He: ni-s ^V3 BOUGHT WITH THE INCOME FROM THE SAGE ENDOWMENT FUND THE GIFT OF nenrg M. Sage 1891 k^-^o'^^^^^. \z\xi\\\'\ 112-. 5931 Cornell University Library HE1843 .K43 Saving freiqht mone olin the 191 3 1924 030 121 192 ^^^^^''^-^J'P-T^?^ The date show» when this volume was taken. To renew this book copy the call No. and give to the librarian. HOME USE RULES^ > Mi Books subject to Recall. , Books not in use for instruction or research are returnable within 4 weeks. 8 Volumes of periodi- cals and of pamphlets are held in uie library as much as possible. For special purposes they are given out for a limited time. Borrowers should not use their library privileges for the bene- fit of other persons. Students must re- turn all books before leaving town. Officers should arrange for the return of books wanted during their absence from town. Books needed by more than one person are held 6n the reserve list. Books of special value and gift books, ' when the giver wishes it, are not allowed to circulate. Readers are asked to report all cases of books marked or muti- lated. Do not deface books by marks and writingf. Cornell University Library 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/cu31924030121192 Saving Freight Money BY APPLYING THE 1910 Railroad Law Containing the complete text of the Interstate Commerce Law, the 1910 Railroad Law and the Commerce Court Act. By ELVIN S. KETCHUM, A. B., Pd. M. Director, Department of Interstate Commerce, La Salle Extension University. THE BUSINESS PUBLICATIONS COMPANY CHICAGO Copyrighted 1910 by ELVIN S. KETCHUM PUBLICITY "In the interest of the public the Government should have the right to inspect and examine the workings of the great corporations engaged in inter- state business. Publicity is the only sure remedy we can now invoke. The first requisite is knowl- edge, full and complete, — knowledge which may be made public to the world." Theodoe^ Roosevelt CONTENTS Chapters Page I. Introduction - ... - 9 II. The Life Blood of Commerce - ... 14 III. Millions of Dollars Lost in Freight Money Annually - 20 IV. Why Freight Tariffs are Intricate - - - 29 V. Interpreting the Rate Schedules ... 36 VI. Blunders Which Cost Millions of Dollars 44 VII. Computing Minimum Rates ..... 52 VIII. Eliminating Rate Competition - . 60 IX. Taxation Without Representation . 72 X. Essentials of the Interstate Commerce Law . 79 XI. Freight Claims and How to Handle Them . . . 90 XII. A New Profession Created by the 1910 Railroad Law 99 Appendix: The Interstate Commerce Act The Commerce Court Act Saving Freight Money CHAPTER I. Introduction. The President of Blank & Blank Manufacturing Company was seated behind his mahogany roll- top desk. "How is business?" inq.uired Mr. Jones, as he stepped into the office. "Have you secured that South- western contract yet?" "No," replied Mr. Brown, "but we are going to get it." Just then the tedephone bell rang. "Is this Smith, the rate clerk of the Chicago and Southwestern Railroad?" ' 'What do you say the rate is on iron pipe?" "$3.50 a ton?" "Write me a letter to that effect and send it over by a messenger at once." Mr. Brown turned to Jones and said, "The order is ours. With a $3.50 rate we can get into that territory and kill every competitor." Mr. Brown pressed a button and in came his secretary, who was directed to send a wire to Mr. Johnson, their salesman, instructing him to take the order on a $3.50 freight rate. The next morning when Mr. Brown returned to his office he found a telegram reading: "The contract is ours. Agreement mailed to-night. Johnson." "I knew we would get the order," said Brown to himself as he laid the telegram away in his basket. He then instructed his secre- tary to make preparations for starting the shipments from the plant at once. Shipments were made as rapidly as they could get gondola cars. In the course of a few weeks all of the pipe was delivered in accordance with the contract. As Mr. Brown was going over the freight vouchers one morning he noticed that on every shipment he had been charged $6.50 per ton, rather than $3.50, the rate quoted by the railroad. He conferred with his secretary at once: "What does this mean? I imderstood the freight rate quoted us was $3.50." "That is right," replied the secretary. ' ' I am sure of it. I will get the correspondence. Yes, here it is over the signature of the General Traffic Manager, $3.50 per ton. There is no doubt about that." Mr. Brown at once wrote a letter to the Railroad asking for an explanation and suggested that they send a check for $3,000 to cover the Overcharge. In a few days Mr. Brown received an answer from the railroad company stating that they were very sorry to inform him that 10 ELVIN S. KETCHTJM the derk quoting the rate had made an unpardonable blunder; that the rate from the point of origin to destination was a "combination of locals" in which two carriers participated; that one of the local rates was $3.50 and that the other local rate was $3.00, making a total of $6.50, the only rate which they could apply on the shipment. Mr. Brown replied that whenever employes of his office made blunders in quoting pricesi, the company had to stand for it and that he would expect a check for $3,000 to balance th3 difference between them. After a voluminous correspondence it was finally agreed that the railroad company would refund the money provided tbey could get the authority from the Interstate Commerce Commission. When Mr. Brown received this letter he threw up both hands in consternation and could not see what the Interstate Commerce Commission had to do with a clerk's bunder costing him $3,000. As Mr. Brown nervously looked through his freight expense bills again, he called his secretary and said: "What has this Interstate Commerce Law to do with a railroad refunding to us the money it owea us?" "You know, Mr. Brown," said the secretary, "that the Interstate Commerce Law was amended recently. Section 6 of this amendment requires that every one of the one hundred fifty million freight rates be filed thirty days for public inspection so that the shippers may know the legal rates which they must pay. This new law further specified that 'the railroad shall not receive a greater or less or different compensation for the transportation of property or for any service in connection there- with or between the points named in the tariffs than the rates and charges, which are specified in the tariffs filed and in effect at the time with the Interstate Commerce Commission.' Therefore, you see, the railroad has no authority to refund this money because it would be in the nature of a rebate. The law protects the shipper by requiring the transportation market to be published. It is not possible for railroad rate clerks always to correctly quote rates on all the various articles which are offered to them every day for shipment in widely distributed territory. They haven't time to look up the lowest combination of rates. "Vou will remember, Mr. Brown, some time ago we had a shipment from Allandale, N. J., to Albany, G-a. I asked one of my railroad friends to write me how to get the rate. Here is his answer, but I cannot under- stand it. ' ' "Answering your esteemed favor of recent date asking how to determine a rate from Allandale, N. J., to Albany, Ga., be advised that, this requires a knowledge of classification territory, differentials, rate basis, applications, and a number of things perhaps most people never heard of. Otherwise you would not know which of the 150,000 tariffs to use in securing this rate- The tariffs of the railroads which run tJhrough either of these cities do not publish a local tariff which gives the rate.. SAVING FREIGHT MONEY IX The expert traffic man, by virtue of his technical knowledge, knows ■wliicli one of the thousands of tariffs to select. He knows where to find the legal rates, how to interpret them, and how to apply them. In other words, he knows that the Joint Freight Tariff governed by Southern Classification with exceptions, published by J. A. Byan, representing several railroads as agent of a railroad association, contains the informa- tion desired, but it requires expert knowledge to find the rate after the tariff has been obtained. I am sending you this tariff under separate cover. If you will look at pages B 30 to B 39 inclusive you will find methods of obtaining rates from interior eastern points. Page B 30, however, does not show AUandale, there being no joint rate published from that point, but if you will look on B 33, you will find that Allandale is located on the Erie Railroad and takes a 'rate basis No. 1' to points in territorial locations X, Y and Z. The explanation of the territorials X, Y and Z will be found on pages B 157 to B 167, giving you the 'rate basis.' Referring now to pages B 30 to 89, you wiU find that Albany, Ga., is a territorial location of X and that rate basis No. 1 will apply from Allendale, N. J., to Albany. Looking now over on page B 157 you will find that to determine a rate from points in rate basis No. 1 to all points in territorial location X, a certain amount must be added to the rates from New York, which in this case, is $0.08. This is known as a 'differential' and this amount must be added to the "first class rate' in order to define the rate to Albany, Ga. The first class rate to Albany is shown in the tariff as applying to 'groups of origin' in item A 1013. By referring to this item, it is found that "A" represents New York, therefore the rate published opposite 'A,' aOso Albany, Ga., are the 'Class rates' from New York to Albany, the 'first class rate' being $1.05. Opposite Albany there is also shown under 'route' the number 13 and by reference to item A 1011 opposite route 13 will be found, Atlantic Coast Line, Piedmont Air Line, Seaport Air Line, etc. Traffic may be forwarded to Albany, Ga., via either of these routes specified. Since the first class rate from New York to Albany is $1.05 and the differential is $0.08, this makes by addition $1.13, the lowest legal class rate from Allandale, N. J., to Albany, Ga. ' 'No wonder rate clerks make mistakes in quoting rates if that is a fair sample of the proposition which confronts them. What are we going to do about it?" "WeU, Mr. Brown," said the secretary, "you probably have noticed that aU the large corporations are coming to engage expert traffic men. That is the only solution of the problem I can see. The transportation market is legally published. We must employ someone who knows how to interpret it. WE HAVE EVI- DENTLY LOST $3,000 BECAUSE WE DID NOT HAVE SUCH A MAN IN OUR EMPLOY. The Smith Grain Company the other day lost $200 on a shipment of eighteen carloads of corn because they did not know how to route it. Mr. Morgan last month lost $77.00 because the line picking up his shipment did not absorb the switching charges. This money could have been saved, a traffic friend tells me, if they had. properly applied the rates." 12 ELVIN S. KETCHUM Mr. Brown agreed -with the secretary and instructed him to get in touch with the best traffic man he could find. This Is a condition which exists in practically all of the small industries of the country today, but most of them do not discover the overcharges ajid do not realize the money they are losing or the disadvantages they are meeting In competition, because "Jones" pay the freight. Clifford Thome in the Saturday Evening Post (April 2, 1910) made a very important statement: "The consumer pays a freight rate tax eight times larger than his tariff tax. We have been talking about all phases •of the tariff for centuries; but the magnitude of the railroad question is just dawning upon us. We are the purchasers of transportation. The railway companies are the sellers. It is to their benefit to have rates high, and to ours to have them low. How are tliey looking after their interests, and how are we looking after ours? "I have before me a publication of the South- Western Tariff Com- mittee which announces rates between many thousands of towns. In this one paper boimd book there are several million rates all issued by one man who acts as agent and attorney for two hundred and ninety rail- roads. Whenever any of these rates are attacked the shrewdest and iDcst trained experts that money can hire are prepared to defend them. You pay these rates. Do you know that they are reasonable?" The Associated Press not long ago gave out an article regarding the correctness of applying the rates publi^ed under the Interstate Com- merce Law as foUows: "Mr. A. B. Stickney, president of the Chicago Oreat Western Kailroad Company, was one of the few prominent railroad men of the country to put himself on record in favor of the passage of the Hepburn rate bill and at a time when the railroads of the country were seeking to defeafthe passage of the law. "Now Mr. Stickney charges that the railroads are constantly evading the law by Ingenious classifications, which are placing the shipper at just as great disadvantage as he was before the giving of rebates became a crime punished by heavy penalties. "In an Interview given out in Seattle, President Stickney declared that rates were being secretly cut and that the law was being evaded In many ways. ' 'When this Interview was called to the attention of Chairman Knapp of the interstate commerce commission he wrote to Mr. Stickney, asking him to make public the facts in his possession. He gave out this statement: " 'I think you are correct in supposing that the secret rates to favored shippers as formerly practiced, have practically disappeared, but as a matter of fact the former method of making such secret rates is the only part of them which has disappeared. Many rates which are con- cealed in the verbiage of the 500 or 600 tariffs which are filed with you SAVING FREIGHT MONEY 13 daily, are really more secret than the former "secret rates," although they may he technically puhlished. " 'I have recently read a publication put out by the La Salle Exten- sion University of Chicago, written by one Mr. Ketchum, who is the director of some freight shippers' association in Chicago, in which he publishes a long list of such rates, which are available only to large concerns which can afford to hire competent men to study the classifica- tion and schedules which are put out and filed with the commission from day to day. " 'He estimates that more than $100,000,000 annually is being paid by shippers in excess of the legal rate, if the rates were published in such a way that they could find out what the real rates are. It is a wonder- ful expose and will sooner or later bear fruit in the judgment of the people. " 'The commission certainly cannot be unmindful of the practice of paying claims to large shippers for overcharges and loss and damages on presentation, provided they do not amount in the aggregate to more than a certain percentage of the freight bills paid by such shippers. " 'I assume the commission also understands that wherever a com- modity rate is published a class rate on the same article is also pub- lished, and in the majority of cases only those shippers for which the commodity rate was made understand such a rate exists, while the other shippers pay the higher rate by classification to which such commodity belongs.' " These are some of the conditions prevailing today which demand the attention of all those who have to do with business progress. CHAPTER n. The Life Blood of Commerce. There is a power in this "free" country of America greater than the government, greater tJhan judges and courts, greater than congress and superior to the state and nation. No king, emperor or tyrant hae ever exercised a power so great in the history of mankind. The mania for money-getting has hlinded our eyes to the evils of this mighty force which defiesi law, and which makes the feudaJ tyrant of the Middle Ages look like a laughing child. Every American home, rich or poor, large or small, pays tribute to this King of Kings three times a day as its members sit down at their tables and partake of food indispensable to life. It levies tax on every thread of clothing, every article of furniture and even the materials in our homes. This mighty power crosses the seas and makes its influences felt in foreign lands which never know its name. It regulates the prices and controUs the shipping of merchandise in a thousand markets. It destroys private Industries and makes men rich or poor. Its mighty influence is felt on the plains of South America and in the avenues and streets of Itondon. It can effect the cost of living in Paris or Berlin as well as in New York or Chicago. In the last few years it has increased the expense of every home in America. It makes prices for the fruit grower in California, the cotton grower of Georgia, and the manufacturer of Massachusetts. It can make the price of wheat, corn and oats and all perishable commodities, which are demanded three times a day as food by ninety millions of people. The operations of this tyranical power have ruined farmers, annihilated industries, destroyed private enterprises, lost millions of dollars in in- vestments, and caused banks to break and men to commit suicide. It has violated the laws of the land at every step of its progress. It has been declared an outlaw by state and federal courts; but its power is as strong today as at any time during its history. This mighty King of Kings is unjust discrimination in freight rates and substitutes for rebating, one of the sources of trusts, the destruction of competition; and a power every shipper large or small must meet in his honest fight for business. This is the power at work today in the in- dustrial world which makes the Traffic Expert indispensable to every manu- facturer, shipper and receiver of freight, because it effects the selling price of his goods and the extent of his market. SAVING FREIGHT MONEY 15 A few hundred miles from the Pacific Coast there is an inland empire with wonderful natural resources. It has a most advantageous location. The climate is invigorating, mild and healthful. It is practically an ideal place for an inland city. Considering all its natural advantages you would expect this Spokane country to contain a great metropolitan center. You would expect to find a city of 250,000 inhabitants and hun- dreds of millions of dollars invested in its industries. You would expect to see a Western City like Cincinnati, St. Louis or Kansas City. But what are the facts? You find rather a dwarfed city of ahout a hundred thou- sand and ten million dollars invested in its manufactures. What is the trouble? The answer has been given by Mr. Charles Edward RusseU in terms which cannot be misunderstood: "It is strangled with railroad rates. That is all — Spokane and the whole Spokane country Is strangled with freight rates. If you are a mer- chant, or manufacturer, or fanner in this domain, it makes not the slighest difference which of the lines you choose for your shipments. By one or by all you are subjected to exactly the same extortionate rates. "This is the extortion: Spokane is three hundred and forty miles east of Seattle; the haul from Chicago to Seattle is about twenty-two hun- dred and forty-eight mUes; the haul from Chicago to Spokane is only nineteen hundred and eight miles. The lines by which freight is hauled from Chicago to Seattle pass through Spokane and the freight is hauled 340 miles farther to Seattle." The rate on typewriters for Instance is $5.96 to Spokane, but the railroad will carry them on to Seattle 340 miles farther for $3.00 or $2.96 less, nearly 100 per cent. Is there any reason for this? Of course, the railroads give a reason. In fact they say tlhere are three reasons. You may draw your own conclusions as to the one you think is the most rationaJ. In the first place they claim the reason for this discrimina- tion is the water competition around Cape Horn. Now let us see what Mr. Bussel has to say on this point: "Water shipments via Cape Horn at the time the railroads began this practice were made in sailing vessels. Very few vessels were en- gaged in the trade and these sailed Irregularly. From New York to San Francisco averaged about 115 days. The merchandise that could be transported subject to such delay was limited in character and of small amount. Not one shipper in 10,000 knew of the existence of the water route; not one in twenty-thousand could use it. Yet because of this com- petition, which existed only in name, Iflie railroads put on an extra rate to the interior points, asserting that the lower rate to the coast cities was the result of water competition. This seems sufficiently ridiculous, and yet it is only a small part of the 16 ELVIN S. KETCHXJM story. Admitting that a man could ship something from New York to the Pacific Ooast hy one of these occasional sailing vessels, he certainly could not ship it from Pittsburg, Chicago, Alabama, Muncie, Columbus, Atlanta, or St. Paul. And yet the discrimination in rates was applied to ship- ments from all these places exactly as to rates from New York." The second reason advanced by the railroads is that they have a right to fix the rates. It is known that this is true and they have always fought any legislation which would leave rate making to any power other than themselves. The Interstate Commerce Commission may declare that a rate is exorbitant but the courts may reverse the decision, as has been the case many times in the past. The fact remains that the railroads may levy any tribute on any section of the country they desire and no power can stop them except the combined influence of shippers and the power of Public Opinion. The third reason advanced by the railroads is that they must charge a sufacient rate to pay a reasonable dividend on the money invested. You have noticed that they do not go into the facts very clearly regarding the amount of such capital which they claim is actually invested in the properties. They do not say anything about the valuable grants by the Government or the right of way given by private interests along the line. In this special case the people of Spokane went down into their pockets and put up $75,000 for the purpose of helping build the road with the understanding that they were to be liberated from extortionate rates. They also gave a right of way through the city five miles long. For a time the new road operated on a reduced tariff but soon it adopted the same rates as the other roads and the promises of the builders passed away like the clouds' after the storm. Do you see the real reason for this discrimination in rates? Here is another paragraph from Mr. Kussell which may explain it: "In the course of the pleas of the Great Northern much is made of the capitalization of the railroad and the impossibility of granting any rate concessions and paying interest on that capitalization. It appears that the capital stock of the Great Northern is $210,000,000 and that there is a funded indebtedness (bonds) of $126,397,909, making a total capitalization of $336,397,909. It is for the sake of maintaining interest and dividends on this capitalization that the rates are defended. What is the total capitalization of the Great Northern railroad cm which we must keep up the rates to provide interest and dividends? $336,397,909. And how much have Mr. Hill and his friends drawn from the enterprise, exclusive of interest, dividends, and the like emoluments? $407,000,000. How does that appeal to you as a really interesting fact? Yet the very suggestive fact remains that in all these years of struggle the policy of the railroads has steadily violated the intention and, so far Saving Freight Money BY APPLYING THE 1910 Railroad Law Containing the complete text of the Interstate Commerce Law, the 1910 Railroad Law and the Commerce Court Act. By ELVIN S. KETCHUM, A. B., Pd. M. Director, Department of Interstate Commerce, La Salle Extension University. THE BUSINESS PUBLICATIONS COMPANY CHICAGO Copyrighted 1910 by ELVIN S. KETCHUM PUBLICITY "In the interest of the public the Government should have the right to inspect and examine the workings of the great corporations engaged in inter- state business. Publicity is the only sure remedy we can now invoke. . . . The first requisite is knowl- edge, full and complete, — knowledge which may be made public to the world." Theodore Roosevelt CONTENTS Chapters Pagg I. Introduction .... _ 9 II. The Life Blood of Commerce . - . . . 14 III. Millions of Dollars Lost in Freight Money Annually - 20 IV. Why Freight Tariffs are Intricate - - - 29 V. Interpreting the Rate Schedules - 36 VI. Blunders Which Cost Millions of Dollars - 44 VII. Computing Minimum Rates - - 52 Vlll. Eliminating Rate Competition - 60 IX. Taxation Without Representation - - - 72 X. Essentials of the Interstate Commerce Law - - 79 XL Freight Claims and How to Handle Them - - 90 XII. A New Profession Created by the 1910 Railroad Law 99 Appendix: The Interstate Commerce Act The Commerce Court Act Saving Freight Money CHAPTEE I. Introduction. The President of Blank & Blank Manufacturing Company was seated behind his mahogany roll- top desk. "How is business?" inquired Mr. Jones, as he stepped into the office. "Have you secured that South- western contract yet?" "No," replied Mr. Brown, "but we are going to get it." Just then the telephone bell rang. "Is this Smith, the rate clerk of the Chicago and Southwestern Kailroad?" "What do you say the rate is on iron pipe?" "$3.50 a ton?" "Write me a letter to that effect and send it over by a messenger at once." Mr. Brown turned to Jones and said, "The order is ours. With a $3.50 rate we can get into that territory and kill every competitor." Mr. Brown pressed a button and in came his secretary, who was directed to send a wire to Mr. Johnson, their salesman, instructing him to take the order on a $3.50 freight rate. The next morning when Mr. Brown returned to his office he found a telegram reading: "The contract is ours. Agreement mailed to-night. Johnson." "I knew we would get the order," said Brown to himself as he laid the telegram away in his basket. He then instructed his secre- tary to make preparations for starting the shipments from the plant at once. Shipments were made as rapidly as they could get gondola cars. In the course of a few weeks all of the pipe was delivered in accordance with the contract. As Mr. Brown was going over the freight vouchers one morning he noticed that on every shipment he had been charged $6.50 per ton, rather than $3.50, the rate quoted by the railroad. He conferred with his secretary at once: "What does this mean? I understood the freight rate quoted us was $3.50." "That is right," replied the secretary. "I am sure of it. I will get the correspondence. Yes, here it is over the signature of the General Traffic Manager, $3.50 per ton. There is no doubt about that." Mr. Brown at once wrote a letter to the Railroad asking for an explanation and suggested that they send a check for $3,000 to cover the lovercharge. In a few days Mr. Brown received an answer from the railroad company stating that they were very sorry to inform him that 10 ELVIN S. KETCHtTM the deirk q,uotmg the rate had made an unpardonable blunder; that the rate from the point of origin to destination was a "combination of locals" in which two carriers participated; that one of the local rates was $3.50 and that the other local rate was $3.00, making a total of $6.50, the only rate which they could apply on the shipment. Mr. Brown replied that whenever employes of his oflce made blunders in quoting pricesi, the company had to stand for it and that he would expect a check for $3,000 to balance th3 difference between them. After a voluminous correspondence it was finally agreed that the railroad company would refund the money provided they could get the authority from the Interstate Commerce Commission. When Mr. Brown received this letter he threw up both hands in consternation and could not see what the Interstate Commerce Commission had to do with a clerk's bunder costing him $3,000. As Mr. Brown nervously looked through his freight expense biUs again, he called his secretary and said: "What has this Interstate Commerce Law to do with a railroad refunding to us the money it owes us?" "You know, Mr. Brown," said the secretary, "that the Interstate Commerce Law was amended recently. Section 6 of this amendment requires that every one of the one hundred fifty million freight rates be filed thirty days for public inspection so that the shippers may know the legal rates which they must pay. This new law further specified that 'the railroad shall not receive a greater or less or different compensation for the transportation of property or for any service in connection there- with or between the points named in the tariffs than the rates and charges which are specified in the tariffs filed and in effect at the tune with the Interstate Commerce Commission.' Therefore, you see, the railroad has no authority to refund this money because it would be in the nature of a rebate. Tne law protects the shipper by requiring the transportation market to be published. It is not possible for railroad rate clerks always to correctly quote rates on all the various articles which are offered to them every day for shipment in widely distributed territory. They haven't time to look up the lowest combination of rates. "You wiU remember, Mr. Brown, some time ago we had a shipment from Allandale^ N. J., to Albany, Ga. I asked one of my railroad friends to write me how to get the rate. Here is his answer, but I cannot imder- stand it. ' ' "Answering your esteemed favor of recent date asking how to determine a rate from Ailandale, N. J., to Albany, Ga., b© advised that this requires a knowledge of classification territory, differentials, rate basis, applications, and a number of things perhaps most people never heard of. Otherwise you would not know which of the 150,000 tariffs to use in securing this rate- The tariffs of the railroads which run tjhrough either of these cities do not publish a local tariff which gives the rate.. SAVING F REIGHT MONEY 11 The expert traffic man, by virtue of his technical knowledge, kno-ws nihich (me of the thousands of tariffs to select. He knows where to find the legal rates, how to interpret them, and how to apply them. In other words, he knows that the Joint Freight Tariff governed by Southern Classification with exceptions, published by J. A. Byan, representing several railroads as agent of a railroad association, contains the informa- tion desired, but it requires expert knowledge to find the rate after the tariff has been obtained. I am senx^ng you this tariff under separate cover. If you will look at pages B 30 to B 39 inclusive you wiE find methods of obtaining rates from interior eastern points. Page B 30, however, does not show Allaudale, there being no joint rate published from that point, but if you will look on B 33, you will find that Allandale is located on the Erie BaUroad and takes a 'rate basis No. 1' to points in territorial locations X, Y and Z. The explanation of the territorials X, Y and Z will be found on pages B 157 to B 167, giving you the 'rate basis.' Eef erring now to pages B 30 to 89, you will find that Albany, Ga., is a territorial location of X and that rate basis No. 1 will apply from Allendale, N. J., to Albany. Looking now over on page B 157 yon wiU find that to determine a rate from points in rate basis No. 1 to all points in territorial location X, a certain amount must be added to the rates from New York, which in this case, is $0.08. This is known as a 'differential' and this amount must be added to the "first class rate' in order to define the rate to Albany, Ga. The first class rate to Albany is shown in the tariff as applying to 'groups of origin' in item A 1013. By referring to this item, it is found that "A" represents New York, therefore the rate published opposite 'A,' aJso Albany, Ga., are the 'Class rates' from New York to Albany, the 'first class rate' being $1.05. Opposite Albany there is also shown under 'route' the number 13 and by reference to item A 1011 opposite route 13 will be found, Atlantic Coast Line, Piedmont Air Line, Seaport Air Line, etc. Traffic may be forwarded to Albany, Ga., via either of these routes specified. Since the first class rate from New York to Albany is $1.05 and the differential is $0-08, this makes by addition $1.13, the lowest legal class rate from Allandale, N. J., to Albany, Ga. ' 'No wonder rate clerks make mistakes in quoting rates if that is a fair sample of the proposition which confronts them. What are we going to do about it?" "Well, Mr. Brown," said the secretary, "you probably have noticed that all the large corporations are coming to engage expert traflic men. That is the only solution of the problem I can see. The transportation market is legally published. We must employi someone who knows how to interpret it. WE HAVE EVI- DENTLY LOST $3,000 BECAUSE WE DID NOT HAVE SUCH A MAN IN OUR EMPLOY. The Smith Grain Company the other day lost $200 on a shipment of eighteen carloads of com because they did not know how to route it. Mr. Morgan last month lost $77.00 because the Une picking up his shipment did not absorb the switching Charges. This money could have been saved, a traffic friend tells me, if they had. properly applied the rates." 12 ELVIN S. KETCHUM Mr. Brown agreed -with the secretary and instructed him to get in touch with the best traiHc man he could find. This is a condition which exists in practically all of the small industries of the country today, hut most of them do not discover the overcharges ajid do not realize the money they are losing or the disadvantages they are meeting in competition, because "Jones" pay the freight. OlifFord Thome in the Saturday Evening Post (April 2, 1910) made a very important statement: "The consumer pays a freight rate tax eight times larger than his tariff tax. We have been talking about all phases of the tariff for centuries; but the magnitude of the railroad question is just dawning upon us. We are the purchasers of transportation. The railway companies are the sellers. It is to their benefit to have rates high, and to ours to have them low. How are they looking after their interests, and how are we looking after ours? "I have before me a publication of the South-Westem Tariff Com- mittee which announces rates between many thousands of towns. In this one paper bound book there are several million rates all issued by one man who acts as agent and attorney for two hundred and ninety rail- roads. Whenever any of these rates are attacked the shrewdest and best trained experts that money can hire are prepared to defend them. You pay these rates. Do you know that they are reasonable?" The Associated Press not long ago gave out an article regarding the correctness of applying the rates published under the Interstate Com- merce Law as follows: "Mr. A. B. Stickney, president of the Chicago Great Western Eailroad Company, was one of the few prominent railroad men of the country to put himself on record in favor of the passage of the Hepburn rate biil and at a time when the railroads of the country were seisking to defeat the passage of the law. "Now Mr. Stickney charges that the railroads are constantly evading the law by ingenious classifications, which are placing the shipper at just as great disadvantage as he was before the giving of rebates became a crime punished by heavy penalties. "In an interview given out in Seattle, President Stickney declared that rates were being secretly cut and that the law was being evaded in many ways. "When this interview was called to the attention of Chairman Knapp of the interstate commerce commission he wrote to Mr. Stickney, asking him to make public the facts in his possession. He gave out this statement: " 'I think you are correct in supposing that the secret rates to favored shippers as formerly practiced, have practically disappeared, but as a matter of fact the former method of making such secret rates is the only part of them which has disappeared. Many rates which are con- cealed in the verbiage of the 500 or 600 tariffs which are filed with you SAVING FREIGHT MONEY la daily, are reaJily more secret than the former "secret rates," although they may be technically published. " 'I have recently read a publication put out by the La Salle Exten- sion University of Chicago, written by one Mr. Ketchum, who is the director of some freight shippers' association in Chicago, in which he pubdishes a long list of such rates, which are available only to large concerns which can afford to hire competent men to study the classifica- tion and schedules which are put out and filed with the commission from day to day. " 'He estimates that more than $100,000,000 annually is being paid by shippers in excess of the legal rate, if the rates were published in such a way that they could find out what the real rates are. It is a wonder- ful expose and will sooner or later bear fruit in the judgment of the people. " 'The commission certainly cannot be unmindful of the practice of paying claims to large shippers for overcharges and loss and damages on presentation, provided they do not amount in the aggregate to more than a certain percentage of the freight biUs paid by such shippers. " 'I assume the commission also understands that wherever a com- modity rate is published a class rate on the same article is also pub- lished, and in the majority of cases only those shippers for which the commodity rate was made understand such a rate exists, while the other shippers pay the higher rate by classification to which such commodity belongs.' " These are some of the conditions prevailing today which demand the attention of all those who have to do with business progress. CHAPTER 11. The Life Blood of Commerce. There is a power in this "free" country of America greater than the government, greater tihan judges and courts, greater than congress and superior to the state and nation. No king, emperor or tyrant has ever exercised a power so great in the history of mankind. The mania for money-getting has blinded our eyes to the evils of this mighty force which defies: law, and which makes the feudal tyrant of the Middle Ages look like a laugbing child. Every American home, rich or poor, large or small, pays tribute to this King of Kings three times a day as its members sit down at their tables and partake of food indispensable to life. It levies tax on every thread of clothing, every article of furniture and even the materials in our homes. This mighty power crosses the seas and makes its influences felt in foreign lands which never know its name. It regulates the prices and controUs the shipping of merchandise in a thousand markets. It destroys private industries and makes men rich or poor. Its mighty influence is felt on the plains of South America and in the avenues and streets of London. It can effect the cost of living in Paris or Berlin as well as in New York or Chicago. In the last few years it has increased the expense of every home in America. It makes prices for the fruit grower in California, the - cotton grower of Georgia, and the manufacturer of Massachusetts. It can make the price of wheat, com and oats and all perishable commodities, which are demanded three times a day as food by ninety millions of people. The operations of this tyranical power have ruined farmers, annihilated industries, destroyed private enterprises, lost millions of dollars in in- vestments, and caused banks to break and men to commit suicide. It has violated the laws of the land at every step of its progress. It has been declared an outlaw by state and federal courts; but its power is as strong today as at any time during its history. This mighty King of Kings is unjust discrimination in freight rates and substitutes for rebating, one of the sources of trusts, the destruction of competition; and a power every shipper large or small must meet in his honest fight for business. This is the power at work today in the in- dustrial world which makes the Traffic Expert indispensable to every manu- facturer, shipper and receiver of freight, because it effects the selling price of his goods and the extent of his market. SAVING FREIGHT MONEY 15 A few hundred miles from the Pacific Coast there is an inland empire with wonderful natural resources. It has a most advantageous location. The climate is invigorating, mild and healthful. It is practically an ideal place for an inland city. Considering aU. its natural advantages you would expect this Spokane country to contain a graat metropolitan center. You would expect to find a city of 250,000 inhabitants and hun- dreds of millions of dollars invested in its industries. You would expect to see a Western CSty like Cincinnati, St. Iiouis or Kansas City. But what axe the facts? You find rather a dwarfed city of about a hundred thou- sand and ten million dollars invested in its manufactures. What is the trouble? The answer has been given by Mr. Charles Edward Kussell in terms which cannot be misunderstood: "It is strangled with railroad rates. That is all — Spokane and the whole Spokane country is strangled with freight rates. If you are a mer- chant, or manufacturer, or farmer in this domain, it makes not the slighest difference which of the lines you choose for your shipments. By one or by all you are subjected to exactly the same extortionate rates. "This is the extortion: Spokane is three hundred and forty miles east of Seattle; the haul from Chicago to Seattle is about twenty-two hun- dred and forty-eight miles; the haul from Chicago to Spokane is only nineteen hundred and eight miles. The lines by which freight is hauled from Chicago to Seattle pass through Spokane and the freight is hauled 340 miles farther to Seattle." The rate on typewriters for instance is $5.96 to Spokane, but the railroad will carry them on to Seattle 340 miles farther for $3.00 or $2.96 less, nearly 100 per cent. Is there any reason for this? Of course, the railroads give a reason. In fact they say Ifliere are three reasons. You may draw your own conclusions as to the one you think is the most rational. In the first place they claim the reason for this discrimina- tion is the water competition around Cape Horn. Now let us see what Mr. Bussel has to say on this point: "Water shipments via Cape Horn at the time the railroads began this practice were made in sailing vessels. Very few vessels were en- gaged in the trade and these sailed irregiilarly. From New York to San Francisco averaged about 115 days. The merchandise that could be transported subject to such delay was limited in character and of small amount. Not one shipper in 10,000 knew of the existence of the water route; not one in twenty-thousand could use it. Yet because of this com- petition, which existed only in name, the railroads put on an extra rate to the interior points, asserting that the lower rate to the coast cities was the result of water competition. This seems sufliciently ridiculous, and yet it is only a small part of the 16 ELVIN S. KETCHTna story. Admitting that a man could ship something from New York to the Pacific Ooast by one of these occasional sailing vessels, he certainly could not ship it from Pittsburg, Chicago, Alabama, Muncie, Columbus, Atlanta, or St. Paul. And yet the discrimination in rates ■^as applied to ship- ments from all these places exactly as to rates from New York." The second reason advanced by the railroads is that they have a right to fix the rates. It is known that this is true and they have always fought any legislation which would leave rate making to any power other than themselves. The Interstate Commerce Commission may declare that a rate is exorbitant but the courts may reverse the decision, as has been the case many times in the past. The fact remains that the railroads may levy any tribute on any section of the country they desire and no power can stop them except the combined influence of shippers and the power of Public Opinion. The third reason advanced by the railroads is that they must charge a sufficient rate to pay a reasonable dividend on the money invested. You have noticed that they do not go into the facts very clearly regarding the amount of such capital which they claim is actually invested in the properties. They do not say anything about the valuable grants by the Government or the right of way given by private interests along the line. In this special case the people of Spokane went down into their pockets and put up $75,000 for the purpose of helping build the road with the imderstanding that they were to be liberated from extortionate rates. They also gave a right of way through the city five miles long. For a time the new road operated on a reduced tariff but soon it adopted the same rates as the other roads and the promises of the builders passed away like the clouds after the storm. Do you see the real reason for this discrimination in rates? Here is another paragraph from Mr. Eussell which may explain it: "In the course of the pleas of the Great Northern much is made of the capitalization of the railroad and the impossibility of granting any rate concessions and paying interest on that capitalization. It appears that the capital stock of the Great Northern is $210,000,000 and that there is a funded indebtedness (bonds) of $126,397,909, making a total capitalization of $336,397,909. It is for the sake of maintaining interest and dividends on this capitalization that the rates are defended. What is the total capitalization of the Great Northern railroad on which we must keep up the rates to provide interest and dividends? $336,397,909. And how much have Mr. Hill and his friends drawn from the enterprise, exclusive of interest, dividends, and the like emoluments? $407,000,000. How does that appeal to you as a really interesting fact? Yet the very suggestive fact remains that in aU these years of struggle the policy of the railroads has steadily violated the intention and, so far SAVING FREIGHT MONEY 17 as a mere plain citizen can eee, the letter of the Interstate Commerce Act. By the fourth clause of that act a railroad is strictly forbidden to charge more for a short haul than it charges for a long haul. This is precisely what the railroads do here. They charge more for a haul to Spokane than they charge for a haul to Seattle, three hundred and forty miles farther. How, then, if it so clearly illegal, dw the railroads manage to continue this practice? Quite simply. In every one of these regulative laws there is a "joker." The joker in this law is "controlling competition." The railroads merely said that this was such a casei, and that the pos- sihility of shipping some things occasionally around the Horn in a sailing vessel was "controlling competition." This case is only one of the many kinds of discrimination that are being practiced in various parts of the country. The Interstate Commerce Commission has the power to determine if rates are exorbitant and shippers through expert Trafftc Men have the power to compel the low- ering of excessive rates if they will take up the work in earnest and fight for their rights. Transportation is the basis of competition. It is a fixed percentage of the cost of every article. Every citizen of the country must pay transportation, whether he desires to or not. He cannot go around the comer and buy from some one else. He must patronize the line or lines on which he lives, or walk. Transportation is therefore a natural monop- oly, and it is just as much a necessity of life as bread ajid water. In those countries where the price of labor is the lowest in the world, the cost of transportation is the highest in the world. Commercial pros- perity increases as wages increase. The most advantageous condition for a nation demands that the cost of transportation shall be at a mimimum. When this condition prevails, the prices paid for labor increase propor- tionately, thus making it possible for wage workers to earn a larger amount of money, which in turn is expended for the products of our mills, mines and soil, generally increasing the prosperity of the country. RELATION OF TRANSPORTATION TO PROGRESS. Transportation is one of the most potent factors in civilization. If the consumers of coal in the state of Kaiisas were compeUed to pay the rates of transportation prevaUing in China, coal would cost them over one hundred doUars per ton. This, of course, means that they would have no coal; but it also means that they could not get their grain to market at a profit. The result would be the raising of only enough cer- eals for local consumption, thus destroying all possibiUty of progress. Every article which is manufactured includes in its purchase price not only the expense for labor and material, but also the cost of transporta- 18 ELVIN S. KETCHUM tion. In primitive countries transportation is in the form of manual labor. The greater part of the tea crop in China today is carried on 1 the hacks of men to the waterways. As soon as modem transportation systems are created the lahor utilized in transporting freight to market Is relieved, to take up the manufacture of more goods or to engage in other industrial pursuits. This all seems simple enough, as we look at it with our "hindsight." We are unable to appreciate the tremendous value of cheap transportation in this country simply because we do not know any other condition. America has the cheapest transportation in the world. It is generally conceded that competition is the life of progress. In a nation where class distinction has no existence and where every indi- vidual has a chance to produce a utility, create an invention or enter into competition in any line of industry — wherever this condition prevails — every individual is induced to increase his efficiency for the highest service of his country. There are certain necessities and attributes of life over which the State must be absolute sovereign. Men who look through eyes of divi- dends are not usually qualified to eliminate personalism and act for the highest good of all concerned. Neither is it true that individuals al- ways know what is best for their highest good. LOWEST BATES INDISPENSABLE. As soon as transportation facilities are made more eflicient we shall at once have lower transportation rates, thus increasing wages, augment- ing our foreign commerce, making a greater demand for labor and bring- ing a greater reign of prosperity throughout the country. To dominate the world's markets we must either have cheaper labor or cheaper trans- portation. Labor in most foreign countries is much cheaper than in America, therefore to hold foreign trade it is necessary that our transportation be as low as possible. There is suificient freight for both the waterways and the railroads, and as soon as our rivers and harbors have been suflS- ciently improved to compete with rail transportation many of the vex- atious problems of interstate commerce will be satisfactorily adjusted. Szechuan, a province in China, has nearly the same population as the United States. Its communication to the various markets, however, is by small boats and transportation is ten cents per ton per mile. Labor is only eight cents per day. It costs thirty times more per mile-ton to transport grain to market than in America. The value of every com- modity depends upon the breadth of the market, therefore as we in- crease our transportation facilities we shall greatly extend the market for our products. SAVING FREIGHT MONEY IB MEETING FOREIGN PRICES. California today ships its apples across the country, over the At- lantic and sells them in the London market to compete with the rates on Scottish railroads. Our cheap transportation has put many of the Saxon iron mills out of husiness because we transport our product to the sea- board, across the Atlantic and deliver it in foreign marfeets to success- fully compete with rates of transportation in Germany. Japan has in- creased her foreign commerce eight hundred per cent since she increased her railroad system. It is a principle of business science that progress depends greatly upon the prompt, regular and efficient interchange of commodities. This is the basis of trade. The means by which the commodities are exchanged to a large degrea is transportation. For the past ten years it has been found that the freight tonnage throughout the country has increased approximately 125 per cent, whereas the railroads have increased their «(iuipment only about fifteen per cent. With the unprecedented prosperity of the country, the traffic situa- \ion has become unbearable. The state legislatures are passing bills re- quiring the railroads to perform a service more in accordance with their charters. At the present time there are four bills before Congress rela- tive to transportation matters. In many cases these measures do not get the support they deserve, because there is not concerted action on the part of shippers. NATIONAL ASSOCIATION OF SHIPPERS. The railroads have a lobby in every legislative hall. The time has come when a national shippers' association, representing every interest, is imperative. The officers of such an association should be qualified to efficiently perform the duties which would be placed upon them. They should not have any interests of their own to hamper them, and they should be free to look every transportation problem sctuarely in the face. Sporadic, detached and unorganized efforts by separate lines of indus- try are now being made to secure better transportation service. Like ef- forts have been made before, have failed and wiU fail in the future, when met as heretofore by the thorough, active and disciplined organiza- tion maintained at all times at Washington, D. 0., and elsewhere, by and at the expense of the combined railroads of the country. The time has now arrived when actual self-preservation compels shippers to form a comprehensive national association representing every line of business with a very large membership in every state in the union. This association should be formed with the expressed intention and determination to continue its efforts for practical relief, until it is ob- tained, though it takes several years to accomplish this object. CHAPTBE III. Millions of Dollars Lost in Freight Money Annually. Transportation is the largest single Item of expense In the world. It costs over 2,000 Million Dollars annually. This is over $25 for every man, woman and child in the United States. It is 10 per cent of the value of all manufactured articles. It is five times the surplus and capital of all the National Banks in this country. No nation or corporation on earth spends in a single year a sum which compares with it. Freight discrimina- tion is the foundation of trusts. Yet it is claimed that 90 per cent of all of this money is spent by shippers who do not know whether they are being charged correctly or not. Conservative traflic experts estimate that shippers lose over $50,000,000 annually in overcharges and errors. This vast amount of money is earned by one set of men, the railroad opera- tors, merely because the other set of men, tha shippers, lack the infor- mation which could save it. SHIPPEES MUST MEET CONDITIONS. During the past few years the Railroads through their traffic man- agers, attorneys, Congressional representatives and allies in State Legis- latures, have built up a "system" which it is almost impossible for the public to interpret. There are over 23,000 classifications of goods. The number of tariffs, rulings and regulations pertaining to the shipment of goods filed by the Railroads every day represents about 600 pages of printed matter of the size of a regular letter-head. The time has come when it is absolutely necessary for shippers to learn the difference be- tween the "net price" and the "list price" for shipping goods. CARRIERS NOT BLAMEWORTHY. It is a common fault of shippers whose attention every now and then is directed to errors of railroads which produce overcharges and often cause them to lose sales, — ^to lay the blame at the door of the carriers. Now, it is a wrong assiunption to place upon the seller the responsibility of looking after the interests of the buyer. Yet that is precisely what a great many shippers do when buying transportation. The railroads are selling, the shippers buying transportation, and it is the business of the shipper to look after his o'wn end of the trade. The Interstate Commerce Act which placed at the disposal of the shipper the tariffs and other sources of information as to the cost of transportation was not a railroad measure; in fact, it is commonly ac- SAVING FREIGHT MONEY 21 cepted that the lailroads were opposed to it. It was a measure enacted for the benefit of the shippers of the country. It compelled the railroads to publish their rates for the benefit of all, but it also placed upon the shipper the responsibility of using the tariffs if he wanted to secure the benefits which the law was designed to provide for him. Ijet us consider the results of this publication clause of the Act regu- lating Interstate Commerce and we shall understand both why the rail- roads make errors and why it is imperative that the shipper look after Ms own interests in buying transportation, if he would secure the low- est rate on freight. WHY SHIPPEES LOSE MONEY. Most overcharges are due to errors. Most errors are due to three things: (1) the common tendency of all employes to make mistakes; (2) to the immense amount of detail involved in properly billing the charges against freight and in rating shipments, and (3) to the want of fuU and complete files of information or adequate time to make use of them. The number of tariffs in effect today among the various railroads of the country run into mUlions. The major classifications embrace 23,000 separate and distinct items, a large part of which acquire different classi- fication when differently packed and described. The larger part of the tariffs issued are called commodity tariffs, being in effect special rates applied to special classes of freight. These are issued by the various rail- roads to meet peculiar conditions which demand lower rates for certain industries and individuals producing large tonnage, but which are appli- cable to shipments of any one whose freight so travels as to make it pos- sible to take advantage of them. $141.29 IN OVEKCHAEGE ON ONE CAE. No railroad attempts, nor would it be practicable to do so, to change the description of freight or suggest other methods of packing it, which would produce lower rates, nor does any railroad carry a complete file of aU the tariffs of all Unes, yet this is practically what would have to be done if the railroads were to secure to the shipper the lowest rate of freight. Often it would mean the loss of freight. How unreasonable, then, for the shipper to expect it! It is a human impossibility for raUroad rate clerks to correctly quote rates on all the various articles shipped every day from any of the large cities to widely distributed territory. The biU clerks merely bUl charges against freight according to the description given by the shipper, and do not attempt to figure the lowest rate that may be applied. A shipper on a carload of goods was recently charged $141.29 more than he should have been charged because the goods were bUled under the wrong classi- 22 ELVIN S. KETCHinvi flcatious. It is uuieasonable to expect the railroad clerks to look up the lowest rates for the shippers. They haven't the time. lu asking railroad clerks to look after the shipper's interests you are asking them to serve two masters — and one of them pays no salary. THE SHIPPER'S DUTY. What, then, is the remedy? The answer is simple enough. Each ship- per must look after his own interests. Let us suggest how it can be done and with economy. The opportunity has been afforded through the Inter- state Commerce Act, the means for making use of it, through the course of instruction of the Interstate Commerce Schools. When the railroads were compelled to abandon rebates and special preferential rates through the enactment of the Interstate Commerce Act, it was not contemplated that this law would do away with the con- ditions which made these rebates and special rates necessary, but it was intended that if they were re-issued after that Act became a law, that they should be in compliance with the law, which gave to every shipper the right to take advantage of such rates if his freight traveled in a direction which made it possible, and if he knew how to secure the "net price." Now here was the opportunity which the law created to place aU shippers on an equal footing. But the means for using it properly were lacking. Our special instruction fills this want. The law created opportunity, but it could not compel shippers to make use of it. Those who did, profited in so doing. Those who did not, lost an advantage. SPECIAL RATES NECESSARY. The new law did away with rebates. It could do away with prefer- ential special fates but it could not alter the conditions which made them necessary. The necessities of certain communities, the necessities of certain individuals and of particular classes of traffic demanded special recognition at the hands of the railroads. The law, however, made it impossible that these concessions should prefer any one shipper or com- munity or class or interest above another. All must be privileged to take advantage of such special concessions when opportunity afforded. The wise few realized that the railroads must meet these conditions and proceeded at once to make use of their privileges. They employed traffic experts and paid them good salaries to secure such advantages as the publication clause of the law afforded. It is significant that the very ones who had profited by the rebates, special rates, etc., prior to the enactment of the Interstate Commerce Act were the first to profit by the provisions above mentioned. Is there no significance in the fact that they are still employing experts and paying out money that they may profit through their employment? Yet the law is strictly conformed to. These shippers possess no advantage which is not by right the privilege of every other shipper; — if they would exercise their right. SAVING FREIGHT MONEY 23 UNUSED LAWS VALUELESS. The law created the opportunity. Why did not aU shippers make use of it to profit? WeU, some would not and many could not. Those who would not were those who believe the passage of a law is a cure for the evils at which it is aimed. They forget that laws are but instruments, valueless unless used. Those who could not were those who could not conunand the service of experts, and they are many. Experts were scarce. There was no school for their production save the slow school of experience. It ground them out slowly and the demand soon exceeded the supply. We have indicated how errors occur among the railroads. It is almost impossible for them to remedy conditions so as to prevent them and the reasons for that are stated, but with the shipper it is different. Any railroad rate clerk will tell you that if he had charge of but one class of shipment he could and would rate them properly with little chance of error. This is precisely the conditions facing the shippers and our instruction teUs him how to do it. HOW TO GET LOWEST KATES. Each shipper has for classification a limited number of articles. He ships to a defined territory save in a few cases. Therefore it is possible for him to make an exhaustive study of the classifications and rates and to maintain a complete file of all the tariffs which in any way affect the cost for carrying freight — if he knows how to do it. That is precisely what our course teaches each and every man connected with handling of this department of business. It seems a simple thing to read the tariffs. It is a complex study re- quiring knowledge of a peculiar kind to study them to profit. The fact that errors are made by men whose business it is to be familiar with the rate situation is prima facia evidence of that. The further fact that ex- perts are employed to do this work for certain shippers is complete proof. TRAFFIC MEN INDISPENSABLE. There is a new department in business known as the Traffic Depart- ment. The man in charge of this department is known as the Trafac Man- ager or expert. The Traffic Manager for private shippers is, like the Traffic Manager for a railroad, a student of railroad conditions, but he differs from his brother in transportation service in this one particular, the railroad traffic manager seeks to charge as much as possible, the pri- vate traffic expert to pay as little as necessary. The study of freight traffic is made possible by the Interstate Com- merce Act; it is made necessary by the attitude of the carriers of the country towards this Act. The purpose of the act regulating interstate commerce was to compel the railroads to offer the same facilities and the 24 ELVIN S. KETCHUM same rates to all shippers, whether small or great. The attitude of the railroads is directly antagonistic to this. Their position is very clearly defined by the president of a prominent eastern road who says that there is no more justice in regulating the price which the carriers should charge than in fixing the price at which one of the mills along the line of his road should sell its product. This being the position taken by the railroads, it will be seen that if there is any way in which they can comply with the requirements of the law and at the same time prevent the attaiimieut of the ends which it sought to accomplish, they would adopt that plan. i THE "NET" AND "LIST" PKICE. Shippers have no animus against the carriers. They hold no brief for the shippers. It is the purpose in plain and simple language to show how out of this conflict of position has arisen a plan, cleverly devised and skillfully executed, whereby the carriers may conform to the letter of the law without yielding in any marked degree the advantages they possessed before the enactment of the Interstate Commerce Act. Our Instruction makes clear how in many cases there has gradually crept into existence two sets of rates for carrying freight, a "list" and a "net" price, the one a high rate, the other a lower one, both published in due form and both legal rates. It shows that of these two rates, one, the higher, is known to every one, while the lower is known to but few, and in doing this it will be made clear how the few secure advantages over the many without se- curing rebates or any concession to which all are not entitled. It shows how -this can be done without confi.lctlng with the law, yet in a manner that precludes most shippers from securing the very benefits which the law sought to assure to them. 90% OF SHIPPERS DON'T KNOW LOWEST RATE. It makes it clear that almost every shipper, (at least 90 per per cent of all), are at some time and in some way losing money through errors which a careful study and understanding of the trafic situation would correct; losses which it is not always possible and which at no time is it the business of the railroads to prevent. And in pointing out these things, things which are of positive and real benefit to every shipper, the course shows the vital weakness of the Interstate Commerce Act, so far as the great mass of shippers is con- cerned, lies in the measure of publicity given to the published rates of the carriers and not in the want of power vested in the Commission to enforce its decisions, for if the public were to know to just what extent it had been hoodwinked in the matter of freight charges, there would be no force on earth that could stop them from securing legislation whick SAVING FREIGHT MONET 25 would empower some authority to readjust rates when it could be shown that they worked an injustice to any shipper or any body of shippers. The private traflc manager is the man who looks after the shipper's interests. Created by the Interstate Commerce Act, nurtured by the necessities of business, he has grown to full stature and is now an im- portant factor in modem business building through an ability to secure profit — decrease expense and increase revenue — by the study of the freight question as it affects the shipping interests of the country. TEATFIC MATSr PROFITABLE FOR SHIPPER. He does not secure rebates. It would be foolish to entrust that duty to him, as it would put a powerful club in his bands without giving any hold on him as an accomplice. He does, however, study railroad methods of meeting the conditions which have faced them since the passage of the Interstate Commerce Act, and If, in doing so, he secures profit for his employer through the application of rates which were not intended to be applied to his traffic, but were designed for special traffic, he has full warrant of the law for so doing, and is amply justified. He knows how to classify goods to secure the lowest rates; he knows when it is necessary to route shipments in order to protect the lowest rates; he understands the method of railroads in handling claims and in consequence is able to collect more claims than the average shipper. He knows when the classification of a product works an injustice to the ship- per and to whom to make an appeal and how to make that appeal to secure the desired result; he understands the combinations to produce lower freight rates, and he knows when it is possible to secure lower rates or special concession on large shipments and how to proceed for the purpose of securing such concessions. In short, a traffic manager possesses a knowledge which produces a profit to his employer over and above what is spent upon his salary. If this were not true the demand for traffic men would not be increasing out of all proportion to the sup- ply, and the keenest business men in the country would not be paying salaries ranging from $2,000 to $50,000 per year to men who are equipped with this knowledge. It is the purpose of our course to portray the conditions that make the employment of traffic managers imperative for those concerns which would win in the race for business, which wish to lessen the cost of pro- duction and to increase the force of their selling power. TRAFFIC MAN DEMANDED BY BUSINESS CONDITIONS. The traffic manager for private shippers is a twofold creation; a re- sult of the modem demand for economy in the cost of production and selling and a creation made necessary by the conditions which have arisen since the establishment of the Interstate Commerce Act. The title of 26 ELVnsr S. KETCHUM traffic manager has been adopted by shippers for the men wbo have charge of freight departments of their business, and in this they have followed the lead of railroads which, since the Interstate Commerce Act has been passed, have designated by this title the men who study to fig- ure the cost for canning freight and to issue the prices at which the railroads carry the various classes of cormnodities and merchandise which are offered them by the shipping public. In purpose, the shipper's traffic manager and the traffic manager of the railroads are engaged in the same work, namely, that of producing profit for their employers. Years ago, when the Interstate Commerce Act first became a law, there were very few men in private service called traffic managers. At that time their chief function was to "shop" for lower rates, working competing railroads against each other to the end that they might secure for the carrying of their freight the lowest possible charge. Today a traffic manager has nothing to do with the question of rebates, and se- cures special rates only in a legal way, a way that is open to every ship- per if he understands the ropes and knows how to go about it. But the position of the traffic manager has grown important owing to the com- plex conditions which have arisen in the rate situation since the passage of the Interstate Commerce law. Notwithstanding the declaration that there shaU be no special preferential rates and no rebates, it is neverthe- less true that the railroads are compelled by the demands of various shipping interests to differentiate between those shippers which produce large tonnage and those of minor importance. In other cases the neces- sities of the railroad itself for the development of traffic compel the issuance of what are practically special rates for the purpose of building up industries along the lines of their road. Knowing this to be a fact, the traffic manager studies the situation that confronts him with relation to the demands of the business interests which he represents, and takes advantage of the situation thus created for the production of lower rates than would otherwise be applied to his traffic. EVERY CONCERN MUST HAVE TRAFFIC MAN. Today every concern that is progressive must have some one that is competent to pass upon the railroad rates, for the reason that the freight charges affect the original cost of manufactured goods, and the price at which manufacturers and merchants can deliver their wares to a large degree determines the making of sales and the extension of the territorial limits within which they may legitimately sell goods. It is strange that this has not been apparent to the great body of shippers when you consider that the freight expense amounts to 10 per cent of the cost of all the manufactured goods in the United States; that it was equal to one-half of all the money spent on labor connected SAVING FREIGHT MONEY 27 with the manufacture of articles for sale and that It is more than the entire general expense. Do you think for a moment that a,ny merchant would pay so little attention to any other factor affecting the cost of his product which played so important a part, not only in fixing the original cost, but also in so large a degree affects his power to market his product? It is because this has been realized by a few of the more progressive merchants that they have employed traffic experts to study this freight question, and as other concerns come into competition with them and realize that there must be some material advantage gained through such employment, the demand for knowledge upon this subject Increases. TRAFFIC MAN MEETS COMPETITION. What the trafSc manager does is this: His first duty being to pro- duce a profit for his employer over and above the expense which is at- tached to his position, he makes an intimate study of the character of the goods which are shipped, he carefully studies the classification of these articles, not only as they are described in the general classifications, but also as they are described in commodity tariffs, these being special rates affecting the cost for transporting the product in which he is interested. In consultation with the sales manager of the concern he studies to see if it be not jrossible to extend the territorial limits within which goods are sold, and to this end it becomes necessary for him to understand what competition is encountered by the firm in selling goods. In cases where large sales are likely to be the result he freqtuently finds that the profits resulting from such sales will admit of the absorption of differences be- tween the freight rates which his concern Is paying and that of some competitor located at a nearer jobbing or shipping center. In other cases where it is not possible to do this and the traffic is desirable from a railroad standpoint he makes an endeavor to secure from the railroads special commodity rates to enable his concern to sell in territory which is not legitimately their own. In this way he increases the selling power of the merchant and produces a profit that would not otherwise exist. He studies the rulings of various railroads and in figuring rates, finds combinations which frequently lessen the cost of transportation. It is the rule of the traffic manager (strange as it may seem), to accept no tariff as an authority unless he finds, after careful examination, that it produces the lowest rate. This is true both on incoming and outgoing freight. It is his duty to furnish instructions to the shipping clerk, both as to the way goods should be described and packed and in special cases as to how they should be routed. TRAFFIC MAN SPEEDS UP SHIPMENTS. One of the important items in selling goods at the present time is the quick delivery of shipments, and he makes it his business to become fa-. 28 ELVIN S. KETCHUM miliar with the time taken by railroads to deliver shipments from his factory to the various territories to which goods are consigned. If his shipments are imreasonahly delayed from one cause or another, he de- vises a tracing system which will tend to produce quicker delivery. This may seem unimportant, hut with the large concerns it is a very important item indeed. Some concerns, through lack of system of this character, lose every year in the various goods which are sold for charges sums ranging from $5,000 upwards. The traffic manager's peculiar knowledge of the methods which are «mployed by railroads in handling freight enables him to handle loss and damage claims expeditiously, and in order that he may collect the maxi- mum amount of claims of this character with the minimum of expendi- ture he must have this knowledge, and in addition must understand the laws which affect common carriers, fixing their liability for loss and damage in the transportation of freight. The same knowledge of the methods in vogue among railroads in handling overcharges is largely pro- ductive of profit. He knows just what is necessary to enforce the col- lection of a claim for an overcharge, he knows what papers to send, to whom to send them and is wise enough (if he be wise at all), to make a reputation for sending no claims which have not a just and reasonable basis for presentation. In other words, a traffic manager is really a legal traffic specialist looking after the interests which he represents, to see that their business is conducted in the most economical and satisfactory manner. All this service of the traffic manager is made possible by the Inter- state Commerce Act. It is made necessary by the attitude of the rail- roads toward that act and the system which they have put in force to meet the various cbnditions which confront them in the handling of traffic. CHAPTEE IV. Why Freight Tariffs are Intricate. The conditions which produce lower freight rates are those which existed before the Interstate Commerce Act was passed, conditions which the passage of this Act did not alter or change in any particular, and conditions which confront practically every railroad in the country at the present time. Plainly stated, these conditions are the demands of special interests and communities for lower rates for their shipments than are applied to the shipments of the public at large. It has, from time immemorial, been accepted as an economic law of trade that the man who purchased a large quantity was entitled to a lower price than the man who purchased a smaller quantity. This senti- ment is one which is deep-rooted in the minds of the business public, and it is necessary for railroads in making rates for the transportation of freight to recognize this sentiment, the statute regulating insterstate commerce to the contrary notwithstanding. ORIGIN OF LOWER RATES. It is, in the manner which has been adopted by the railroads to meet this demand of the shipping public, and at the same time, conform to the letter of the law, that the average shipper finds opportunity to secure for himself lower freight rates than would otherwise be applied to his traffic. The methods and practices of railroads that had been in effect time out of mind were completely overturned by the act regulating commerce. According to the publication and posting clause of the new act, it was made illegal to offer any rate which was not previously published and posted for the benefit of all shippers. Now, if you have had any railroad experience at all you will know what an immense burden this placed upon the railroads. Prior to the ad- vent of the Interstate Commerce Act very few tariffs were published. Each line published local tariffs showing rates between stations on their lines and through rates to a few of the larger jobbing centers without regard to how these through rates affected intermediate points where rates were arbitrarily made with no reference to their proportionate mileage of the through haul. Special rates were issued by circular ana not published at all, and contracts for drawbacks and rebates were made without the knowledge of anyone but the parties interested and the clerks in charge of the rebate claim department. 30 ELVIN S. KETCHUM EFFECT OF LONG AND SHOET HAUL CLAUSE. It was a hard matter for railroads to adjust themselves to the new conditions imposed. Bates had been made upon the basis of "what the traffic would bear." Into this entered as factors the question of com- petition and the building up of industries along the line of the railroad which would ultimately produce increased traffic, and as in every other business enterprise, the volume was the determining factor in making the rate. There was, prior to the enactment of the law regulating interstate commerce, no long and short haul clause acting as a deterrent factor in the making of rates. The shipping public were dealt with in the same way and upon the same general principles that governed in other lines of business enterprise. The rule was, get the business. Get it at a profit if you can, but get it. If it appeared, for example, that a certain lumber shipper could make a contract involving the sale of a great many cars of lumber at a cer- tain point providing he could sell at a certain price, he and the railroad representatives on whose line he was situated would get together and arrange for a rate that would enable the lumber dealer to get the busi- ness and the railroad to get a haul at a profit, even if it were small. Each road had certain prorating arrangements with their connections whereby they were at liberty to make what rates they felt necessary to secure certain traffic, provided, of course, that the earnings did not fall below a certain minimum for each line. In cases of competitive business and at times when traffic was light, even better terms than these were made. CAUSE OF "CUTTING" RATE. Such a rate was called a special rate, issued in the interest of a cer- tain firm on a definite article traveling between defined territories. If, in the making of such a special rate, it was found that it was lower than a special offered to some other concern shipping the same commodity from the same point, there might be trouble if it came to the knowledge of the other party, so the shipments were billed at the same special as already in effect, and a rebate or drawback was given to take care of the difference. This was the situation in dealing with large traffic in carload lots. The same condition pertained to large shippers of less than car lots, but it had to be dealt with in a different manner in many cases. Suppose in the same town there were two large concerns, the one larger than the other, receiving or shipping large quantities of merchan- dise freight, as it is called, or less than car lots. To issue special rates to cover the various articles they received from various points or to do the same for shipments to all points of the compass was an impracti- SAVING FREIGHT MONEY 31 cability. In these cases, to secure the business and insure getting all of it, one line would offer a rebate of a certain percentage on all freight bills paid when coming from territory where they had prorating arrange- ments, and the amount of rebate or drawback would be regulated by the volume of traiiic and the amount of freight paid. THE PEINCIPI.E OF QUANTITY PRICES. Now stop for a moment and consider the facts of this situation. There was nothing criminal about this. It was a common law of business as applied to every other commercial enterprise, and there was nothing peculiar in the fact that the railroads of the country recognized that the buyer of a large quantity of transportation was entitled to a lower rate than the buyer of a small quantity. It is an economic fact that large quantities can be handled at a lower price proportionately than smaller quantities, and this was the rule which regulated the making of special concessions of every character before the establishment of the Interstate Commerce Act. Now all this may be familiar to you. Whether it is or is not, you want to stop right here and think over this situation very earnestly, for here is the basis of the whole study of traific. Here we come up with the things which makes study of the traffic situation profitable. Here is where the transportation interests of the country were up against it hard. Here is where, for a time at least, they fell down, and here is v. here, in studying how they finally readjusted themselves to the situation, you get the knowledge of how to save money on freight ship- ments. MUST PRODUCE A PROFIT. The one purpose of a railroad is the production of profit. That is where it is like everything else in the way of business enterprise. But in the carrying out of its purposes its functions are different from those of other business ventures. It meets with and has to deal with more perplexing problems than others. Part of these arise from its desire to increase its traffic. Some of them arise from competition and some from the fact that it is what is termed in law a common carrier, i. e., it is obliged to receive freight for shipment and cannot decline it at its option. In its desire to create traffic, railroads and other transportation inter- ests have done more for the upbuilding of the country than per'iaps all other factors combined. They stimulate the building of industries along their lines to the end that it may thereby increase traffic. In making rates for these and other large interests which are or may be located along its right of way, or in the towns on the line of its railroad, it lias to consider the fact that if it can, through the establishment of low rates, enable the shippers along its line to increase their business it 32 ELVIN S. KETCHUM creates a two-fold benefit; it builds up the business of its patrons and at the same time it prevents the business and the traffic from going else- where, thus increasing the earnings of the railroad. This is not purely a selfish business proposition, as it sometimes has to be done with no profit for the time being, or at a very slight profit. The great aim of every railroad is to have full train loads both going and coming, and in the newer sections of the country and because of conditions which we cannot enter into here, this is a problem, and a prob- lem which is productive of competition and the cutting of rates. It will explain why some classes of products are carried at very low and some- times ruinous rates. A PUBLIC SERVICE CORPORATION. As a common carrier it cannot carry on its plans with the same free- dom of movement that is possible to other forms of business enterprise, ajid this is because it is a quasi-public corporation, gaining its charter from the various states and often various and sundry other rights which become valuable, on the theory that a railroad is put into commission to serve the people and build up the business interests of the country. It is as a common carrier that the Interstate Commerce Act deals with the railroads, and in compelling the placing of all shippers on the same plane for the transportation of all their freight the law has placed an obstacle in the way of the railroads, which, with all their ctmning, they cannot wholly get around. It is in the publication of tariffs for the bene- fit of the shipping public that they have struck the hardest snag, and it is because they cannot prevent conflict of rates in the issuance of tariffs,, that the study of traffic becomes one of profit and value to the average shipper. These details show you that the conditions which existed before the enactment of the Interstate Commerce Act still exist, and that these conditions are such that the railroads must meet them by the issuance of special rates only that now the methods of their issuance is changed to conform to the law. Naturally, if the railroads were at such pains to keep them from the eyes of the general public when they were not by law compelled to offer one shipper the same rate as the other, they wiU be at no less pains in their issuance at this time when it is possible for anyone to take advan- tage of these special concessions to special conditions, and secure such benefits for themselves as are intended to apply to the shipments of others. How can "Net Rates" be granted and not conflict with the law which prohibits the making of such discriminations? Two things maie it possible. First, the method of issuing and filing tariffs; and, second, the natural and artificial complexities of the tariff SAVING FREIGHT MONEY 33 situation which make the tariffs unintelligible to the general shipping puhlic. Out of these conditions and the manner in which they are met by the traffic managers of railroads, has arisen a system of "list" and "net" prices for transporting freight, a system which requires study, and intelligent study, to acquire the lowest rate, and which places every firm which cannot do this, or employs no one competent to perform the service for them, at a material disadvantage, as the natural result Is higher charge for the carrying of freight. WHY SHIPPEKS PAY HEGHEE. BATE. Today the great mass of shippers pay the "Ust" or higher price. Why do they do it? Because they are supplied with tariffs which are easily comprehensible, require little or no study, but contain the highest rates. Other tariffs there are, and those shippers know it, but not com- prehending their significance and not knowing how to decipher their complexities, they faU back upon the class rates which can be easily figured. That's what the railroads wish them to do. If all shippers were upon a real equality in the matter of rates, the issuance of tariffs would be a comparatively simple matter. But as the purpose is to meet conditions which require special rates for specific traffic — rates not designed to be used for general traffic — the rate situation has become so complex a matter as to require a certain degree of expertness to make it intelligible. That it is designedly so we will not say, but that it is so, we definitely declare, and that in the unravelling of this complex tariff situation will be found a "net" price is beyond question, and will be sho\rn. CAUSE OF SOME OVEB,CHAKGES. Claims for overcharges made by shippers upon the raUroads in part arise from errors of agents and others in charging the rates under a general tariff and classification, instead of applying the commodity rate at the time in effect. It has been observed in many instances of this kind that neither the shipper nor the agent was informed of the exist- ence of the commodity tariff. In other cases the shipper has accepted as correct the class rate as furnished by the agent, who withheld the com- modity rate for the exclusive use of certain favored patrons. From these it will be seen that the irregularities in tariffs, irregu- larities admitting of easy remedy, result in confusion and vexation to the shipper. Is it not reasonable to suppose this is done with an object in view, and that object to discourage the shipper from too close a study of the tariff situation? Here it is definitely stated that certain commodity tariffs are with- held from the general public for the use of certain favored patrons. Does this not comprise a "net" price on freight? 34 KLVIN S. KETCHUM Another part of the scheme to create a "net" price ascertainable by those who study the tarifi situation, is the practice of establishing differentials that may be applied. About this the Commission's report says: "Another Instance where schedules do not plainly state the points between which rates apply is observed in tariifs which name rates from certain points and provide rates from other points by notations, as fol- lows: 'Usual differentials wiU apply;' 'Usual differentials to seaboard cities'; 'Rates from Peoria, 111., will be 5 cents lower than Chicago.' Tariffs from western grain shipping points name rates to the Mississippi Eiver and provide that 'Rates to Chicago will be 5 cents higher.' A CASE IN QUESTION. "An illustration of the use of the phrase 'Usual differentials will apply,' is found upon tariffs intended to name rates from St. Louis, Cairo, Columbus, Ky., etc., to southern points. Figures are given from St. Iiouis only; no figures are stated from Cairo or Columbus, and rates from these points may only be obtained after the deduction of certain differentials, which are not given on the same sheet, nor is any refer- ence made to the particular sheets on which they may be found. The title of the tariff is misleading so far as Cairo and Columbus are con- cerned, as the actual rates are not to be found upon the tariff from either of these points. It was noticed that ample room was afforded by these tariffs to include the figures from Cairo and Columbus. Many illustrations of this kind could be given." The application of differentials, arbitraries and territorial boundaries, make it practicable to find two rates in effect to many points. We will illustrate this: ANOTHER ILLUSTRATION. "A frequent irregularity is observed where changes are made in cer- tain tariffs which affect other rates, which latter changes are not shown by any separate publication. This is brought about as follows: A tariff is issued showing rates to aU points on a road. Such rates are made pro- gressive, according to mileage, the rate to the last or terminal point being higher than to the preceding intermediate points. From the pres- sure of competition or other causes it appears necessary, from the stand- point of the carrier, to reduce the rate to the more distant or terminal point. Accordingly, a new tariff is published, covering that point only and abrogating so much of the general tariff, which formerly gave the rates to that point, as may conflict with the new tariff. No announce- ment is made of a change in rates to the intermediate points, but upon the new tariff to the terminal point a notation appears to the effect that 'no higher rate shall be charged to any intermediate point,* etc., and this note, it has been claimed would reduce rates to any intermediate points SAVDTG FRE IGHT MONEY 35 that were higher than the new rate to the terminal point, and thus pro- hibit a higher charge for a shorter than for a longer distance. It wUl be observed that no change has been authorized in the general tariff showing the rates to the intermediate points; a new sheet has been issued for the terminal point only. The tariff first published, so far as the rates to the intermediate points are concerned, remains unchanged, but it is in- tended that agents at forwarding stations shall be governed by the gen- eral rule of the fourth section of the act as shown upon the new or later tariff to the terminal point, and modify the rates to the intermediate points when necessary. This lower rate to the terminal point is fre- quently termed a special or an emergency rate, intended to be tem- porary only and to be shortly withdrawn after the movement of certain trafac when the former or higher rate will be restored. During the life of these separate tariffs, rates to the intermediate points are at all times subject to the tariff to the terminal point, as this latter sheet prescribes the maximum charge to any intermediate point. Under these conditions the correct rate to intermediate points may only be obtained after care- ful comparison of the two separate tariffs. The difficulties the ordinary shipper would encounter are at once seen to be numerous; discrimination and overcharge may easily follow without coming to his knowledge, espe- cially if he relies on the only tariff to be found which gives definitely the rates to the intermediate points. Changes to the terminal point are announced hurriedly, and it does not appear improbable that many agents who are authorized to name rates to the intermediate points are at first without instruction as to the terminal rate published in the new tariff; where this occurs violations of the long and short haul clause fourth section are no doubt numerous. Irregularities in this respect may follow with many roads where the duties of the ofB.cers are divided so that one agent will only be interested in through traffic, with authority to make rates, while the local traffic is in charge of others. The conditions sur- rounding the traffic covered by the through rates would not necessarily be known to the officers in charge of local traffic; changes made in the through rates may therefore not come to their knowledge. It thus may happen that reductions are made to terminal points without correspond- ing changes to the intermediate points." CAUSE OF "NET" PKIOES. The fact has been established that a "net" price exists, that most shippers pay the "list" price, due to the misleading manner of issuing rates, and that this apparent confiict of rates is due to the necessity upon the part of carriers to meet the needs or demands of some ship- pers for lower rates than others. It is apparent, also, that any shipper is entitled to these "net" prices if he can find them. Let us see how he can find them. CHAPTER V. Interpreting the Rate Schedules. The thing which makes the finding of "net" prices possible is the publication clause of the Interstate Commerce Act. This is Section 6, and should he read carefully by every shipper: It specifies that every common carrier subject to the provisions of this Act Shall print and keep open to public inspection schedules show- ing all the rates, fares, and charges for transportation between different points on its own route and between points on its own route and points on the route of any other carrier by railroad, by pipe line, or by water when a through route and joint rate have been established. If no joint rate over the through route has been established, the several carriers in such through route shall file, print, and keep open to public inspec- tion, as aforesaid, the separately established rates, fares and charges applied to the through transportation. The schedules printed as afore- said by any such common carrier shall plainly state the places between which property and passengers will be carried, and shall contain the classification of freight in force, and shall also state separately aU terminal charges, storage charges, icing charges, and all other charges which the Commission may require, all privileges or facilities granted or allowed and any rules or regulations which in any wise change, affect, or determine any part or the aggregate of such aforesaid rates, fares, and charges, or the value of the service rendered to the passenger, ship- per, or consignee. Such schedules shall be plainly printed in large trpe, and copies for th^e use of the public shall be kept posted in two public and conspicuous places in every depot, station, or oifice of such carrier where passengers or freight, respectively, are received for transporta- tion, in such form that they shall be accessible to the public and can be conveniently inspected. The provisions of this section shall apply to all traflc, transportation, and facilities defined in this Act. THIRTY DATS' NOTICE. No change shall be made in the rates, fares, and charges or joint rates, fares, and charges which have been filed and published by any common carrier in compliance with the requirements of this section, except after thirty days' notice to the Commission and to the public published as aforesaid, which shall plainly state the changes proposed to be made in the schedule then in force and the time when the changed rates, fares, or charges will go into effect; and the proposed changes will be shown by printing new schedules, or shall be plainly indicated upon the schedules in force at the time and kept open to SAVING FREIGHT MONEY 37 public inspection: Provided, That the Commission may, in its discretion and for good cause shown, allow changes upon less than the notice herein specified, or modify the requirements of this section in respect to pub- lishing, posting, and filing of tariffs, either in particular instances or by a general order applicable to special or peculiar circumstances or conditions. JOINT TAEIFF. The names of the several carriers which are parties to any joint tarili shall be specified therein, and each of the parties thereto, other than the one filing the same, shall file with the Commission such evidence of concurrence therein or acceptance thereof as may be required or approved by the Commission, and where such evidence of concurrence or acceptance is filed it shall not be necessary for the carriers filing the same to also file copies of the tariffs in which they are named as parties. Every common carrier subject to this Act shall also file with said Commission copies of all contracts, agreements, or arrangements with other common carriers in relation to any traffic affected by the provi- sions of this Act to which it may be a party. T'ae Commission may detemiine and prescribe the form in which the schedules required by this section to be kept open to public inspection shall be prepared and arranged and may change the form from time to tim.e as shall be found expedient. THE IMPOETANT CLAUSE. The clauses to which we wish to direct your attention appear above. In substance they say that all rates shall be published for the benefit of the public, that no greater or less charge shall be made by any device and that the Commission may determine the form of publication. We have called this an unappreciated clause. Perhaps you will ask why. Because it is the one vital feature of the whole a<:t; the founda- tion stone upon which the whole structure is built. Other features there are, dealing with rebates, the long and short haul clause, etc., every one of which has been so emasculated by decisions of the courts and the actions of railroads as to entirely nullify the original purpose of the Act. This one section remains untouched, and why? Because, in the first place, the shippers do not realize its significance to them; and, second, because the railroads do not want it changed. It suits their purpose as it stands, and if attention were directed to it and any changes made, such alterations would be more than likely to be more objectionable to the carriers than the present clause. This clause has been unappreciated by the shipper for the reason that he does not know or realize what tariffs are published and does not comprehend to what extent they might affect the rates on his ship- -n.ents. He receives a few tariffs showing the rates easily understood 38 ELVIN S. KETCHUM and does not see that in the vast multitude of other taitSs issued there must be a device which operates to his injury if he does not understand It and which is a source of profit if he does. It is this lack of thought on the part of the shippers — ^the great mass of them — ^that has made possible the complicated and beautiful system of the carriers which makes it possible for them with an Interstate Commerce law to do, not only the things they did before it was enacted, but many things they wanted to do and could not. NTJMBEB. or SPECIAI. BATES. Today there are more special rates in the shape of commodity rates than there ever was thought of before the Interstate Commerce Act wa« passed. The class rates have not changed materially for several years, yet there were filed with the Commission last year over three million tariffs and supplements. They were not class rate changes. What were they? Special commodity rates, special rulings, etc., every one of wliich tends to reduce the rates applied to the shipments of the general public. The newspapers have been fuU of the rebate ciuestion, special car lines, etc., which affect only a small portion of the shipping public, who, to enforce the law, must first secure evidence by secret means of the violation of the law and who, when this has been done, cannot enforce their claims for justice without a lawsuit. But nothing has been said about the great mass of the shippers who are bamboozled into thinking that they are securing the proper rates, and who, to secure lower rates, have only to wake up, study the situation and secure the tariffs which ciuote lower combinations. They can enforce their claims without a lawsuit by simply furnishing as authority the tariffs which produce the rates. UP TO THE SHIPPEB. This is easy to say and quite as easy to do, but the shipper must wake up. Do not expect the railroads to thrust these rates upon you. They win not, — it tends to reduce earnings. Neither expect to find them with- out a search, an intelligent search. In a preceding chapter it was shown from reports of the Commission that rates were complex and not clear where it was easy to make them clear, that rates between competing terminal points were lowered and intermediate points not aware of it, that sometimes special Commodity rates were withheld from the general public's use because they were designed for certain favored patrons. It was also shown that a system of differentials, arbitraries, rulings and special references had crept into tariffs and the tendency of all these things has been to make it possible for a few of the shippers to secure lower rates than others, and the key to this situation lies in the fact that the firms which secure the benefits. SAVING FREIGHT MONHY 39 of this system are those which employ traffic managers, and these gen- erally come from railroad service. In latter chapters your attention will he directed to how this is done with rates, hut here we want to emphasize the necessity for appreciating Section 6 of the Act. LOOKING FOE A " SPECIAL." It is the one useful thing to you. If you have reason to helieve that either before the Act was passed or since, any competitor secured a lower rate than would be applied to your freight, don't jump at the conclusion that he secured a rebate, but request the railroads from his town for tariffs affecting the Commodity you are both shipping; have them place your name upon the list for subsequent issues and correc- tions and you will frequently find rates which will lessen your cost for transportation. The first thing to be done is to figure out the points where rates on your product are likely to be made lower than would be granted you, ascertain what places intermediate between you and your various cus- tomers have two or more competing roads, then get a supply of tariffs from all of these places as well as from your own territory. Then sit down and study the thing out iu acordance with suggestions in suc- ceeding chapters. Remember, the railroads are not compelled to furnish you with copies of tariffs. It is a mere gratuity on their part arising from their plan of furnishing tariffs containing class rates which lead the general public to believe they are securing all that is necessary. They will scarcely refuse your request to be put upon the mailing list, especially if it comes endorsed by your local agent. If, however, they do refuse, you may justly suspicion there's a reason back of it. LOOK OUT FOR COMBINATIONS. Understand that tariffs from your town are insufficient even though they show rates to many points you ship to. There may be combina- tions from other and intermediate points which produce lower rates. This is particularly true to the south, southwest, northwest and Pacific coast territory. We must again call your attention to this point: The system of filing tariffs and posting them is not satisfactory publicity. Those filed with the Interstate Commerce Commission are buried, those posted at St. Louis, for example, may affect your rates from Chicago as shown in the preceding chapters, and these at Chicago may and probably will affect any traffic passing through Chicago from any other point. It not being obligatory upon the carriers to furnish these and they, being posted where you could not have personal access to them, it 40 ELVIN S. KETCHUM remains for you to search for them and secure those that affect your shipments, if you wish the benefit of lower rates. BATE STUDY IMPERATIVE. In dealing with a subject of this character, affecting widely dif- ferent interests and localities situated all over this broad land, it is manifestly impossible to fix any set rules that will apply to the in- dividual characteristics of particular traf&c. In conseciuence, we can only give the general rules that will govern, and suggest methods that will direct the thought of our readers into new channels. We have shown to you that the whole rate situation is covered over as by a blanket, with the general class rates and the rates on general commodities. We have proven that this really constitutes a "list" price for carrying freight and that there is possible, through study, the securing of a lower or "net" price. We have attempted to show by illustrations and the citations of reports of the Interstate Com- merce Commission that this lower price for carrying freight is due to certain conditions which compel the issuance of lower rates for special cases, rates that are not demanded by, nor intended to be applied to, general traffic. This apparently conflicting condition is responsible for the complex- ities of the rate situation, and it makes a study of rates imperative, and at the same time profitable. With the knowledge that there is profit in the study of rates, the great problem is how to apply this general statement to specific shipments. To outline how to figure lower rates in a general way, requires a knowledge of the factor;^ that enter into the rate question. The first is Classification. Let us state where classifications govern with some illustrations as to exceptions to the general rule. The OfScial Classification applies generally in the territory north of the Ohio and Potomac Rivers and east of Lake Michigan, Chicago, and the Mississippi River to the Atlantic seaboard, except locally be- tween points in the State of Illinois and between certain points in New England located on the Boston and Maine Railroad. It applies from points in Wisconsin and from St. Paul, Duluth, etc., when destined to or coming from points east of the Illinois-Indiana state line. This classifica- tion also applies to local traffic between points on the Chesapeake and Ohio and Norfolk and Western Railways, and between certain points on these lines and points in what is known as eastern seaboard territory located north of the Potomac River. Through rates from points in eastern sea- board territory to Nashville and Memphis, Tenn., and New Orleans, La., are also subject to this classification. SAVING FREIGHT MONEY 41 SOUTHERN CLASSIFICATION. The Southern Classification applies generally in the territory south of the Ohio and Potomac Rivers and east of the Mississippi, except locally between points in the States of North Carolina, Georgia, and Florida, and between points on the Chesapeake and Ohio and Norfolk and Western Railways. The through class rates from points in eastern seaboard territory to points in southern territory are also, with a few exceptions, governed by this classification. The Western Classifications governs in the territory west of Lake Michigan and the Illinois-Indiana state line through Cairo and i^ all the territory west of the Mississippi River except locally between points in Illinois and Iowa. The class rates applying between Pacific Coast points and points in the territory Missouri River to Atlantic seaboard, inclusive are also subject to this classification. Besides the three general classifications referred to there are classi- fications published by the Railroad Commissions of tie States of Illi- nois, Iowa, Georgia, North Carolina, and Florida, applying locaUy on shipments moving between points in those States. The Illinois classifi- cation applies from St. Louis to all points in Illinois, and various points in Wisconsin south of the Milwaukee district. Between points in the State of Texas the Western Classification governs in connection with an exception sheet published by the Railroad Commission of that State. There is also a classification known as the New England Freight Classification, which governs the class rates between points on the Eas- tern, V/estern, and Northern divisions of the Boston and Maine Railroad. EXCEPTIONS TO CLASSIFICATIONS. There are exceptions to classifications as well as to rates, and these will generally be found in the tariffs of the various railroads with which you are dealing. It is essential that these be studied and mas- tered so far as they aifect the particular shipments with which you are engaged. Whenever exceptions exist they take precedence over classification, and generally inure to the benefit of the shipper. An illustration or two will suffice to show how these exceptions affect the rate situation. On traffic originating south and east of Chicago, destined to the Upper Peninsula of Michigan, the Official Classification governs, when passing through the Lower Peninsula. The Western is effective, when passing through the Lower Peninsula. The Western or Official, which- ever makes lowest rates, is effective to many points on the Peninsula ■when shipment passed through Wisconsin. These rates are governed by the Southern Classification. On traffic originating at Chicago, Milwaukee and common points in Wisconsint, 42 ELVTU S. KETCHUM also Illinois and points subject to Indianapolis group in Indiana, rates are lyased on a proportional to the Ohio Bdver, considerably lower than the regular rates, and apply to territory known as green line territory, which lies east of the Mississippi Bi7er and south of an imaginary line below the states of Kentucky and the Virginias. We have pointed out in the previous chapter that it is the frequent mistake of shippers not to properly describe and pack their goods, and we go into the study a little more at length at this time, and give you some illustrations which will add force to this point upon which we desire to lay special emphasis. To know how to pack goods and describe them so as to have them billed out properly is a matter of much importance and one that is overlooked by a great many shippers. WHY BHiL CI^BKKS make MISTATCP.S. The average shipper forgets that the bill clerk has nothing before him but the description of the goods on the shipping ticket to guide him as to what may be the proper classification and rate to apply thereto, and many who are careful to pack goods properly do not de- scribe them in their shipping bills properly. The most common fault, however, is the failure to have the proper instructions given to the packers of goods, so that they may go through, not only with least liability to damage, but acquire the lowest possible rate. For example, in conversation with the head packer of a very large house in Chicago a short time ago, we learned that in making ship- ments of pictures and frames with glass, the glass was boxed separately and billed as a box of glass, very carefully marked, "glass, handle with care," to insure careful handling. Billed in this manner to most territory, the shipment of a box of glass so described would have applied to it the first-class rate, whereas, had it been described as a box of common window glass, the rate would have been fourth class, which would in the aggregate mean a large saving, as the business of this concern in this line alone amounts to a considerable item during the year. Many concerns which ship furniture, for example, bill it out as so many pieces of furniture, and, in consequence, the billing clerk at the railroad will apply to it the highest rate possible to any article of furniture, as he is not able to fathom the contents of each bundle and has no incentive to do so. Chairs are invariably billed as so many bundles of chairs without regard to kind and manner of packing. Wood seat, cane seat, upholstered, willow, set up or knocked down, legs off, tops nested, are all specifications which affect the clas- sification applied to chairs, and of course the classification on articles affected by class rates determines the rate. Because of the want of proper packing and, after, of proper description, many articles of fur- SAVING FBEIGHT MOKEY 43 niture acquire higher rates than those to which they are legitimately entitled. The rate on vehicles, such as carriages and buggies, is fixed accord- ing to the size of the crate in which they are packed. In some cases no dimensions are specified. In this case the shipment will have applied to it three times the first-class rate, whereas if the vehicle were properly knocked down, crated and the dimensions shown the rating wouI4 he more than cut in half. MANNER OF PACKING GOODS. It may be urged that no large shipper of this class of freight would be guilty of such a mistake, but the fact remains that he often is, if not with one part of his shipments, with another. Baby carriages, which are almost always knocked down to a cer- tain extent, will acquire the lowest rate only when knocked down to the fullest extent; wheels, springs and top taken off and tied in bundles Inside the carriage. It was only a short time ago that one of the largest concerns li; Chicago employed an expert to devise a system for properly handling all their traffic details, and on going over their shipments for a period of six months back it was found that they had lost in excess freight charges nearly $1,000 within the year because they were ignorant of the fact that their goods if boxed took only the first-class rate, but that when crated they took double first. It was easier and to a certain extent cheaper to crate the goods, so they crated them, and as the shipments went to a far western point, where the first-class rate was $2.05 per cwt., and twice that double first, they had lost precisely $2.05 on every hundred pounds which they shipped. CHAPTEE VI. Blunders Which Cost Millions of Dollars. MisclassiScation is one of the shipper's most expensive errors. Here's where the shipper is Mt, for while he makes only some of the mistakes that cause him to lose money or become overcharged, yet he usually makes the one great mistake of paying for something he can- not check as to cost. He leaves it to the other fellow to figure it for him. It is impossible, or rather impractical — for the railroads to prevent errors, and if, as the Commission says, they sometimes withhold in- formation for the benefit of special interests to the injury of others — if these things occur which produce overcharges— who is the loser? The shipper, of course, and if the shipper cannot decipher the tariffs, if he cannot help himself, v>hat must he do to protect himself against loss? There is but one practical answer. These errors are productive of profit to the railroad. It is not to their interest to stop them. We cannot hope that they will. These errors produce loss to the shipper. It is to his interest to stop them. He must, if he would make his the profit which now accrues to the carriers. To do this the shipper must master the freight rate problem, or hire some one to do it for him. KINDS OF MISTAKES. Mistakes are of two general kinds — those of classification and those t)f rates. The shipper m^es the former, the railroads the latter. The former are fewer in number, but costly when made. Mistakes in classification, packing and describing shipments are due to the fact that the shipping clerk is commonly supposed to have noth- ing to do with rates; an erroneous supposition as the rate is often dependent on the manner of packing and the description. Let us illustrate this. STTTDY THE COMMODITY DESCEIPTION. V/hen you have an article for classification do not proceed upon the theory that if your article be a spade that you must necessarily classify it as a spade. There may be a general classification on hardware which includes spades and makes a lower rate. S'.udy the classification and see if you cannot describe your goods so tlicy will acquire a lower rate. Take olives, for example. You will find olives classified. You will also find in some territories a commodity on canned fruits and vege- SAVING FREI GHT MONEY 45 tables. Now, olives are olives all right, and there might be a discus- sion as to whether they be fruit or vegetable, but it is certain they are one or the other, and consequently justly entitled to the lower rate. If the classification on canned fruits and vegetables has been ciualified by "not otherwise specified," then, of course, they are susceptible of only the "olive" rate, but so long as that classification remains in- definite it leaves the classification open to suspicion of having been designed to be elastic enough to meet the needs of some firm which wanted to ship olives as canned vegetables or fruits, and at the same time leave it up to the railroads to refuse the same classification to some smaller shipper to whom they could point to the specific rate for olives and say the other classification was not "meant" to apply. CAUSES OF DELAY IN CLAIM DEPARTMENTS. It is not unusual for a claim department to refuse to consider claims on the ground that a rate or classification was not "meant" to be construed in a certain way, but the carriers are not allowed to make rates with mental reservations as to what they may be applied to, nor yet to twist the English language to their way of thinking. Here is the point we want you to consider, and it has important bearing upon the question, both of classification and rates. The railroads confront a peculiar situation. The large shipper of merchandise claims that he, because of greater tonnage, is entitled to a lower charge than the small shipper, all law to the contrary not- withstanding, and as the question of the volume of traffic of any cer- tain character is a determining factor in both classification and rate making, there is logic in the argument. In consequence the railroads in issuing classification are bound to consider this claim, but if they are to confine its benefits to the large shipper they must classify the stuff in such a way that the average shipper would not naturally seek it. HOW TO FIND SOME "SPECIALS." If you have an article for shipment which is manufactured or han- dled in vastly larger quantities than you yourself manufacture or handle it, think what other description may be applied to it and look for some less definite but lower classification. In speaking of classification, we do not confine ourselves, of course, to the three general classifications, but include in its broadest sense Commodity rates of every character. To certain territories there is applicable, first the general classification, but this may be modified by a special commodity rate for part, or all of the haul. Don't take it that you should misdescribe freight. There is a pen- alty of a heavy fine upon the shipper for that. Study the classifications to secure every benefit you can. Tjes your brains! If you know or think tha.t any competitor before the Interstate 46 KLVHT s. ketchum Commerce Act was passed, secured by rebate or other plan a lower rate tlian you, be sure he is trying to get an advantage over you now. Maybe you will find that he gets it in the classification. Maybe in special commodity rates, but be sure, also, that if the railroads can give it to him under cover of the law in such manner that you will not be likely to know of it, they will be obliged to do so. And it is safe to assume also if the railroads cannot do it in compliance with the law, they won't do it at all; or, if they do, there will be no ad- vantage to you in it. THE EEBATING EVIL. Railroads don't encourage rebates any more than you would encour- age your customers to expect a present of your profits on their patron- age. When they give rebates, as has been admitted in a few cases, it has been forced upon them by conditions over which they have no control. The traflac manager would have small chance for his activities if rebating were a regular practice, or even a recognized "irregular" practice. It is the traific expert's business to seek out the hidden things for the advantage of his employer. Studying the classifications is one step in this work. AN IIJ.USTEATION. Before taking up the subject of rates, we want to illustrate the need of a more elastic shipping ticket than most concerns deem neces- sary. It is a fact that the Official, Western and Southern Classifica- tions frequently differ in the phraseology employed in describing the 6ame article. Sometimes, but not often, this makes a difference in the rates. Study the classifications so that your shipping ticket will describe the freight precisely as it is defined in the classifications, or as nearly so as possible. Then also study the Commodity rates to see if the special commodities to special territories require a different description of your goods. We can show you a facsimile of a claim which was declined, not on the ground that the amended description might not have been applicable, but because the billing was correct for the de- scription furnished. Here it is: BIU.es FKOK CHICA.QO TO I^OS AirOEI^IiS, CAIiIP. _ Keads. Date. Way BllL Car. SOarch 18. t. 3715 7798 Ad- Over- ., » AJ^cle. ^ Weight. Bate. Prelglit. vaneea. cliarg-e. 4 Bzs. Kefgrrs. Glass Frts 8,755 325 9 65.99 3 Cs. Drogrglats Btls 330 150 4.95 1 Cs. Gas Fixtures 175 330 3.85 1 Osk. Onuunents 390 300 8.70 1 OOTUiteT TTndr. 16 ft 316 320 9.00 1 Work Board Crtd 300 300 9.00 10 Bzs. UCarlile 3,450 190 46.55 53 Fkjs. Soda Ftns 3,335 300 397.05 $545.09 aAVDTQ FREIGHT MONEY 47 Shoald read: la RefgTB. Crtd 3,540 150 9128.10 6 BX. Wood FztTS 2,690 300 80.70 1 Countar Crtd 315 300 6.45 1 Wood 1)0ard Ctd 300 300 9.00 11 Bxs. lUxTors, 4x5, xel. to 14c sq. ft.. 1,960 360 50.96 1 Bx. lUtxorB, 6x8, rel. to 25c sq. ft.. 500 400 20.00 SO Bxs. MarMe, rel. 40c on. ft 4,395 190 83.51 4 Bza. Hardware, Iletal Plates 210 250 5.46 1 Bx. Oas Fixtures 175 220 3.85 1 Brl. Glassware 250 150 3.75 2 Bxs. Bottles, pkd. excelsior 300 125 3.75 2 Bxs. lUrrors, 2x5, rel. 15c sq.. ft 200 200 4.00 $399.53 Savin? $145.56 Remember the bill clerk in a railroad does merely mechanical work as a rule. He charges according to the description given — ^not the description which might be applied or ought to have been given. It is not his business, nor is it the railroad's to correct your errors, and you need not expect it, the more especially when it loses earnings to do so. ELASTIC SHIPPING TICKET. Make it your business to see that your shipping ticket is elastic enough to meet all requirements. Furnish the shipping clerk with instructions that cover the difierences to diiferent sections of the country and see that he observes them. Don't let him crate goods to points where rates are high and where boxing wiU cut the rates in two. One shipper lost $500 in one month that way. Don't allow advertising matter accompanying your goods to be packed separately, when by packing in with the goods you accLUire a lower rate. One concern did that for several years and lost many thousands of dollars. Study the peculiarities of your traffic to get what advantages you may. In presenting matters of classification for adjustment remember that the basis of classification is the value, liability to damage, weight, bulk and the quantity of traf&c of a particular kind. Remember that if you want a change in classification particularly applicable to Pacific coast points, it is for the consideration of the Trans-Continental Freight Bureau, not for the Western Classification Committee. In making requests for classification changes, remember the ten- dency is upward and not downward, and that unless you can show that analogous articles compete with yours to your detriment owing to lower classification you are not likely to secure a reduction. Don't make admission which may result in increases instead of reductions as one manufacturer did some time ago. Lacking a definite carload classification he appealed for one, and as an argument, stated that he could load 8,000 more pounds to the car than the classification 48 ELVIN S. KETCHUM then applied compelled him to. He got the same rate as he had been paying, but the minimum carload weight was increased 8,000 pounds. Don't antagonize Committees by demanding that they see things from your standpoint. They are experts on classification, understanding it from the railroad point of view — that of producing a sufficient revenue . — and looking at it from a point of view which counts your grievances as only a small factor in the whole rate situation. Study the traffic situation as it afCects you; get what benefit you can from it; be politic in your methods. You will be the gainer. Many of the following freight accounts were passed on by some of the largest Traffic Departments in the country. Old freight bills contain thousands of dollars which belong to shippers just as truly as if the money were credited to their account in the bank. The claims below show how industries, by misrouting goods, misdescription of shipments, non-applica^ tion of commodity rates, failure to use application sheets, non-use of In- terstate Commerce Commission rulings, disregard of through rates, billing mixed shipments, and in a thousand and one other ways are losing millions of dollars annually. The following are a few claims selected at random which have been collected by the Shippers' Freight Service, Chicago and which show how shippers lose thousands of dollars: $134.78 collected. Shipments of mica from Johnson City, Tenn., to Chicago. Eailroad billing $1.76 per cwt. We found that by applying the Bristol combination, the correct charge should have been $0.97 per cwt., or a saving of $0.79 per cwt. $59.68 collected. Shipments of iron working machinery from North Greenfield, Wis., to Chicago. Railroads charged 25c per cwt. Correct rate 15c per cwt. Cause: Madison, Wis., to Chicago commodity rates apply as maxima from North Greenfield. $276.43 Collected. 137 cars of empty beer carriers from Shermerville, Dl. Cause of overcharge: Non-application of the long and short haul clause. $85.47 collected. Shipment consisted of two carloads of envelopes from St. Louis to Chicago. Kailroad billing was 281/2 per cwt. Cause: Non-application of commodity rate. $141.20 Collected. Cars of furniture from Neilsville, Wis., to Balti- more rate points. Weight 12,000 lbs. approximately. B-ailroad charged 20,000 lbs. minimum, 171/2 to Chicago, actual weight, 62c east of Chicago. Some shippers claim that because they ship only one commodity, maintained a traffic department and employ a traffic manager, it would be impossible to save them any freight money. After considering the proposition thoroughly and finding nothing to lose and everything to gain, SAVING FREIGHT MONEY 49 a shipper recently permitted the expert auditors of the Shippers' Freight Service, Chicago, to revise a part of his freight bills, with the follow- ing results: 5249 $ 1.40. . . .So. Pac. 5250 1.08 So. Pac. 5251 5.06 M. C. 5252 96 0. M. & St. P. 5253 1.25 0. M. & St. P. 5254 27.23 C. M. & St. P. 5255 74 C. M. & St. P. 5256 2.30 O. E. I. & P. 5257 1.72 P. M. 5258 49 Erie. 5259 3.75 Star Union. 5260 90. . . .Star Union. 5261 48 Star Union. 5262 1.95 A. T. & S. Fe. 5263 4.71 P. M. 5264 49.83 Nat'l Dispatch. 5265 7.76 Nat'l Dispatch. 5266 70.56 Nat'l Dispatch. 5267 18.00 Reading Desp. 5268 3.14 C. & N. W. 5269 1.37 I. C. ! 5270 24.99 M. St. P. & S. S. M. 5271 98 N. Y. C. & St. L. 5272 3.48 Western Trans. 5273 9.68 Nor. Pac. 5274 2.19 Nor Pac. 5275 3.76 Nor. Pac. 5276 7.60 N. Y. C. & H. R. 5277 12.07 N. Y. C. & H. E. 5278 84 N. Y. C. F. F. 6279 67.26 N. Y. O. F. F. L. 5280 1.13. . . .N. Y. C. F. F. L. 5281 3.60 N. Y. C. F. F. L. 5282 1.52 5283 90 Ii. S. & M. S. 5284 1.00 Penn. 5285 2.02 S. P. L. A. & S. L. 5286 73 S. P. L. A. & S. L. 5287 75 C. B. & Q. 5288 2.21 C. B. & Q. 5289 75 O. & A. 5290 71.13 Wabash. 5291 7.21. . . .C. I. & L. 5292 69.12 N. Y. C. & St. L. 5293 2.69 B. & O. 5294 62.92 B. & O. 5295 25.71 P. C. C. & St. L. Saving $590.92 50 KLVIN S. KETCHUM If industries knew where they were losing freight money, they would try to save it. Many are not conscious of the fact and think they are not losing money until expert auditors find a few hundred dol- lars. Here is a letter from a shipper who thought his freight accounts were correct: "We are pleased to acknowledge receipt of your valued favor with enclosed statement, advising that claims for $850.80 were prepared and filed for our account. We are sending you bills for the year 1904 and 19051, and trust that same will prove as remunerative as the first con- signment." The Interstate Commerce Law gives the trained traffic man power to secure the refund of transportation charges which are not in accordance with the published tariffs. The Interstate Commerce Commission is authorized under the law to order transportation companies to refund overcharges to industries, and the following instances taken from thou- sands of cases which come before the Commission illustrate how large amounts of money are constantly being recovered by those who know how to interpret the tariffs and the law: $3,995.78 refunded to the Hobson Brothers by Southern Pacific Company; cattle from Hereford, Ariz., to Ventura, Cal. $2,396.52 refunded to the Prairie Oil and Gas Company by Atchison, Topeka & Santa Fe Railway Company; water from Fort Madi- son, la., to Gorin, Mo. $2,746.63 refunded to the Northern Coal and Coke Company by Union Pacific Bailroad Company; coal from Erie and Canfield, Colo., to various points. $14,717.64 refimded to the Lackawanna Steel Company by Central Rail- road Company of New Jersey; shipments of spiegeleisen from Newark, N. J., and Hazard, Pa., to Buffalo, N. Y. It has been claimed that Chicago shippers lose approximately $10,000 a year on reciprocal switching. Tie switching district in Chicago is very indefinite, and there are few traffic men who know all its shipping points or the application of the rulings of the various railroads which apply to it. One of the many instances which illusi;rate how shippers lose money took place recently in the shipment of coal originating on an Eastern line and consigned to a point on the C. T. T. Ry Co. The ship- ment showed an overcharge of $2.25, because there were no routing in- structions given. This took place in this manner. The absorption sheets of the Eastern Une ^owed that if the shipment was made via the Belt Railway, $3 would be absorbed out of the through rates; but if delivery was effected by the Blue Island Railway $5.25 would be absorbed. Not long ago an overcharge of $2 a car was made because of an East- em line failing to comply with the rulings of the Interstate Commerce Commission through clerical error. A certain shipment which originated SAVING FREIGHT MONEY 51 on an Eastern line was consigned to a point on the 0. B. Sc Q. B. B. The Eastern line tariff showed an absorption of $i per car on cars consigned to the C. B. & Q. B. B. in Chicago switching district. The C. B. & Q. tariff showed that under a reciprocal arrangement a charge of $4 per car wonld be absorbed if the shipment was prepaid. As the shipment was not prepaid in accordance with the Eastern tariff the overcharge occurred. CHAPTER VII. Computing Minimum Rates. The study of "How to Figure the Lowest Rate" Is in reality a study of "Comhinations and Where to Apply Them." In the previous chapters we have outlined how it is possible to figure lower rates than those which will naturally lie applied to your shipments, and we have shown you in a general way that the conditions which produce lower freight rates are so varied in their effect that there are but few interests in the country that are not in some measure affected by them. A great deal will have to be left to the reader? of this book for the ferreting out of combinations such as are peculvar to their shipments and to the territory in which they are interested, but the possibilities of saving money by the studying of these publications will be illus- trated by the following instances: RATIO BASIS OF RATES. On business moving between the East and the West, we will cite a combination which covers many shipments, and what is true of this particular case will also be found to be true in a great many other instances. The rates, as are well known, from the East to Central Traffic Association territory, as well as the Trunk Line territory, are upon a percentage basis, rate from New York to Chicago of 75 cents, first-class, being the primary basis, or 100 per cent. Take a Line G-uide Book and you will find that the rate to Waukesha, Wis., from New York is the' same as to Chicago, it being a 100 per cent point. In figuring the mileage from Waukesha to Madison, you will find that rates from all territory east of Western Termini points can be cut from 2 to 6 cents per hundred pounds. Again, take the rates between the Mississippi River and points east on business destined to points in Iowa a proportional rate is used when traffic originates east of the Indiana-IUlnois state line; regular rates to other Western points^ and rate should be made up on Mississippi River combination. In shipping to points in the southeastern and Caro- lina territories, the rates should be figured on the Ohio River crossings, and the Virginia cities. Frequently it will be found that while the rates on Ohio River crossings will be lower on one class, on another the Virginia city combinations will be found lower in other classes, so that it is neces- sary in every case to figure each class of goods forwarded via these various gateways. Business destined to Arkansas, Louisiana and Texas can frequently SAVING FREIGHT MONEY 53 be handled at lower than through published rates by making com- binations at the various common points — Shreveport, La.; Little Rock, Ark.; Texarkana, etc. PUBLISHED RATES MAXXMUM. In handling business to and from extreme western points, It should be borne in mind that published rates are the maximum rates to be applied, and that frequently a rate published to a common point, plus the rate beyond, based upon actual mileage, will be found less than the published rate. It is well known that rates to Pacific Coast terminals are very much lower than to intermediate points. These, however, can be used to produce lower rates to some points intermediate, when it is found that by adding the local rate back to such points to the terminal rates, the result will be lower than the through rate to such intermediate points. Rates from the North to Southern territory should always be fig- ured via all of the Ohio River crossings, for the reason that on ac- count of competition and the disadvantages some lines labor under, of being compelled to haul a longer distance, the rates from the Ohio River to a great many points widely vary. The conditions here are very much similar to those in the Official Classification territory, where the roads which are under disadvantage by reason of longer routes are allowed to quote differential rates. "STANDARD" LINES. We suppose it is quite commonly known that while the rate from New York to Chicago via the "standard" lines, or those which carry the freight all rail from New York west, is the common basis, there are what are known as differential lines, which are allowed to charge less, because of the fact that their facilities will not allow them to compete with standard lines upon the same basis. These lines aie largely constituted of lines which run in connection with canal and water transportation. From these brief illustrations, covering shipments from the Bast to the West, from Central territory west beyond the Mississippi River and to the Pacific Coast, and from the North to Gulf points, it will be seen that there are combinations in effect in all these territories which produce lower rates. This is due to the fact that in the first place all tariffs issued are based upon some common point. This common point then becomes a definite basis for the figuring of fu- ture rates, and all the rates which are at first put into effect are ""lined up," as they say in railroad circles, so as not to conflict with each other and the law. 54 ELVDT S. KETCHTTM Subsequently, however, owing to demands for a lower rate upon particular traffic, due to conditions which are very clearly outlined in the first portion of this hook, changes in rates are put into effect, through the application of which the rates to these common polnte are sometimes entirely altered, and as a natural consequence the rates to other points within a considerable radius are also modified by these changes. RATE BASIS EOETECTED BY EXTENSION OF IJNE. Some time ago, when the St. Louis and San Francisco Bailway was built from Hugo to Hope, Ark., thus making the Texarkana rate to Hugo the maximum to apply, the mileage from Hugo to Paris, Texas, plus the Texarkana rate to Hugo, changed the entire situation to Paris and all points between there and Paris. Thus railroad exten- sion may affect the rate basis. It must be borne in mind by the reader that water competition does not necessarily enable the shipper to take advantage of such rail rates as are put into effect to meet this competition, as the courts have decided that where the business is directly competitive rail rates may be made to meet it without affecting the general situation. Another thing which should be borne in mind is that there are pub- lished by the carriers application sheets, which are entirely separate from the tariffs in many cases, and these have material bearing upon the lowering of rates. BTT.T.TNG INSTRUCTIONS. A practice has grown up also of issuing what are known as Bill-, ing Instructions, being for the use of bill clerks in railway employ and not for the general public, but these sometimes are found to affect the application of rates. This is the case where switching charges are absorbed by competitive railways to certain territories, where they could not secure the business with the addition of this charge. It is commonly claimed by the carriers that the effects of such new issues and changes as have been mentioned above are overlooked by the clerical force in the making of tariffs, but as the demands for these changes arise from special sources there is fair ground to sup-- pose that they are not intended to apply to general traffic, and as the. method of publishing and posting does not bring these changes to the. attention of the general public they are not aware of their existence and discrimination and overcharge may very naturaUy be the result. The necessity for readjustment is not apparent in such cases, as only- a few, and those few the ones who study the rate situation carefuUy,, secure the advantages which these changes offer. SAVING FREIGHT MONHY 55 If a readjustment of all rates affected were made when such changes take place they should not accomplish the result aimed at by the inter- ests which made their issuance a necessity, namely, the securing of a better rate than enjoyed by the general public, and therefore it is only fair to presume that there is a purpose behind this apparent care- lessness on the part of tariS makers, which results in conflicting rates, through the application of which lower rates axe secured for trans- porting freight. "NET PEICE" EFFECTED. In this way a "net" price for carrying freight is produced and it is open to him who seeks it and finds it, to his profit. If these lapses were far between and exceptional it might appear that they were the result of oversight but as the vast number of changes constantly made are of this character there appears to be no good reason to accept that as a reasonable explanation. Whether intentional or otherwise, the fact remains that these things produce lower freight rates, that more concerns are employing traffic experts every year for the sole purpose of detecting these conflicts which tend to lower freight cost, and it is to be presumed this would not be true if there were not profit in it. To figure the lowest rate you must study the classification to se- cure the proper description and method of packing goods, you must learn through study of the tariffs how the changes above outlined affect your commodities and you must carefully scrutinize all tariffs for rulings, exceptions, differentials, etc., that may in any way enter into the question of freight cost. This seems to be a complicated matter, but when you consider that the major part of its complexity is due to the wide variety of inter- ests with which it deals and the broad scope of country which it covers, it will be seen that only a certain portion of this affects your particu- lar traffic. It will be a comparatively easy matter for you to ascertain what differentials are in effect to the points to which you ship, it will be equally easy for you to study your competition and railroad compe- tition within the territory to which you ship so as to secure the bene- fit of such commodities as are made to aifect your shipments and when once this is done the work of keeping posted as to subsequent changes and rulings is really very little trouble. LESS THAN CWT. PACKAGES. There is nothing in which there is greater chance to save and, from the railroad standpoint, in which there is greater chance for error, than in the charges which are levied upon packages weighing less than one hundred pounds, what are called minimum weight shipments. This is due to the constant conflict between such charges as established by the 56 EI.VTN S. K ETCHTJM classifications and the combinations of minimums established by the rail- roads which haul the goods. To illustrate this, let us aay that in many cases the minimum charge as established by the classifications, figured at 100 pounds first-class or in the class to which the freight belongs, pro- duces a higher charge than would be the case if the minimum charge of the respective roads hauling the goods were figured and applied, but of course this is impractical from the railroad standpoint, and in conse- quence the bill-clerks take the classification as a basis. It is really the maximum basis. AN EXAMPLE. For example, the minimum charge Cincinnati to St. Paul, according to the classification, is 91 cents, yet the minimum to Chicago plus the minimum rate beyond makes but 65 cents, a difference of 26 cents on each shipment. This would seem to be a small matter, but to those whose shipments consist almost wholly of such small shipments it is of vital importance. The rule with these charges as with all other rates is, that the through rate may not be higher than the combination of the locals, however the commission have lately ruled that when through rates are in effect they must be used, and are the legal rates to be applied to through shipments. They will, however, authorize reduction upon one day's notice of rates to correspond with the sum of the two locals. We have requested this reduction in numerous instances and the railroads interested have complied, thereby saving enormous sums yearly for not only our clients but for all of the shipping public in territory Interested. In shipping from the East to points beyond the Mississippi Eiver, it will pay to study these out and make a list of the differences. Ship- ments are frequently billed upon Chicago, when, if billed to the river at the same charge, the minimum beyond to many points would be considerably less. A study of carload minimum and maximum weights will be found to be productive of profit. Frequently it happens that shipments are charged at weights which are greater than the maximum possibilities of the car's capacity. In such cases undoubtedly an overcharge exists. GOODS AT FIXED WEIGHT. Where goods are taken at a fixed weight for each package or meas- ure, as is the case with many commodities, it may be found that the car weights do not correspond to the computed weights based upon quantity. In such cases a claim will hold. Many times shippers have a basis for the computation of the weight of their shipments which is accurate, yet the carload weights fre- SAVING FREIGHT MONEY 57 quently show difCerences. When this is the case it Is well to establish with the terminal or forwarding line the accuracy of such weight hasis, and it will obviate trouble and enable you to collect back overcharges which are the result of overweights by the weighmaster. The method of weighing cars is singularly susceptible of error. Cars which carry refuse from other loads, are covered with ice and snow and accumulate weight are weighed with their load in a train, and all these accretions go to make freight charges higher. In all cases where the weights can be shown conclusively to have been wrong, claims can be sustained, as a weighmaster 's receipt is not proof positive of the correct weight of the contents of a car. In figuring to obtain the lowest rate a thorough knowledge of the geographical locations is of paramount value. The country, for the pur- pose of rate making, is divided into territories and then again sub-di- vided many times. Within these territories are what are known as "common points," which serve as a basis from which rates are figured to towns within a certain radius, and these rates to common points are used as maxima. There are three general divisions of the country for this purpose, named after the classifications which govern on traffic within their boundaries. They are Official Classification territory, Southern Classifi- cation territory and Western Classification territory. These are again sub-divided and various portions put under the control of Committees and Associations composed of representatives of the railroads operating within these territories and these Associations and Committees in turn determine how rates shall be made and what towns shall be used as points on which to base rates. BASIS FOR RATE COMPUTATION. We give here a rough outline of the divisions of the country so di- vided, which is not complete in all details, but will serve as a guide to give the shipper an idea of part of the plan which, while seeking to simplify rate making for raUroad usage and to establish a common basis for rate figuring which will be acceptable to all lines interested, really complicates the situation for the understanding of the average shipper. The Official Classification territory has two general divisions called the Trunk Line territory and Central Traffic Association territory. The first extends its boundaries from the Atlantic seaboard to the Niagara frontier or what is known as the western terminal of Trunk Line terri- tory, and the latter extends from Chicago east to the same boundary. The dividing line is fixed by the gateways known as the Niagara fron- tier, which are Builalo, Black Rock, Erie, Salamanca, Pittsburg, Park- ersburg, W. Va., and Wheeling. Rates east and west-bound within these 58 ELVIN S. KETCHUM territories are established upon a percentage basis, the foundation being the Neiw York-Chicago rate, which is 100 per cent. AU other rates within this territory east and west are determined upon their relative mileage to the terminal points. New York and Chicago. Bates from Trunk Line territory south-bound are based upon what are known as the Virginia Cities, i. e., Bichmond, Petersburg, Lynchburg and Norfolk^ Va., and in some Instances upon the Ohio Birer crossings. OENTBAl TBAITIC ASSOCIATION TEBEITOBY. Bates from Central Tra£B.c Association territory east-bound are based upon the Chicago-New York rates, and the seaboard towns, Boston, Philadelphia and Baltimore, are figured at fixed differentials, higher or lower than New York. The classification governs on business originating at or destined to points in Illinois, including St. Louis and points on west bank of Mississippi Biver, to points in Wisconsin, including St. Paul,-Du- luth group. Bates south-bound from Central Traffic Association territory are gov- erned by the Official to the river, but the Southern Classification may be used to Mississippi Valley territory when it makes a lower rate. On south-bound shipments from this territory rates are all based on the Ohio Biver crossings: Louisville, St. Louis, East St. Louis, New Al- bany, Jeifersonville, Cincinnati, Cairo, Thebes, etc., and to some few points on Virginia City combinations. A very fine map of this terri- tory and its divisions is published by the Queen & Crescent Boute, showing the intricate divisions of southern territory. Southern Classification territory has within it the Southeastern Freight Association, Southeastern Mississippi Valley Association, The Joint S. E. M. V. Association, and S. E. F. Association, the Associated Bailways of Virginia and Carolina and Central Kentucky territory. These divisions are defined carefiilly in the Queen & Crescent rate book above mentioned. The various divisions of this territory are due to water competition with the Ohio, Mississippi Bivers, and with similar competition existing on the Atlantic seaboard and with waterways running inland therefrom. BASING POINTS AND COMMON POINTS. The basing points to and from this territory are the Ohio Biver crossings, Virginia cities and common points within the territories such as New Orleans, etc. Exceptions to the classifications are named in the article which defines the scope of Classification influence. Western Classification territory embraces a large number of Asso- ciations and Committees, the more important of which are the Trans- Missouri Freight Committee, Western Trunk Line, Southwestern Freight SAVPTG FREIGHT MONEY 69 Oommittee, Trans-Continental Freight Bureau, Arkansas Freight Com- mittee, and Indian Territory and Oklahoma Conference Committees. Basing points to and from this territory are the Mississippi and Mis- souri Blver points, Minnesota Transfer and common points within the territory such as Denver, Spokane, Salt Lake, Arkansas and Texas com^ mon points, etc. Some common points within each of these territories may he used as bases for figuring low combinations. COMMON POINTS AS UAXSMA. In making tariffs at the outset the common points in the various territories are taken aa the maxima and other rates based thereupon. After these have been Issued for a time they become a permanent basis and all other rates are affected by their variations. In the issuance of these first tariffs, the rates are carefully compiled with due regard to avoiding conflict and the long and short haul clause, taking into con- sideration aU factors such as mileage, competition, etc., and these tari iffs then become recognized figures for transportation cost. Such tar-^ iffs are broad and comprehensive, cover all towns, all classes and gen- eral commodities, and are the foundation of railroad charges billed against freight carrying. Kailroad clerks use them and the public get them for the computing of freight cost, and in this manner — "list" price becomes established for the transportation of freight. Hardly are these issued, however, before the demands of competition, the demands of certain interests for lower rates and such like factors compel the is- suance of other rates, which tend to lower the cost for transporting freight. Frequently these changes are made to the common points on special commodities and sometimes on classes, and in their issuance the tariff only names changes to the basing point, although by so doing all rates within a certain radius are affected. Bates beyond and interme- diate become susceptible of change in consequence, but as the public does not know of this, the old rates are charged and an overcharge re< suits, even though it be unknown to the shipper. CHAPTER VIII. £liininating Rate Competition. One of the chief causes of extortionate freight rates is an attempt on the part of Bailroad Companies to pay interest on money which was never invested, and dividends on stock which represents no property. Overcapitalization is the inflation of corporate indebtedness by the is- sue of stocks or the sale of bonds, which represent exaggerated values. Freight rates and overcapitalization are so closely related that it is almost impossible to discuss them separately. Corporations whose direc- tors water their stocks and increase their indebtedness, create a natural monopoly which is highly dangerous to progressive industry. Henry D. Uoyd makes this statement in "Wealth Against Common- wealth"; "Monopoly cannot be content by controlling its own busi- ness. It is the creature of the same law which has driven the tyrant to control everything — government, art, literature, even private conver- sation. Any freedom, though seemingly the most remote from any possible bearing upon the tyrant, may — will — grow from a little leak of liberty into a mighty flood, sweeping his palaces and dungeons away. The Czar knows that if he lets his people have so much freedom as a free talk in their sitting-rooms, their talk will gather into a tornado. In all ages wealth, like all power, has found that it must rule or noth- ing. Its destiny is to rule or ruin. Hence we find it in America creep- ing higher every year up into the seats of control. Its lobbyists force the nomination of legislators who will get passed such laws as it wants for its judges to construe." EAUiEOAD CONSTEUCTION EEDUCED. Mr. WeUs, in "Economic Changes" asserts that the cost of con- structing railroads up to 1889 decreased 100 per cent on account of new inventions for excavating, blasting, and other labor-saving machinery. Since that date, he further estimates that the cost of construction has decreased at least one-third, so that today, in the absence of unusual en- gineering difliculties, railroads may be buUt at an average of $15,000 per mile, exclusive of equipment, including depots, terminals, tunnelling and ordinary bridge construction. It required only $10,200 per mile to buUd 107 miles of the Kansas Midland road, Including all equipment, and the cost of constructing the Union Pacific from McPherson, Kan- sas, to Eldora was less than $10,000 per mile; but by the latest reports in "Poor's Manual," it Is found that the average capitalization of the Union Pacific Is $78,000 per mile, and that of its main line, over $134,000 per mile. SAVING FRE IGHT MONEY 61 If the stock valuation of railroads represented actual money invested there would be little harm done. "But what are the facts?" says Thomas Carl Spelling? "The stocks on which dividends are paid repre- sent hut little cash actually paid by the stock holders. Bonds are usually issued and a loan procured before a spadeful of dirt is moved. Construction and betterment are almost invariably prosecuted from the beginning upon credit; so that the money paid by the patrons of the railroads in fares and freights, to keep down interest and pay the principal of bonded indebtedness, goes to liquidate liabilities incurred at the start by the owners of the property, and any dividends paid to the latter in excess of these charges is, for the most part, an extra bonus on what they owe, and not income from actual investments. PAYING DIVIDENKS ON "WATERED STOCK." In reality, on the showing of the railroads themselves, the public are pajring the enormous debts incurred in the purchase of the railroad property of the country at a grossly exaggerated purchase price, or pay- ing the interest on it— which is the same thing — paying in addition divi- dends to the owners of an equity of redemption which is worth a great deal less than nothing. The showing is much worse if we take the actual value of the roads based upon the present cost of reproducing them. The difference between this value and the bonded indebtedness was, in 1892, in round numbers, $1,973,000,000, and in 1902, $1,963,880,- 887. The difference between value and stock capitalization was, in 1892, $1,431,719,073, and in 1902, $1,898,866,207; that is to say, real value is less than two-thirds of stock capitalization, also less than two- thirds of bonded indebtedness. It is 33.4 per cent of combined stocks and bonds in 1902, almost exactly one-third." To bring the matter right down to every man's door, the crime of overcapitalization means a tax on every man, woman and child in the United States of $10, because statistics show that the average cost of transportation in the United States is $30 per capita and about one- third of the capital is water. The investigation of recent railroad financing has brought into light the most stupendous stock gamble the financial world ever knew. In six months, a railroad dictator, with more power than the president of the United States, bought $103,000,000 worth of stocks in other roads, Which stocks, it is now claimed, have a value of $147,000,000. By purchasing a controlling interest in western lines this railroad king armed himself with a power sufficiently strong to destroy a large percentage of competition. It is generally known that he has control of the Pacific Steamship Co., the Portland & Asiatic Steamship Co., and also the steamship line from New York to New Orleans, formerly known as the Morgan line. 62 ELVIN S. KETCHUM HASBIMAK'S DOMAIN. It is asserted that this magnate, with all of these lines of transporta^ tion under his thumb, has almost unlimited power relative to transporta- tion, the life hlood of commerce. The power of the president of the United States is limited by Congress, the Constitution, and the white light of publicity; but with respect to this man, who is dictator of a railroad system representing more than one thousand million capitali- zation, and employing twice as many men as there are in the standing army of the United States, his power is almost unlimited. Directly or indirectly, he has supervision of about one-third of the railroad transportation interests of the United States, and by his power over its finances, he can exert an influence over the principal financial markets of the country. The Hepburn amendment to the interstate com- merce act destroys rate cutting on the part of the railroads. The atntl- trust laws would not permit a "gentlemen's" agreement on the part of the carriers to raise the rates for the transportation of freight. This magnate has an unique system of his own. He gets control of a railroad, issues bonds on it and with the proceeds he buys another road, on which he issues Donds, with the proceeds of which he buys a third railroad, and so on. It is asserted that if this chain of holding com- panies expanded far enough, it would furnish working capital sufficient to purchase a controlling interest in all of the railroads in the coimtry. The Oregon Short Ijine is his big stick. It is capitalized at about twenty- seven and one-half million dollars, and all but one hundred shares are owned by the king himself. Eecently this little road, running over the mountains of Utah, Montana, Idaho and Oregon, has bought nearly $70,000,000 worth of stock in other raUroads. By its advantageous posi- tion it is used to sand-bag other lines, such as the Baltimore & Ohio, New York Central, St. Paul & Northwestern. ELIMINATING COMPETITION. It is interesting to note how this intricate system of eliminating com- petition which may be the basis of advancing freight rates in the future has been developed. From the report of the Interstate Commerce Com- mission No. 493 we get a full history of this remarkable transaction. "Within three years after the reorganization of the Union Pacific Railroad Company In 1897 Mr. Edward H. Harrlmaa became the dom- inating spirit in that corporation. As chairman of the executive com- mittee he exercises powers that are well-nigh absolute. The directors have delegated their power 'to manage and direct all the business and afiairs of the company' to an executive committee of five members, who shall act 'in such manner as such committee shall deem best for the com- pany's interest in all cases in which specific directions shall not have been given by the board,' and in turn the chairman of the executive SAVING FBE[GHT MOIfEY 63 committee is authorized to represent that body when it is not in ses- sion. Accordingly we find that in 1902 Mr. Harriman was 'authorized to borrow such sums of money as may b« required for the uses of this com- pany, and to execute in the name and on behalf of this company a note or notes for the amounts so borrowed.' " The investigation showed that in practically all the great transac- tions of this company Mr. Harriman, as chairman of the executive com- mittee, acted upon his own initiative, and his acts were subsequently ratified and approved by the executive committee. It may fairly be said, therefore, that the policies and purposes of the Union Pacific have ~been those of Mr. Harriman. UNION PAOIFIO AS SUPREME POWER. When the Union Pacific was reorganized it owned 1,822.59 miles of :railroad, extending from Council Bluffs, Iowa, to Ogden, Utah, from Julesburg to Denver, from Denver to Cheyenne, from Kansas City to Denver (formerly known as the Kansas Pacific), and various branches extending into the territory on each side of these main lines. Previous to the reorganization the old company had control, through stock owner- ship, of the Oregon Short Line and Utah Northern Railway and the Oregon Railroad & Navigation Company. These companies were also reorganized, and shortly after the fore- closure sale the Union Pacific Railroad Company acquired by stock own- ership the control of these companies, and has since acquired substan- tially all their stock. The Oregon Short Line owns the lines of railway from Granger, Wyo., on the Union Pacific, to Huntington, Oregon, and from Salt Lake City to Butte, Montana. The Oregon Railroad & Navi- gation Company owns the lines from Himtington, Ore., to Portland, Ore., together with a number of important branch lines in the States «f Washington, Idaho, and Oregon. Prior to the acquisition of the control of the Southern Pacific by the Union Pacific, the Oregon Rail- road & Navigation Company also owned and operated a line of steamers from Portland to San Francisco and a line of steamers from Portland to Japanese and Chinese ports. The Union Pacific also owned one-half the stock of the Occidental & Oriental Steamship Company, which owned and operated a line of steamers plying between San Francisco and oriental ports. UNES BROUGHT UNDER CONTROL. With these properities as a nucleus, and with the credit based on -these assets, the Union Pacific has in the past six years so grown in power and influence that at this time it controls every line of railroad reach- ing the Pacific coast between Portland on the north and the Mexican "border on the south — a distance as great as that from Maine to Florida — excepting alone the Santa Fe line, in which it has a large stock inter- 64 EliVIN S. KETCHUM est; and of his ability to "take" this road at any time the law -will permit Mr. Harriman expresses no doubt. Among the lines thus brought under the same control, in addition to the Union Pacific, Oregon Rail- road & Navigation Company, and Oregon Short Iiine, are these: The San Pedro lines, running from Salt Lake City, through Los An- geles, to San Pedro Harbor, on the Pacific coast, projected and begun by Senator Clark as an independent line, which Mr. Harriman stopped and absorbed. All the lines of the Southern Pacific Company (a holding corpora- tion), including: The Southern Pacific "Sunset Route," running by two routes from San Francisco to Los Angeles, and thence through Arizona, New Mexico, Texas and Louisiana to New Orleans, with many extensive branches; The Central Pacific "Ogden Koute^'" running from Ogden to San Francisco and from Boseville (near Savr^imento) to the Oregon State line, with several branches; The Oregon & California Railroad, running from Portland to the Cali- fornia State line, which, with the Central Pacific's "Shasta Route," con- nects Portland with San Francisco. In addition, the Union Pacific controls every regular line of trans- Pacific steamships operated out of the Pacific coast ports south of Puget Sound; also the Pacific Mail Line, plying between San Francisco and Panama; and the Morgan Line of freight and passenger carriers, operated between New York City, Habana, New Orleans and Galveston. SYSTEM CONTROLLED BY MB. HARRIMAN. Mr. Harriman may Journey by steamship from New York to New Orleans, thence by rail to San Francisco, across the Pacific Ocean to China, and, returning by another route to the United States, may go to Ogden by any one of three rail lines, and thence to Kansas City or Omaha, without leaving the deck or platform of a carrier which he con- trols, and without duplicating any part of his journey. He has further what appears to be » dominating control in the Illi- nois Central Railroad, running directly north from the G-ulf of Mexico to the Great Lakes, paralleling the Mississippi River; and 2,000 miles west of the Illinois Central he controls the only line of railroad paralleling the Pacific Coast, and running from the Columbia River to the Mexican border. Withia a year his sphere of influence has extended eastward; the Union Pacific and Oregon Short Line have acctuired 18.62 per cent of the stock of the Baltimore & Ohio, at a cost of $45,466,960, and have invested $19,634,324.93 in New York Central & Hudson River stock. That it is only the law which prevents the concentration into Mr. Har- riman's hands of every railroad line lying between Canada and Mexico is the frank admission of Mr. Harriman himself. Questioned by the SAVINQ FBEIGHT MONEY 65 Commission as to where Ms policy of acquisition was to stop, Mr. Harrl- man said: A. I would go on with it. If I thought we could realize something more than we have got from these investments I would go on and buy some more things. Q. Supposing that you got the Santa Fe? A. You would not let us get it. Q. How could we help it? A. How could you help it? I think you would hring out your power to enforce the conditions of the Sherman anti-trust act pretty quick. If you will let us, I will go and take the Santa Fe tomorrow. Q. You would take it tomorrow? A. Why, certainly I would; I would not have any hesitation; it is a pretty good property. Q. Then it is only the restriction of the law that keeps you from taking it? A. I would go on as long as I live. Q. Then after you had gotten through with the Santa Fe and had taken it, you would also take the Northern Pacific and Great Northern, if you could get them? A. If you would let me. Q. And your power, which you have, would gradually increase as you took one road after another, so that you might spread not only over the Pacific coast, hut spread out over the Atlantic coast? A. Yes. THE HAEEIMAU POIJCY. To gather under one head all existing transcontinental lines, or as many as possible, and to exclude the incoming of all competitors, became manifestly the Harriman policy, which was inaugurated in 1901 by the issuance of $100,000,000 of convertible bonds by the Union Pacific. With the proceeds of these bonds the Union Pacific purchased control of the Southern Pacific Company, and a majority of the outstanding stock of the Northern Pacific Railway Company, which latter incidentally carried with it control of one-half of the stock of the Chicago, Burlington & Quincy Railway Company, the stock of which has been purchased jointly by the Northern Pacific and Great Northern companies and their col- lateral trust bonds issued therefor. Possession of these lines would have given to the Union Pacific absolute mastery over every avenue leading to the Pacific coast within the United States save that afforded by the Great Northern railroad on the northern border of the country, and that offered by the Santa Fe upon the southern. This plan, if executed, would have subjected to a common will and policy nearly one-half of the terri- tory of the United States — a comparatively undeveloped, rapidly grow- 66 EliVIN S. KETCHUM ing, and extremely rich territory, into which must necessarily extend the population and business of the eastern states. In all of its acquisition of stock control in other railroads the Union Pacific has either purchased the stocks directly itself or through the Ore- gon Short Line Railroad Company, which it owns and controls. In the year 1901 the Union Pacific acq.uired 750,000 shares out of a total of 1,978,492 shares of Southern Pacific Company stock, and suhseciuently acquired 150,000 additionaJ shares, making a total of 900,000 shares, or 45.49 per cent of the total stock issue of the Southern Pacific Company. Thereafter, when the preferred stock of the Southern Pacific Company was issued, the Union Pacific subscribed for its proportion, to -v, it, 180,000 shares, out of a total of 395,688 shares; so that at the present time the Union Pacific owns 1,080,000 shares out of a total of 2,374,180 shares. POWEE OF SOUTHERN PACIFIC. The Southern Pacific Company is a holding corporation. It was or- ganized under a special charter of the State of Kentucky in 1884, and was authorized to acquire by purchase or otherwise the stocks, bonds and securities of railway and steamship companies. Shortly after its organi- zation it acquired the stocks of and controlled, and still does own the stocks of and control, a system of railroad extending from Ogden, Utah — where it connects with the Union Pacific — to San Francisco, Calif.; from San Francisco to Portland, Oregon; and from San Francisco, through California, Arizona, New Mexico, Texas and Louisiana to New Orleans; and has since acquired a line of railroad into Mexico. It also owns and controls a line of steamships from Galveston, Texas, and from New Orleans, La., to New York and Habana. It is unnecessary to detail each separate railway corporation owning the sections of the various lines in these States; it is sufficient to say that through stock ownership it controls the* entire Southern Pacific system, commonly known as the "Sunset Route." Immediately, however, upon the purchase of the Southern Pacific Company's stock the Union Pacific began the unification of the two or- ganizations and the exercise of a control over the Southern Pacific which has effected a substantial elimination of competition between these two lines. SOUTHERN PACIFIC CONTROL. The Union Pacific and Oregon Short Line have at each annual meet- ing of the stockholders of the Southern Pacific Company since 1902 voted a majority of the stock represented at such meetings and have elected the directors and other officers. For several years last past the Union Pacific and Southern Pacific have had a majority of common directors, the same president, vice-president, director of traffic, director of mainte- nance and operation, secretary, treasurer, comptroller, auditor, legal de- SAVING FREIGHT MOKTEY 67 paitmeut, and other chief officials. Whereas, formerly the two companies had separate commercial agents in the principal cities throughout the United States, soliciting traffic over their respective lines, they now have common agents and solicitors who represent the unified Union Pacific and Southern Pacific systems. While the Union Pacific, through the Oregon Short Line, does not own a majority of the stock of the Southern Pacifix:, yet it appears that its control over it is, for all practical purposes, as absolute as though it owned every share. Before the acquisition of its stock by the Union Pacific, the Southern Pacific Company, with its lines of rail and steamships, was engaged in competition with the Union Pacific for traffic moving between the Atlantic seaboard and the Pacific seaboard and betwen the Atlantic seaboard and oriental ports. Through their several connections by rail these lines were also engaged in competition for traffic from practically all points east of the Missouri Kiver between the Great Lakes and the Gulf of Mexico. From Atlantic seaboard territory east of Buffalo and Pittsburg rates have generally been the same upon business destined to the Pacific coast, whether moving by the all-rail route, including the Union and Central Pacific, or moving by rail to an Atlantic port, thence by water to New Orleans and Galveston, and thence by Southern Pacific rails to Los An- geles, San Francisco, or Portland. Bates from this same Atlantic sea- board territory on traffic moving by the Southern Pacific steamships and its rail connections to Colorado common points have likewise been the same as on traffic carried by rail over the Union Pacific lines to such points, and of such traffic there is a great and increasing volume. It is less true the competition which previously existed was not as complete as if the Union Pacific had a line of its own into San Francisco, Instead of turning traffic over to the Central Pacific at Ogden. For all this traf- fic there exists at present no actual competition between the Union Pacific and the Southern Pacific lines. TEANSCONTINENTAL POOL. Prior to the enactment of the interstate commerce law the Union Pa- cific and Southern Pacific belonged to what was known as the Transcon- tinental Pool, in which each was regarded as a competitor of the other and was accordingly awarded an allotted percentage of trans-continental business; and there is on file with the Commerce Commission a contract made in March, 1893, known as the Agreement of the Trans-continental Freight Bate Committee, to which contract both the Union Pacific and the Southern Pacific were parties, and under which all of the traffic west of the Missouri Biver and passing through the gateways of St. Paul, Min- neapolis, Sioux City, Omaha, Kansas City, and Sabine Pass, to and from California and Oregon, was treated as competitive transcontinental busi- ness. 68 ELVIN S. KETCHUM la 1900 the Southern Pacific Company purchased a majority of the stock of the Pacific Mail Steamship Company, which has for many years been the largest carrier of oriental traffic to this country, and which has operated a line of steamships in connection with the Panama Bailroad, by which Panama route traffic in large quantities has moved from the At- lantic ports to Pacific coast points in competition with the all-rail car- riers. By virtue of the consolidation of the Union Pacific and Southern Pacific steamship companies all competition between these steamship Uses has been destroyed; and thero is some evidence on the record tend- ing to show the impossibility of maintaining an independent steamship line running out of any of these ports without the consent of and ar- rangement with a connecting rail carrier. SANTA FE 25 PEE CENT AGKEEMENT. The Santa Fe Company formerly had a line of steamships to the Orient connecting with its road at San Diego, Calif. Under an arrange- ment with the Pacific Mail Steamship Company for a division of the ori- ental business brought to this country by that company, and the other steamship lines for which the Pacific Mail acts as agent (Including, singu- larly enough, a Japanese line known as the Nippon Yusen Kaisha), this independent Santa Fe line was abandoned in 1901. The percentage of this oriental traffic allotted to the Santa Fe and the Southern Pacific, respect- ively, has varied from time to time; but the understanding is that the amount to be delivered to the Santa Fe shall approximate 25 per cent of the total. From this brief synopsis, it is evident that history is rich in illustra- tions of various methods of indefensible financing. First, the profit to the stockholders' of the C. & A., arising out of the sale to themselves of $32,000,000 of bonds at 65, which sold for several succeeding years for 82V8 to 94. Second, the 30 per cent dividend based on amounts expended from income for improvements, much of it nearly thirty years before, and recently capitalized. Third, the psuedo transfer to Stanton, and his con- tract under which the new company paid $10,000,000 in cash for preferred stock which had cost less than $7,000,000. Fourth, the conversion of 183,- 224 shares of common stock in the Bailroad Company into 195,428 shares of common stock plus 194,890 shares of the preferred stock in the BaUway Company, part of which was sold to the Union Pacific at 861/2 a share. Fifth, the sale of the St. Louis, Peoria & Northern for $3,000,000 cash. Sixth, whatever interest the syndicate may have had in the sale to Kuhn, Loeb & Co. of $22,000,000 of bonds at 60 cents on the dollar. Seventh, the fee of $100,000 to Mr. Harriman for financing the enterprise. This analysis is no doubt incomplete, but it is suggestive. SAVrnG FBEIGHT MONEY 69 BANKERS RIOHLY BEWAIIDED. Incidentally, it may be observed that the bankers who manage these operations appear to be richly rewarded. The testimony shows that Euhn, Loeb & Co. received 5 per cent, or five millions of dollars, on the $100,- 000,000 of Union Pacific convertible bonds, one-half of which was re- tained by them and the other half given to the syndicate to whom the bonds were sold. On the 750,000 shares of Southern Pacific which the Union Pacific purchased at $50.61 per share, the same banking house re- ceived a commission of $2.50 a share. They received a like commission of $2.50 per share on the Chicago & Alton stock sold to the Union Pacific at $86.50 per share. It is significant that a member of this firm refused to disclose the extent of its interest in these securities. The effect of the control of the Southern Pacific by the Union Pacific has been to unify and amalgamate the management of these two railway companies and their steamship lines, and to eliminate competition between them in transcontinental business and in business to and from oriental ports. These are conspicuous illustration of the development of the theory of "community of interest" and "harmony of management," which Mr. Harrimam suggested when he demanded representation upon the Santa Fe "board. If the policy of purchasing and controlling stocks in competing lines is permitted to continue, it must mean suppression of competition. FUNCTION OF BAILEOAD OORPOEATION. The function of a railroad corporation should be confined to the fur- nishing of transportation. Kailroads should not be permitted to invest generally in the stocks, bonds and securities of other railway and of steamship companies, except connecting lines, for the purpose of forming through routes of transportation, including branches and feeders. It is in the interest of the public to facilitate the consolidation of connecting lines. The credit of a railway company is founded upon the resources and prosperity of the country through which it runs. Its surplus funds and credit should be used for the betterment of its lines and in extensions and branches to develop the country contiguous to it. Statistics show that about 50,000 square miles of territory in the State of Oregon, sur- rounded by the lines of the Oregon Short Line Kailroad Company, the Oregon BaUroad & Navigation Company, and the Southern Pacific Com- pany, Is not developed; while the funds of those companies which could be used for that purpose are being invested in stocks like the New York Cen- tral and other lines having only a remote relation to the territory in which the Union Pacific system is located. Railroad securities should be safe and conservative investments for the people. To this end the risks of the railroad should be reduced to 70 ELVIN S. KETCHTJM a minimum. Everyone knows that railway securities fluctuate more or less, according to the prosperity of the times, and also by reason of the wide speculation in such securities. It therefore adds an element of hazard to a railroad's capital and credit to have its funds invested in the stocks of other companies, thereby endangering its solvency and its ability to pay reasonable dividends upon its own capital stock. It is a serious menace to the financial condition of the country to have large railway systems fail to meet their obligations or go into the hands of receivers, and the object of legislation and administration should be to lessen the risks of railway investments. It is contrary to public policy, as weU as unlawful, for railways to acquire control of parallel and competing lines. This policy is expressed in the Federal laws and in the constitutions and laws of nearly every State in the Union. The constitutions and laws of 40 States contain prohibitions against consolidation of capital stock or franchises of com- peting railways, or the purchase and acquisition by a railway of com- peting lines. Competition between railways as well as between other industries is the established policy of the nation. And while the ac- quisition of a small minority of the stock of a competing line might not decrease the competition, yet the acquisition of any considerable amount of stock, with representation on the board of directors of such railway, unquestionably has the effect of diminishing competition and lessening to that extent its effectiveness. So long as it is the policy of the Gen- eral Government and of the States to maintain competition between naturally competing lines, the ownership of any stock by one railway in a competing railway should not be permitted, and such lines of railway should be prohibited from having any common directors or of^cers. REGULATION INDISPENSABLE. The time has come when some reasonable regulation should be im- posed upon the issuance of securities by railways engaged in interstate commerce. In the construction of new lines of railway, developing new territory, it has been necessary in many instances to sell railway securi-^ ties at large discount, and to sell bonds with stock bonuses, and even in such cases it has many times been difficult to raise the necessary capital. Men will not invest their money and take the risk for small rates of in- terest. But this principle does not apply to old established railway systems having good credit. Such railways should be prevented from inflating their securities for merely speculative purposes. Bailroads should be encouraged to extend their systems and develop the country. It is of the utmost importance, also, that railway securities should be safe and con- servative investments for the public, and should yield good and ample return for the money invested. Eeasonable regulation will tend to make. SAVING FREIGHT MONHY 71 them safer and moie secure investments, and thereby benefit not only the railway companies but the public. ATTITXJDE OF EAILROAD MANAGERS. The Interstate Commission has not completed its investigation of all railroad financial operations. The information which it has unearthed at its several hearings is evidence that the Commission should have in- creased power in supervising the financial workings of common carriers. Investigation has shown that many of the freight traffic managers and superintendents of railroads appreciate the fact that the public is not getting efficient service. But since they are compelled to show good reports in Wall Street for the benefit of the stock jugglers, they are powerless to improve present conditions. Many of the operating officers, it is asserted, welcome investigation on the part of the government and secretly hope that federal authorities wlU compel the railroad manage- ment to give the public more adequate transportation facilities. The Interstate Commerce Commission is often blamed for not elimin- ating conditions which are constantly hindering the transportation of commodities; but it should be remembered that the Commission's powers are limited. For the past twenty years the Commission has been asking for more power from Congress. It is the duty of all shippers to help the Commission get more power, to write their congressmen for co-opera- tion and to induce them to support measures which will give shippers a more equitable service. CHAPTER IX. Taxation Without Representation. The most important work of the government is to require the com- mon carriers to do a legitimate business. The general growth of every community depends upon adequate transportation at a reasonable cost to all shippers without discrimination. "The founders of this republic," says a prominent writer in The Making of America, "recognized the importance of establishing lines of transportation and of insuring a basis of equality for each community in Its exchange of products with every other. They ordained that commerce between the states should be free and untrammeled. The state, as well as the nation, aided in the construction of roads and canals. I Since 1800 the federal government has supported by taxation a sys- tem of river and harbor improvements upon which there has been ex- pended more than one hundred and seventy-five millions of dollars in the last seven years alone. Added to this, nearly one-half of the states in- vested large sums of money in the construction of railroads, and tows and county aid in the several states throughout the country, aggregating many hundred millions of dollars, was contributed for like purposes, while state and national governments granted out of the public lands enough, in aid of railroad construction, to equal in area the states of Ohio, Indiana, Illinois, Missouri, Iowa and Wisconsin. SUPPORT BY PUBLIC PUHSE. AH that has been invested by towns, counties and states in turn- pikes, all that has been expended in building locks and dams and canals and in broadening and deepening rivers and harbors by the federal gov- ernment for more than a century, together with the vast sums of money donated by municipalities and states, and the lands granted by state and national governments for the construction of railroads, which are now a part of the great systems of the country, — has been paid out of the public purse and carved out of the public domain. Every dollar of the money and every acre of the land was the prop- erty of the people, and, independent of all else, each citizen, however humble, ought of right to stand upon an equal footing with every other citizen respecting transportation. Furthermore, the state creates the railway corporation and bestows upon it special powers and special privi- leges without which it could not establish and maintain its lines or build up its business. The state invested the transportation company with one of the greatest powers which the state possesses, — ^the right to take private SAVING FBEIGHT MOKEY 73 property without the consent of the owner. This grant of power is made, not as a matter of favor to the corporation, but the better to enable it to discharge its duties to the public. It can be justified upon no other ground. As stated by the United States supreme court: The state would have no power to grant the right of appropriation unless the use to which the land was to be put was a public one. Tak- ing land for railroad purposes is a taking for a public purpose, and the fact that it is taken for a public purpose is the sole justification for tak- ing it at all. BASIS OF LAND GRANTS. The grant of these powers and privileges to the railroad corporation in itself establishes the character of the transportation business, and identifies it as a function of government. It would be obnoxious to ev- ery just principle upon which government is founded to charter railway companies, give them the right of eminent domain, authorize the bond- ing of towns and counties, and grant to them large areas of the public lands, if they were to be permitted to conduct a business so established upon any other basis than that of absolute and exact justice to each individual and to every interest. Railway managers, with rare exception, agree that the public should have no voice in regulating railway services or railway rates. Not all high railroad oflcials have the same boldness to declare their positions that Mr. Milton H. Smith, president of the Louisville & Nashville rail- road company, disclosed in testifying, upon an investigation into rates on his line of road, conducted by the interstate commerce commission. This testimony was given in a proceeding before the commission prior to the supreme court decisions which deprived the commission, of all author- ity to determine as to the reasonableness of the rates: POWEE OF COMMISSION LIMITED. 'Commission: We exercise no authority over your road until it has been determined by investigation that the rate is an imreasonable one. Your objection comes to this, that there ought to be no authority any where which has power to inquire whether the rate on the Louisville & Nashville railroad is reasonable or unreasonable? 'Mr. Smith: That is my position. 'Commission: Now let us go back to our CLuestion. That is the foun- dation of It all. Here are these two points connected by your line or road and by no other line. You say that the government ought to leave you and the shipper who resides at those places free to contract. Now, that shipper is obliged to pay whatever you charge? 'Mr. Smith: No. ■Commission: What could he do? 'Mr. Smith: He could walk.' " 74 EI.VIN S. KETCHUM The railroad companies of the country form a natural monopoly — ^when they are once established in a given territory all shippers must patronize them. Other lines are kept out because of competition, which makes it unsafe for other capital to be invested in parallel lines. COMMISSION'S POWER WITHHELD BY OONGEESS. "For years," asserts Mr. LaFoUette, "the Interstate Commerce Com- mission has laid before congress all the facts: the systematic increase in rates; the gross injustice in discrimination; the utter helplessness of the commission to afford relief. In its annual report to congress, De- cember, 1897, the commission reviewed the supreme court decisions and made it clear that there was no power left in the law to protect inter- state commerce. It urged In that report the necessary amendments upon the attention of congress, and this has been repeated in extended dis- cussion and reinforced with recommendations in each annual report for the last seven years. In 1898 the commission reported to congress that there was 'no power, in the judgment of the commission, or In the judgment of the court, to restrain a railroad company from demanding and receiving unreason- able and unjust charges.' They said further: 'The power of fixing and establishing reasonable rates or charges in advance is the only practical legal remedy for extortion and unreason- able and unjust charges.' Again, in 1899, congress having failed to act, the commlssiwi said: 'Every consideration of private justice and public welfare demands that the railway rates shall be reasonable, uniform to all shippers, and equitable between aU communities. Until needful legislation is supplied, that demand must remain unsatisfied.' Again, in January, 1900, the commission urged action, and among other things, said: COMMISSION SUPPORTED BY SHIPPERS. 'The request of the commission for needful amendments have been supported by petitions and memorials from agricultural, manufacturing and commercial Interests throughout the country, yet not a line of the statute has been changed, and none of the burdensome conditions which call for relief have been removed or modified. . . . It is suffi- cient to say that the existing situation and the developments of the past year render more imperative than ever before the necessity for speedy and suitable legislation. We, therefore, renew the recommen- dations heretofore made, and earnestly urge their consideration and adoption.' Every effort to pass a bill embodying the recommendation of the commission to afford relief to the overtaxed commerce of the country SAVING FREIGHT MONEY 75 baviug failed, the commission in its next annual report to congress of 1901, said: 'The reasons for urging these amendments have been carefully ex^ plained and repetition of the arguments at this time can hardly be ex< pected Knowledge of the present conditions and tendencies increases rather than lessens the necessity for legislative action upon the lines already indicated, and in such other directions as will furnish an adequate and workable statute for the regulation of commerce among the several states.' COMIMISSION PLEADS CONSTANTLY FOK MORE POWER. This important legislation having failed again in 1902, the com- mission once more appealed to congress. Referring to the defect in the law, the commission in this report, says: 'That this imperfection is curable is equally conceded. The full- est power of correction is vested in congress, and the exercise of that power is demanded by the highest considerations of public welfare, . . The sense of the wrongs and injustice which cannot be pre- vented in the present state of the law, as well as the duty enjoine4 by the act itself, impels the commission to reaffirm its recommendations for the reasons so often and so fully set forth in previous reports and before the congressional committees. Moreover, in view of the rapid disappearance of railway competition and the maintenance of rates established by combination, attended as they are by substantial ad- vances in the charges on many articles of household necessity, the commission regards this matter as increasingly grave, and desires to emphasize its convictions that the safeguards required for the protec- tion of the public will not be provided until the regulating statute is thoroughly revised.' TAKEN UP BY ROOSEVELT. Recognizing the right of the federal government to regulate and control interstate transportation, and the wrongs and injustice which could not be prevented without further legislation. President Roosevelt, in his first message to congress, with respect to the interstate commerce law, said: 'The act should be amended. The railway is a public servant, Its rates should be just to and open to all shippers alike. The gov- emment should see to it that this is so, and should provide a speedy, in- expensive and effective remedy to that end.' February 9, 1903, an act relating to the payment of preferential rates was approved. It contained nothing, however, which could in, any way aid the commission in affording protection against unreason- able and extravagant rates. The commerce of the country was still subject to the levying of a transportation tax as heavy and burden-. 76 ELVIN S. KETOHUM some as the railroad companies were pleased to impose. Representative business men, shippers and producers, were petitioning congress and appearing before committees, with testimony and argument, to reinforce their prayers for relief. December, 1903, in its annual report, the com- mission again made a strong appeal for legislation which would clothe them mth authority to establish a reasonable rate. Keferring to the act of February 13, 1903, it said: 'It has added nothing whatever to the power of the commission to ■correct a tariff rate which is unreasonably high or which operates with discriminating effect. It greatly aids the observance of tariff charges, but affords no remedy for those who are injured by such charges, either when they are excessive, or when they are inadequately adjusted This is the point to which the attention of congress has been called. This is the defect in the regulating statute which demands correction. In previous reports this question has been fre- quently and fully discussed. We have commented at length upon the weakness and inadequacy of the law as its provisions have been con- strued by our courts. We have carefully pointed out the amendments which we deem essential, and explained in detail the reasons for our recommendations. We are miable to add anything of value to the presentation heretofore made. Our duty in this regard has been per- formed. ' SEVEN YEAES' FIGHT. For seven long years this broken down statute has been before con- gressional committees, where, day after day, arguments and appeals have been made in vain to secure action to repair, in some measure, its defects. As the law was weakened and the efficiency of the commission im- paired by judicial decisions from time to time, leaving the interstate transportation of the country without regulation, railway rates became higher, railway abuses began to multiply, and protests and complaints came from aU quarters of the country, and from all classes of indus- try. Within a year or two railroad consolidation became marked. The railroad business of the country was literally honeycombed with discrim- inations in the form of rebates, and transportation charges were every- where generally advanced. The Industrial Commission, in its report submitted to congress, De- cember, 1901, after a careful investigation of the subject, said: Sum- marized, we conclude that the advance in the published freight rates upon all the railroads of the coiintry is probably not less than twenty- five per cent.' HIGHER BATES NOT WITHIN COMMISSION'S POWER. Powerless to restrain the railroads from imposing higher rates, power- less to prevent discrimination in shipping charges and facilities to fav- aA.VING FREIGHT MONEY 77 ored interests and localities, the commission could only, year after year, set forth, in its annual report to congress, the gravity of the situation, and the urgent need of legislation for the protection of the commerce of the country. In its latest published report, it is made very clear that rates have generally advanced in all sections of the country. The coal rates, the iron schedules, the rates upon grain and its prod- ucts, lumber, live stock and its products, are generally higher than four years ago — ^the increases upon coal rates alone amounting to very much more than twenty-five million dollars per year. EA£NXN'GS AND RATES INCREASE. The Interstate Commerce Commission has shown that the average rate per each ton of freight — not per ton, per mile — yras about 12% cents higher in the spring of 1904 than in 1899. When the increase was ap- plied to the traffic of 1903, it was found that it meant an Increase in. gross earnings, from this source alone, of over $155,000,000. From this cause alone, the gross earnings from the freight traffic in 1903 were thus over 13 per cent greater than would otherwise have been the case. The gross earnings from freight traffic were $424,282,871 greater in 1903 than in 1899. Of this amount $155,000,000, or about 36 per cent, was de- rived from increases in the rates. No one will question the soundness of the proposition that as the volume of traffic increases and the efficiency of transporting is developed and improved, the cost is greatly reduced, and rates should fall pro- portionately. But, instead, rates have steadily advanced, adding greatly to the increased cost of living, wrongfully imposing burdens upon the great body of consumers throughout the country. The volume of traffic has greatly increased since 1896. In 1897 the tons of freight carried one mUe per mile of road amounted to 519,079, In 1902 it stood 793,351. The increase thus amounts to 274,272, or about 52 per cent. CAPACITY INCREASED, EXPENSES DIMINISHED. The facilities for handling were greatly improved, increasing the number of tons carried in each car, and the number of loaded cars in each train, as well as the capacity of engines for moving larger loads. Roadbeds and tracks have likewise been improved, and all of the ele- ments of cost in transporting freight greatly reduced. At the same time the cost of these improvements has, as a rule, been charged to operating expenses, and paid for in the increased rates by the people. In 1897 it required 1,647 cars to carry 1,000,000 tons of freight. In 1903 it required only 1,268 cars to carry 1,000,000 tons of freight. In 1897 each locomotive carried 36,362 tons of freight. In 1903 each loco- motive carried 51,265 tons of freight. In 1897 the average number of •78 ELVIN S. KETCHUM tons per freight train mile amounted to 204.62. In 1902 it amoimted to 296.47. Here, then, we have an increase in the efficiency of the road to handle freight that Is equal to about 42 per cent. With the increase in the volume of traffic the profits of handling the same will be relatively very much larger, even though there is no improvement in the facilities of transportation. But where the facili- ties have all undergone the marked improvement above noted the profits axe, of course, enormously increased. This proves to be the case with the railway companies during recent years. For the whole country gross earnings and net earnings per mile Were as follows: The gross earnings per mile were $6,122 in 1897, and $8,265 in 1902, an increase for the period that amounted to $2,503 per mile, or to 40.9 per cent. The net earnings per mile amounted to $2,016 in 1897, and to $3,084 in 1902, an increase of $1,032 per mile, or 46 per cent. The net earnings per mile in 1897 were equal to 6 per cent on $33,600. The net earnings per mile in 1902 were equal to 6 per cent on $50,800. NET EARNINGS ADVANCE 40 PEE CENT. We have, then, an increase in the volume of the traffic amounting to 52 per cent, an increase in the efficiency of the road to handle all the traffic equal to 42 per cent, with a resulting increase in gross earn- ings for the period amounting to 40i9 per cent per mile of road, and of the net earnings amounting to 46 per cent. Add to this the fact that the net earnings per mile on all the railroads of the country equaled 6 per cent on a capitalization of $33,600 for the year 1897, while the net earnings per mile by 1902 had amounted to such a figure as would equal 6 per cent on $50,800 per mile, and we have a result, the signifi- cance of which can escape no intelligent man." These large earnings permitted the railroad stock manipulators to pump more and more Water in their stocks. The Interstate Commerce Law was amended in 1906 by the Hepburn Amendment, and in 1910 by the "Railroad Law," which, however, does not give the Commission power to fix rates. CHAPTER X. Essentials of the Interstate Commerce Law. The new rate law has not been in effect long enough to judge fully of Its merits. It is asserted that the number of formal complaints filed is very small as compared with the number of complaints in the form of letters which are daily received by the Commission. The Commission is a court. If complaints are not properly filed, it is not probable that the Commission will take immediate action. Some shippers, it is asserted, believe that the Commission, on the whole, is favorable to the carriers. This has grown out of the fact that the t:iommission has made certain decisions; as the one in reference to initial carriers' liability or the case relative to through rates and the sum of two locals, as well as decisions which seem to be more to the interest of the carrier than the shipper. Moreover, many shippers feel that since the Commission does not consist of experienced and practical transpor- tation experts, that their complaints, when filed, will be handled simply on the basis of legal argument. SHIPPERS LACK "NEKVE." Very few shippers of the country have courage enough to make a good fight; they are well aware of the fact that the carriers have within their power means of taking away credit accounts, delaying goods and many devious ways of injuring the shipper. The country on the whole is very prosperous, and a large number of shippers are too busy taking care of their rapidly increasing business to give much attention to cor- recting injustices. These reasons explain, in a measure, why so few formal complaints have been filed. Every shipper should know what sections of the 1910 Amend- ment apply to his business. The Interstate Commerce Law will save the shipper nothing unless he uses it. The term "transportation," as stated in the text of the law shall include cars and other vehicles and all instrumentalities and facilities of shipment or carriage, irrespective of ownership or of any contract, express or implied, for the use thereof and all services in connection with the receipt, delivery, elevation, and transfer in transit, ventilation, refrigeration or icing, storage, and han- dling of property transported; and it shall be the duty of every carrier to provide and furnish such transportation upon reasonable request therefor, and to establish through routes and just and reasonable rates -applicable thereto. All charges made for any service rendered or to be rendered in the 80 ELVTU S. KETCHUM transportation of passengers or property as aforesaid, or in connection, therewith, shall be just and reasonable; and every unjust and unreason- able charge for such service or any part thereof is prohibited and de- clared to be unlawful. SWITCH CONNECTIONS. Common Carriers, upon application of any shipper offering trafllc for shipment shall construct, maintain and operate a switch connection or private side track which may be constructed to connect with its railroad, where such connection is reasonably practicable and can be put in with safety and will furnish sufficient business to justify the construction and maintenance of the same; and shall furnish cars for the movement of such traffic to the best of its ability without discrimination in favor of or against any such shipper. If any common carrier shall fail to< install and operate any such switch or connection as aforesaid, on application therefor in writing by any shipper, such shipper may make complaint to the Commission. It shall be unlawful for any Common Carrier to receive in the ag- gregate for the transportation of property under similar circumstances- and conditions greater compensation for a shorter than for a longer distance over the same line in the same direction, the shorter being included in the longer distance. It shall be unlawful for any Common Carrier to enter into any contract, agreement or combination with any other common carrier or carrier for the pooling of freights of competing roads or to divide between the net proceeds of the earnings of said roads or any portion thereof. CONTEACTS PEOHIBITED. It shall be unlawful for any common carrier to enter into any con- tract expressed or implied to prevent the carriage of freight from being continuous from place of shipment to destination. If any common carrier shall, directly or indirectly, by any special rate, rebate, draw- back, or other device, charge, demand, collect, or receive from any per- son or persons a greater or less compensation for any service rendered, or to be rendered, in the transportation of passengers or property, thaa it charges, demands, collects, or receives from any other person or per- sons for doing for him or them a like and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and conditions, such common carrier shall be deemed guilty of unjust discrimination, which is hereby prohibited and declared to be unlawful. It shall be unlawful for any common carrier subject to the provisions of this Act to make or give any undue or unreason- able preference or advantage to any particular person, company, firm, corporation, or locality, or any particular description of traffic, in any respect whatsoever, or to subject any particular person, company, firm. SAVING FREIGHT MONEY 81 corporation, or locality, or any particular description of traffic, to any undue or unreasonable prejudice or disadvantage in any respect what- soever. OOMPIiAINTS TO COMMISSION. Any person, firm, corporation, or association, or any mercantile, agricultural, or manufacturing society, or any body politic or municipal organization complaining of anything done or omitted to be done by any common carrier in contravention of the provisions of the law, may apply to the Commission by petition, which shall briefly state the facts; whereupon a statement of the charges thus made shall be forwarded by the Commission to such common carrier, who shall be called upon to satisfy the complaint or to answer the same in writing within a reason- able time, to be specified by the Commission. If such common carrier, within the time specified, shall make reparation for the injury alleged to have been done, said carrier shall be relieved of liability to the com- plainant only for the particular violation of law thus complained of. If such carrier shall not satisfy the complaint within the time specified, or there shall appear to be any reasonable ground for investigating said complaint, it shall be the duty of the Commission to investigate the matters complained of in such manner and by such means as it shall deem proper. The Commission shall have authority to inquire into the manage- ment and business of the railroads and shall keep itself informed as to the manner and the method in which the same is conducted, and shall have the right to obtain from such common carriers full and complete information necessary to enable the Commission to perform the duties and carry out the objects for which it was created; and the Commis- sion is hereby authorized and required to execute and enforce the pro- visions of this Act; and, upon the request of the Commission, it shall be the duty of any district atomey of the United States to whom the Commission may apply to institute in the proper court and to prosecute under the direction of the Attorney-General of the United States all necessary proceedings for the enforcement of the provisions of this Act and for the punishment of all violations thereof, and the costs and expenses of such prosecution shall be paid out of the appropriation for the expenses of the courts of the United States; and for the purposes of this Act the Commission shall have power to require, by subpoena the attendance and testimony of witnesses and the production of all books, papers, tariffs, contracts, agreements, and documents relating to any matter under investigation. DUTY OF ATTORNEY GENERAL. It shall be the duty of the various district attorneys, under the direction of the Attorney-General of the United States, to prosecute 82 ELVIN S. KETCHUM for tlie recovery of forfeitures. The costa and expenses of such prose- cution shall be paid out of the appropriation for the exiwnses of the courts of the United States. The Commission may, -with the consent of the Attorney-General, employ special counsel in any proceeding under this Act, paying the expenses of such employment out of its own appropriation. Any person who shall wilfully make any false entry in the accouiits of any book of accounts or in any record or memoranda kept by a car- rier, or who shall willfully destroy, mutilate, alter, or by any other means or device falsify the record of any such account, record, or memoranda, or who shall willfully neglect or fail to make full, true, and correct entries in such accounts, records, or memoranda of all facts and transactions appertaining to the carrier's business, or shall keep any other accounts, records, or memoranda than those prescribed or ap- proved by the Commission, shall be deemed guilty of a misdemeanor and shall be subject, upon conviction in any court of the United States of competent jurisdiction, to a fine of not less than one thousand dollars nor more than five thousand dollars, or imprisonment for a term not less than one year nor more than three years, or both such fine and imprisonment. REFUSAI. TO TESTIFT. Anyone who shall neglect or refuse to attend and testify, or to answer any lawful inquiry, or to produce books, papers, tariffs, contracts, agreements, and documents, if in his power to do so, in obedience to the subpoena or lawful requirement of the Commission, shall be guilty of an offense and upon conviction thereof by a court of competent juris- diction shall be punished by fine not less than one hundred dollars nor more than five thousand dollars, or by imprisonment for not more than one year or by both such fine and imprisonment. Every person or corporation, whether carrier or shipper, who shall, knowingly, offer, grant, or give or solicit, accept, or receive any such rebates, concession, or discrimination shall be deemed guilty of a mis- demeanor, and on conviction thereof shall be punished by a fine of not less than one thousand dollars nor more than twenty thousand dollars. Any common carrier subject to the provisions of this Act, or, when- ever such common carrier is a corporation, any director or ofiicer thereof, or any receiver, trustee, lessee, agent, or person, acting for or employed by such corporation, who, alone or with any other corporation, com- pany, person, or party, shall v:illfully do or cause to be done, or shall willingly suffer or permit to be done, any act, matter, or thing in this Act prohibited or declared to be unlawful, or who shall aid or abet therein, or shall willfully omit or fail to do any act, matter, or thing in this Act required to be done, or shall cause or willingly suffer or permit any act, matter, or thing so directed or required by this Act to aAVING FREIGHT MONEY 83 be done not to be so done, or shall aid oi abet any such omission or failure, or shall be guilty of any infraction of this Act, or shall aid or abet therein, shall be deemed guilty of a misdemeanor, and shall, upon conviction thereof in any district court of the United States Xrithin the jurisdiction of which such offense was committed, be subject to a fine of not to exceed fiye thousand dollars for each offense. The above represents the main features of the Hepburn Amend- ment, which was a great improvement over the original act, but weak In many particulars. The principle weaknesses are as follows: 1. That the Commission should have power to initiate rate com- plaints. 2. That the Commission should possess over freight classifications the same power it had over rates. 3. That a special Commerce Court should be created to hear appeals from the orders of the Commission. 4. That the purchase by one railroad of the stock of a competing one should be prohibited. 5. That railway securities should be issued only after the consent of the Commission was given thereto. 6. That, subject to the approval of the Commission, the railroad could make rate agreements and file common rates in concert. In order to correct these defects and secure for the industries adequate relief from the hardships to which they had too often been sub- jected, the Wickersham Bill was Introduced and passed in 1910, which in many ways is the most remarkable legislative achievement in the history of the American Congress. THE 1910 EAIIxBOAD LAW. This new law, the result of seven months of struggle, may be con- sidered to clinch Federal control of railroad rates. It covers practically all the chief defects in government supervision with the exception of physical valuation of railroads and Federal control of stock and bond issues. As is stated by a Washington correspondent to the New York Tribune at the time of its passage: "Not only wiU the new biU clinch all that was accomplished in the law of June 20, 1906, but it will provide for many things which, had they been proposed at that time, would have filled the conservatives In both Houses of Congress with consterna- tion and would probably have sent the holders of railroad securities flocking to the bear side of Wall Street with a rush which might have caused a panic. That law defined as common carriers, express companies and sleeping car companies as well as railroads. This measure includes telephone and telegraph companies. The old law permitted Investigations and decisions by the Interstate Commerce Commission only when com- 84 ELVIN S. KETCHUM plaint had been filed by a shipper or other person interested. The new bill permits the Commission to institute proceedings on its own motion and without waiting for complaint to be filed. The old law delegated to the Commission authority only over rates and charges. The new law will extend that authority to include all regulations and classifications which may in any way affect rates or the interest of shippers. The old law authorized proceedings only after a rate had gone into effect. The new law authorizes the suspension of any proposed rate regulation or classification for a poTiod not exceeding eleven months, pending investi- gation by the Commission. The old law included a court review clause. The new measure, while not repealing that provision, meets the objec- tions thereto by creating a special Court, which will devote its entire attention to cases growing out of the Interstate Commerce Law, and thus obviate the tedious delays which it was feared would result from judicial review. THE COMMERCE COUET. The new law provides that the new court shall be known as a Com- merce Court; that it shall be a court of record and composed of five judges, to be named from among circuit judges for a period of five years, but that in the first instance the president shall appoint five addi- tional circuit judges and designate them to serve one, two, three, four and five years, respectively, in the new tribunal. The jurisdiction of the court shall be the same as now possessed by the Circuit Courts of the United States, and the judges thereof over all cases for the enforcement, otherwise than by adjudication and collection of a forfeiture or penalty or by infliction of criminal punishment, of any order of the Commission other than for the payment of money; cases brought to enjoin, set aside, annul or suspend, in whole or in part, any order of the Commission; suits authorized under section three of the Elkins Act, to be maintained in the Circuit Courts, and such mandamus proceedings as are authorized to be maintain in the Circuit Courts. It is specifically provided, how- ever, that nothing in the act shall be construed as enlarging the jurisdic- tion now possessed by the Circuit Court which is transferred to the Commerce Court. Appeals may be taken to the Supreme Court by the aggrieved party within 60 days after the final order is entered in the Commerce Court; interlocutory orders granting or continuing an injunction may be appealed within 30 days. Suits to enjoin orders of the Commission shall be brought in the Commerce court in the name of the United States. The pendency of such suit shall not in itself stay the operation of the order complained of, but the court may, in its discretion, restrain in whole or in part, the SAVING FBEIGH T MONEY 86 operation of tlie Oommisslon's order pending a final hearing and deter- mination of the suit. No restraining order shall he issued, however, otherwise than upon notice and after full hearing, except where irrepar- able injury would ensue, and in that case the court, or a judge thereof, on hearing after not less than three days' notice to the Commission and the Attorney-general, issue a temporary restraining order to remain in effect for not more than 60 days, pending application to the court for its order or injunction, in which case said order ^all contain a specific find- ing, based upon evidence submitted to the judge making the order and identified by reference thereto that such irreparable damage would result to the petitioner and specifying the nature of the damage. In a like manner, at the time of the hearing on the application, the court may con- tinue its temporary restraining order, either in whole or in part, pend- ing its decision on the application. Bight to intervention in any proceeding in the Commerce Court when- ever public interests are involved is given the United States, even though it has not been made a party to the case. Control of the government's litigation is vested in the Attorney-general, both in the Commerce and the Supreme courts. The right to employ assistants is also granted him. The Commission or any parties in interest to the proceedings before it are, however, permitted to appear and be represented by counsel in any suit involving the validity of such order. To the court is left the right to make such rules as to such appearances, the number of counsel and all matters of procedure and otherwise as seem to it necessary. The right of intervention In suits before the Commission is given committees, as- sociations, corporations, firms and individuals Interested therein, and the same privilege applies to suits brought by anyone relating to the action of the Commission. The Attorney-general may discontinue a suit or proceeding over the objection of the interveners, but the interveners may then proceed unaf- fected by the action or non-action of the Attorney-general. It is further provided that complainants before the Interstate Commerce Commission interested in a case shall have the right to be made parties to such case and be represented by counsel before the courts under such regulations as are now permitted. TELBGBAPH AND TELEPHONE COMPANXBa. Control of telegraph, telephone and cable companies is vested in th« Commission to the same extent that it exercises authority over railroad and express companies. All charges for the transmission of messages shall be just and reasonable, but classification into day and night, repeated and unrepeated, letter, commercial, press, government, etc., is permitted -and the charging of different rates for the different classes allowed. 86 KLVHT s. ketchum Said companies may also enter into contracts with common carriers witli regard to service for such carriers. Drastic auti-pass provisions are alsa included. The long and short haul clause^ over which there was so mnch con- flict in the Senate, as adopted' by the conference, reads as follows: "That it shall be unlawful for any common carrier, subject to the pro-, visions of this act, to charge or receive any greater compensation in the aggregate for the transportation of passengers or of like kind of prop~. erty for a shorter than for a longer distance over the same line route in the same direction, the shorter being included within the longer distance, or to charge any greater compensation as a through route than the aggre- gate of the intermediate rates subject to th« provisions of this act; but this shall not be construed as authorizing any common carrier within the terms of this act to charge or receive as great compensation for a shorter as for a longer distance; provided, however, that upon applica- tion, to the Interstate Commerce Commission, such common carrier may, in special cases after investigation, be authorized by the Commission to charge less for longer than for shorter distances for the transportation of passengers or property, and the Commission may from time to time pre- scribe the extent to which such common carrier may be relieved from the operation of this section; provided, however, that no irates or charges lawfully existing at the time of the passage of this amendatory act shall be required to be changed by reason of the provisions of this section prior to the expiration of six months after the passage of this act, nor in any case where application shall have been filed before the Commission in accordance with the provisions of this section, until a determination of such application by the Commission; provided, further, that whenever a carrier by railroad shall, in competition with a water route or routes, reduce the rates on the carriage of any species of freight to or from competitive points, it shall not be permitted to in- crease such rates unless, after hearing by the Interstate Commerce Com- mission, it shall be found that such proposed increase rests upon changed, conditions other than the elimination of water competition." FINE FOE, MISQUOTING RATES. A common carrier or ofllcer thereof who willfully refuses or omits, or mistakes, to give in writing the correct legal rate between points of ship- ment is liable to a penalty of $250 to accrue to the United States. Any person or corporation who obtains or attempts to obtain transpor- tation at less than regular rates by false billing or any means, is sub- ject to a fine not to exceed $5,000.00. Should the offense be an unlawful discrimination in rates, the officer will be liable to imprisonment for not more than two years. If a common carrier or an officer thereof, by means. SAVIITG FREIGHT MONEY 87 of false 'billing, false classification or any other device permits a rebate to be given, a similar penalty is incurred and tlie shipper benefiting by such illegal practice becomes liable to the same extent. Doming to the question of the suspension of rates, the law provides that whenever there shall be filed with the Commission any schedule stating a new individual or joint rate>, fare, or charge, or any new indi- vidual or joint classification or any new individual or joint regulation or practice affecting any rate, fare, or charge, the Commission shall have and is hereby given authority, either upon complaint or upon its own initiative without a complaint, at once, and, if it so orders, without answer or other formal pleading by the interested carrier or carriers, but upon reasonable notice, to enter upon a hearing concerning tht propriety of such rate, fare, charge, classification, regula- tion, or practice; and pending such hearing and the decision thereon the Commission, filing with such schedule and delivering to the carrier or carriers affected thereby a statement in writing of its reasons for such suspension, may suspend the operation of such schedule and defer the use of such rate, fare, charge, classification, regulation, or practice, but not for a longer period than 120 days' time, when such rate, fare, charge, classification, regulation, or practice would otherwise go into effect; and as fuU hearing whether completed before or after the rate, fare, charge, classification, regulation, or practice goes into effect, the Commission may make such order in reference to such rate, fare, charge, classification, regulation, or practice as would be proper in a proceeding initiated after the rate, fare, charge, classification, regulation, or practice had become effective; provided, that if any such hearing cannot be concluded within the period of suspension, the Interstate Commerce Commission may, in its discretion, extend the time of suspension for a further period not ex- ceeding six months, and at any hearing involving a rate increased after January 1, 1910, or of a rate sought to be increased after the passage of this act, the burden of proof to show that the increased rate or pro- posed increased rate is just and reasonable shall be upon the common carrier; and provided further, that the Commission shall give precedence to the determination and investigation of questions concerning rates over aU questions pending before it and render the speediest determination consistent with the proper examination thereof." COMBIISSIGN GIVEN MOEE POWEE. The new law gives the Commission the right, after hearing, with or without complaint, to fix joint through routes and establish joint rates and classifications as a maxima and to fix the terms and conditions under which the through routes shall be operated whenever the carriers neglect or refuse to voluntarily establish said routes, rates, etc. This provision SB ELVIN S. KETCHUM will apply -when one of the connections is a water line, but the Com- mission is denied the power to ax rates, routes and classifications when the transportation is wholly by water or between street, electric street, railways not engaged in the general business of transporting freight. The right of directing routing is accorded the shipper. It shall be unlawful for any common carrier, its officers or employes, to disclose to any person or corporation, other than the shipper or con- signee, any information concerning a shipment made which may be used to the detriment or prejudice of the shipper or consignee and violation of this provision is made punishable by a fine of not less than $1,000 for each offense. Recognition of the state courts is given in the acceptance of the pro- vision that no interlocutory injunction suspending or restraining the en- forcement of a state statute shall be granted by any United States judge on the ground of the unconstitutionality of such act unless the applica- tion shall have been heard and passed upon by three judges, one of whom must be a justice of the Supreme Court. Five days' notice of hearing shall be given the state authorities and other defendants. If irreparable in- jury threatens, a temporary restraining order may be issued before such hearing, but said order shall remain in effect only until the hearing and the determination of the interlocutory application. The law also empowers the president to appoint a special commission to investigate questions pertaining to the issues of railroad stocks and bonds. The total expenditures of this body are limited to $25,000. This provision is generally considered the answer the conferees have made to the president's pleas that something be done to resuscitate the elimi- nated provisions relating to supervision over railroad securities. NEW LAW A GREAT VICTORY. The 1910 Railroad Law is a decided advance toward the just regular tion of railroads on the part of the government. It will be seen from the above review of the main features of the amendment that only three of the serious defects in the Interstate Commerce Law have been reme- died. We must wait until a later date for the balance of the regulative legislation. This new law is a more substantial and far-reaching victory for Fed- eral rate regulation than was the original Hepburn Bill. There was a struggle in conference before the House clause for the supervision of the issue of stocks and bonds was abandoned, a compromise finally being given in the form of a commission to investigate the general subject of securities of common carriers. Another conflict took place over the long- and short-haul clause, which aims to prevent carriers charging more proportionately for a short haul than for a long haul, except with the SAVING FREIGHT MONEY 89 approval of the Interstate Commerce Commission. This procisiou was finally adopted. In compromising the differences between the House and the Senate railroad bills; the conference committee appears to have borne in mind the strength of the insurgents in both Houses and the advanced views enter- tained by many of the majority who are not insurgents. The form in which the Bailroad Eate Bill came from the conference committees represents a great victory for the rights of the people. This victory is unique in that it was gained by a small body of indomitaWe progressive men against the hostile array of both Democrats and Republi- cans, and the entire machinery of both the Senate and the House. Able and tireless fighters as these men are, they could not have amended the bill into its present meritorious form by mere force of num- bers or by perfect presentation of the justice of their demands. They drove their way through four months of fighting to victory simply because they were backed by the awakened intelligence and deter- mined sentiment of the American people. They were enabled to forbid some of the senators to perpetrate their customary trickery simply because Congress has heard from the country, and the fear of the people's wrath had been borne into the hearts ot men long used and content to obey the demands of the leaders who take orders from the railroads and the trusts. The omission of any provision for regulating the issue of new rail- road securities is the crucial proof of railroad influence on the passage of the law. The denial of a "physical-valuation" clause is of less practical consequence, but shows the same influence. CHAPTEB XI. Freight Claims and How to Handle Them. Many damage claims just in themselves are not settled througb want of necessaxy precautions on the part of shippers. Draymen should be carefully instructed about receipting for pack- ages in anywise damaged. Claims showing receipts for goods, the boxes of which are receipted for as broken, or the contents of which are rattling about with every evidence of damage, cannot be denied by the railroads. Many damages are the result of improper packing, no doubt, most of them are due to improper handling, and when you read the lectures the railroad claim departments are giving their agents and employes on the necessity for properly handling goods and what they say about the carelessness of their own trainmen, you will be surprised to learn that nearly every employe reports that "goods were in good condition while in my charge." EESPONSIBIUTY FOE DAJdAGE CLAIMS. It is next to impossible to fasten the responsibility for the damag- ing of freight upon any one in charge of it in transit, and when sev- eral lines handle the freight there is invariably a squabble about which should stand for the damage. Damages unplaced on any one of the several lines are prorated according to the basis of earnings, and all these things together with the investigation provoke delay. Delay in damage claims Is the common fate. It overtakes them all save those which are plainly fixed on some particular line, therefore the necessity for constantly tracing these claims — not spasmodlcaJly, when you have the time, but systematically, at stated periods all the time. Claims for loss receive more consideration. Goods receipted for as "short" the railroads get promptly after. They must be somewhere. The telegraph is used and things hurried up, becanse lost freight means a claim and a claim which must be paid, and consequently a loss of money. Do not, however, hasten to place claims for loss merely upon re- ceipt of notice that the freight has not been received from your cus- tomer. Trace for it, sending one to the initial line, one to the agent at destination and keeping a copy for yourself. Frequently things for which there are no waybills are over in the warehouse at destination and the tracer to agent locates it before joa. would hear from the tracer at your end of the line. Sometimes the con- signee will look for it at one depot and it will be at another. 3AVI1TG FREIGHT MONEY 91 TTSnTG T&AUEB. I^IVIUiGE. If Bhipments are lost lieyond a leasonable length of time, ship a new consignment, make claim foi the lost one and if it is fomid an4 returned, credit the railroad with the valne on receipt of the retnmed goods less charges. Don't abuse the tracer privilege. Bailroads wiU trace for any one who merely traces delayed shipments, but will throw them into the waste basket if you trace merely to hurry goods along. Be consistent in demanding what is your right and no more, and your claims will have more attention. Bailroads are liable for any damages, not the result of the act of God, the public enemy or things beyond their control. Negligence of employes of any character, damages from defective cars, defective serv- ice of any character are things for which they are responsible under the common law as carriers and they must pay such claims when the facts are established. Overcharge claims are notoriously slow of handling by the raUroads. Everything that wiU expedite settlements should be attended to in the first presentation of the claims. Frequently many delays are due to want of some explicit and necessary information at the outset. Often complete papers accompanied by the G. F. D. reference (the railroad's tariff number) will secure prompt and instant settlement, especially where the claim department is behind in its work and the chief clain^ clerk recognizes the authority. WHY CLAIMS MAY BE DECLINED. When claims are first declined it must be remembered that it is merely clerical help that declines them. If convinced of their merit pass them back with a strong statement of the facts and they will finally be passed upon by a higher authority, who will be more tha^ likely to consider the danger of offending a good patron of the road by declining the claim if any real basis of merit exists. Bight here is a good time to say that it is the best principle in the world to make a reputation for placing only claims which have a real basis of merit and you will add force to any protest you may have to make upon rejections. Many claims for overcharge are declined through the ignorance or negligence of clerical help and many more that the initial line beUeve^ just are declined, because connecting lines refuse to join in settlement, but any claim based upon tariffs can be enforced ajid will be paid if In-, sisted upon. In presenting claims for overcharge they should be presented to the line by which freight was delivered if presented at the terminal point and to the forwarding line by the shipper. Each claim should have the^ ■92 ELVIN S. KETCHUM original expense bill attached and a memorandum form showing car number, way-bill number, point of shipment and destination, with a record of the weight, rate and charges billed and a corrected record of the way charges should read. These forms should be printed in duplicate and numbered and a copy retained, as the papers may get lost in transmission through the mails. GIVING DETAILS ON CLAIMS. In stating the rate claimed show the authority by G. F. D. tariff number and in correspondence always refer to railroad claim numbers. Claim papers referring to railroad claim numbers receive the promptest attention. Make it a practice to trace for claims promptly ever so often and have a consistent method of so doing. Private claim departments which are known to be prompt receive greater consideration than those which are known to be spasmodic in their systems of tracing. Don't be stalled off by the statement that papers are in the hands of connecting lines. General Freight Claim Departments are notoriously unsystematic in tracing claims, generally have insufficient help and if you don't punch them up consistently and persistently will allow things to drag out their usual course. Bailroad claim department service is the most unsystematic of any business in the business world. Two reasons operate to produce this. First: Many meritorious claims are never paid by allowing them through lapse of time to become dead and forgotten. This saves money. Sec- ond: The clerks in railroad service have none of the training which is the result of contact with the business world. Their pay is secure, their positions assured during good behavior, and their motto is "what cannot be done today can be done tomorrow." Other departments of the service are rapidly improving, but the claim departments will not improve so long as the delays incidental to the handling of claims result in profit to the railroad and loss to the shipper. THE FREIGHT CLAIM PIGEON HOLE. In some of the smaller railroads the rule is to handle claims when nothing else is pressing, and to the man who has seen railroad service it is no uncommon thing to see claims pigeon-holed for weeks and some- times months at a time for want of the time or energy to look up ^ome essential data. In the reference of claims to connecting lines for adjustment is the greatest cause of delays in settlement. From an experience of years in claim departments, experts can confidently say that if most of the claims which are referred to connecting lines for authority for pay- ment were not traced for, fully the larger per cent of them would Jiever be heard of. SAVING FREIGHT MONEY 93 Bemember this, that while delays in ordinary business mean loss of money and patronage, that the exact reverse is true in railroad claim departmects; delays mean the saving of money. With this thought in mind you will see the importance of first pre- senting claims in the proper form and then everlastingly keeping after them. In order to understand how to properly handle loss and damage claims it is necessary to comprehend how the railroads themselves treat these matters and the conditions which contribute to lost and damaged freight. For the benefit of those who have had no railroad experience we briefly outline these conditions. All less than carload shipments consigned to the care of transpor- tation companies go through the following process of handling, with here and there exceptions to meet the difCering conditions peculiar to different sections of the country. THE "CHECKEK-IN" AND HIS DUTIES. Each piece of freight is checked into the warehouse by a man de- nominated as a "checker-in." He notes the number of packages, and the condition of each and receipts for them in good or bad order as the case may be. These are stored in different sections of the warehouses and are again checked by the "checker-out," who again notes the number of packages and their condition, noting on the face of the shipping ticket the initial and number of the car into which it is loaded. The freight is "stowed" in the car by a man whose particular busi- ness it is to see that freight is so loaded that it wiU carry without damaging other freight, and who also, when loading cars for what they are called "way" or local stations, has the added responsibility of placing the freight so that it will be easily accessible from the car door, placing that destined to distant points in the ends of the car to be im- loaded last. The car being loaded it is sealed and subsequently switched into the train. When the train is made up the conductor collects from the local freight office the way-bills for the various cars in the train and receipts for them, each bill being numbered and entry made in a book of the number of the bills and the points for which car is loaded. In the case of through cars loaded with freight for points to which carloads are made up, the seal on the car is not broken until opened at destination and the delivery of a car with unbroken seal to connect- ing line is prima facie evidence of the good order of its contents. Local or "way" freight cars have the seal broken at the first point at which the car has to be opened, and thereafter the conductor is responsible for loss and technically for damage resulting to any of its eontents. 94 ELVIN S. KETCHTTM TEANSFEBKINa SHIPMENTS TO OONITBCTING LINES. In the cases of long hauls a conductor will take care of the train over one division of the road and turn it over to another, who again receipts for the cars and contents in good condition. Now, you will readily comprehend that In the matter of loss and damage claims the railroad thus far is at the mercy of itg employes. If either of the checkers fail to note the damage to any package re- ceived, or if there be a package short which by error is checked as being received and forwarded, the railroad company is responsible for the loss or damage. We have known of cases where the teamster was responsible for damage to parts of his load, and through collusion with the checker received a clean receipt for the same, making the railroad stand the loss. Again, if the stower piles heavy freight upon tap of classes of freight easily damaged, the latter Is likely to arrive at des- tination In bad condition for which the railroad company has to make good. Often it happens in the rush of business that parts of consign- ments are placed In remote parts of local cars and are reported short at destination and "over" at some other point, and In some cases tliese "short" packages are not easily traced up or are delivered to the wrong parties owing to indistinct markings or the similarity to other markings and become wholly lost, when again the railroad company must stand a claim. AGENT'S REPORT ON LAST SHIPMENTS. When any agent receives a consignment from which there Is a package lost, damaged, or a consignment which is refused or unclaimed, he at once makes a report to the department in the general office of the railroad In" charge of this work, referring to the way-bill number and the station which Issued same. With this information the general office sets the machinery at once in motion to trace up the shipment and get things straightened out. If one station reports an "over" and another a "short" at the same time, the matter Is soon settled. If not, the following method of procedure is followed: If the con- signment is "over" and the markings are plain, the report Is referred to the station for which the shipment Is presumably destined, and if that station be short, the package is dead-headed back. If a "short" report comes in and no corresponding "over" report, the report is referred to the agent who billed out the car in which the consignment Was found to be short, and the report is then sent to the various agents along the Une to ascertain if they be "over" a package tallying with the description of th^ "short." This generally discovers the missing package, but when it does not it is then sent to the Superintendent of the Division in control of the train men in charge of the train from Which the article became short, and through him is referred to the SAVING FEEIGHT MONEY 95 various conductors who in turn report on the matter. In case of refused and unclaimed freight the matter ia referred to the agent at point of shipment for disposition, and if not disposed of the freight is, after a reasonable time, sold. It is, however, with cases of damaged freight that the greatest trouble is encountered. No one wishes to assume the responsibility for the damage. If a local shipment the report is referred through the proper channels to the various conductors, who invariably report it in good condition when received and if pos- sible, when delivered by them. It ia hard to place the responsibility on the shoulders of any one where clean recepits are held. RAILBOAD DISCIPLINE SYSTEM. Records are, however, kept of the men who bill freight wrongly and of conductors who handle freight and have damages reported against them for which they cannot account, and some one sooner or later is called down on the carpet. In the cases of losses and damage which occur in through cars where shipments are delivered to connecting lines, the same shirking «f responsibUlty goes on, each conductor reports the car delivered with unbroken seal and no rough usage in his hands, and the terminal line, if it receives the car with unbroken seals, assumes that the damage occurred somewhere other than on its lines. Most of the delays which occur in the settlement of claims occur through the tedious and necessary methods of referring all papers to those who handled the freight in an endeavor to locate the responsi- bUlty. Most roads receipting for goods delivered in damaged condition now pay claims promptly if the whole haul was Umited to their own line. If, however, handled by two or three lines the responsibility must first be fixed and the basis of settlement determined. There is no department of present day business to which the sys- tems and methods that produce economy in management have been so little applied as the Traffic Department. This is perhaps due to the fact that it is a comparatively new feature of many concerns, its needs are not understood by the expert systematizer and because a great many of the men who are in charge of these departments have had little or no previous business training, having come directly to this department from railroad service. It is possible to so systematize the work in the traflc department as to save much of the labor and expense and at the same time increase the efficiency of the work. There are a great many ways of doing this, varying with the dif- ferent needs of different classes of traffic; but certain general princi- ples will govern for all departments, whether large or small. 96 ELVIN S. KETCHTJM EESPONSIBILITY OF TEATFIC DEPARTMENT. The shipping department should be under direct control of the traffic department proper. Instructions for routing, for packing and description of freight to meet the various exceptions to general rules, created by special commodity rates and exceptions to classification should be carefully tabulated and given in a series of instructions to the shipping department. A careful system of filiug and keeping track of tariffs should be in- stalled. If this is done carefully it will save waste of time In search- ing for information and it will also enable the man looking for rates to know if he Is receiving the proper notices of changes in rates. No complicated tariff file is needed for this as a common vertical letter file will adapt itself to the needs of most concerns, in fact in my judg- ment it makes an ideal file being capable of unlimited extension and indexing. Much of time is wasted in looking for the same thing over and over again, especially in the figuring of combinations; and for nearly every concern this can be prevented in this way. We will say that a shipper has a list of 1,000 customers scattered over various sections of the country. In order to save time in looking up the rates to these 1,000 points it will be found a good plan to adopt a card system and compile the rates to these various points, showing thereon the routes via which the goods are to go forward, the rates, how they are made up and the authority. This need not be done all at one time although it Is the best plan, but whether done at once or from time to time it will need to be done carefully. Thereafter to keep this file accurate it will only be necessary to scan the tariffs as they come in for changes which affect the rates so compiled. This will be found a comparatively easy matter and you will have an individual tariff for your own use based upon the tariffs of the railroads which will make the checking of expense, etc., very simple. The saving in thus compiling rates will be appreciated if you have spent a half hour in figuring a combination say, via the various Ohio River gateways. Once done by this card system plan it will not have to be done again and many half hours will be saved. If your freight acciuires class rates to most territory your own compilation will be quite as good as that of the tariffs of the railroads, as there are very few changes in rates of this character, and it wUl not require any knowledge of rates to enable any one to check the freight expense, as the cards will show all the rates, with their authority. Similarly when claims are presented you will not have to hunt for the authority, as it will be shown on the card. SAVING FREIGHT MONEY 97 CAED SYSTEM FOR DIFFERENT POINTS OF ORIGIN. If youi shipments originate at various different points, the same system can be adopted by showing on the one card all the rates from different factories to one destination, so that if, as is the case with some concerns, the same goods may be shipped from two or three different points, you will have shown directly before you the difference in rates and can determine which place is the cheapest to ship from. If you are equalizing rates to meet competition or wish to know what rates your competitor has to pay on the same shipment to the same destination, the cards by the same plan will show you at a glance. By this plan a great deal of the time that is consumed in figuring combinations and hunting up authorities will be saved and it will be possible to answer quickly and with every degree of accuracy, ques- tions as to rates. In one large concern with several factories, where this plan has been adopted, the expense of conducting the Traffic Department has been reduced two-thirds and the service has been better. Where before the adoption of the plan there were five employes, there are now but two, and the saving has been accomplished through the want of neces- sity for constantly looking for the same information over and over again. Such a system will be of no value if not systematically kept up, as its value Ues entirely in its accuracy, but it will consume less time to keep it up and cost less money than by the ordinary plan of search- ing for the rates whenever wanted. Of course it does not do away with the necessity for a tariff file; it is really a simple transcript of such information as the file contains, which is applicable to your busi- ness. The same plan may be followed in handling claims, filing all claims against each railroad under the name of the railroad and filing nu- merically. Thus when you are tracing for claims which are delayed, you will have your attention attracted at once to the number that are outstanding with one road, and can see which roads are the most de- linquent in this regard. VALUE OF SYSTEM IN TRAFFIC DEPAHTMENT, While the general rate situation is very complex, it is not so as applied to specific traflc if gone about in the right way, and better work will be done and greater value derived from a Traffic Department conducted along systematic lines than one which is controlled by want of system. The one practical feature of the Interstate Commerce Act as it stands today is the publishing section, which provides the means whereby the average shipper can, if he make a study of the rates, secure for 98 ELVIN S. KETCHXJM himself the lowest rate published. We trust we have made it clear that this rate, i, e., the lowest rate, is not applied by the railroads in a great many cases, and we hare attempted to show how this lower rate may be secured through the enforcement of the publication clause of the act. A careful study will bring to light many differences which produce discriminations against many shippers, and it is to direct your attention to the conditions which produce these, to show you that there is a way whereby they can be issued and not be brought to your attention or applied to your shipments, and to suggest how you may take advantage of them, that this book has been issued. With this knowledge in hand it is up to you to apply it for your profit. CONDITIONS LIKELY TO CONTINUE. While it is probable that the Inter-State Commerce Commission will be empowered by Congress to regulate rates with certain limitations, it is hardly likely that there will be any action taken which will prevent the railroads from recognizing the conditions which now exist to produce lower rates, nor is it probable that any material modification in the system of filing and posting tariffs will be installed, therefore the sit- uation which enforces the necessity for studying the rate situation will, in aU likelihood, continue for some time to come. CHAPTER XII. A New Profession Created by the 1910 Railroad L,a.\\r. The rapid and complex growth of 300,000 industries has created posi- tions for thousands of q,ualified men. This is an age of specialization. "Jack-at-aJl-trades," although a good worker, can command only a living wage. Organized business demands sales managers, advertising managers, and specialists in every department. During the past four years a new profession has been created in Trade, Commerce, and Transportation hy the passage of the Hepburn Amendment and the 1910 Bailroad Iiaw. This new profession is Interstate Commerce, and includes the cost of distribution, as important today as the cost of production. Cost of distribution or freight charges amounts to six million doUars per day. Ninety per cent (90%) of this money is paid out by those who do not know whether they are being charged cor- rectly or not, resulting in two million dollars loss per week. The growing demand for technical men who know every angle of the Interstate Commerce business is very forcibly brought out in a letter written by a Bailroad President recently to the Interstate Commerce Commission and reported by the Associated Press in leading dallies throughout the country. This letter called attention to the important fact that "railroads are constantly evading the law by ingenious classifications, which are placing the smaller chipper at just as great disadvantage as he was before the giving of rebates became a crime punished by heavy penalties. "Many rates which are concealed in the verbiage of the 500 or 600 tariffs which are filed daily, are really more secret than the former 'secret rates,' although they may be technically published. * * * COMPETENT MEN NECESSARY. "Such rates are available only to large concerns which can afford to hire competent men to study the classification and schedules which are put out and filed with the commission from day to day. * * * "Wherever a commodity rate is published a class rate on the same article is also published, and in the majority of cases only those ship- pers for which the commodity rate was made understand such a rate ex- ists, while the other shippers pay the higher rate by classification to Which such commodity belongs." XTntil the passage of the Hepburn Amendment and the 1910 Law it 100 ELVIN S. KETCHUM was impossible at all times to deteimine the lowest cost) of transporta- tion, but the new law caused the publication and filing of all freight schedules. It increased the powers of the Interstate Commerce Com- mission. The men today in charge of the Interstate Commerce affairs of our industries are given certain powers. A few such men saved about $24,000,000 last year, on account of their technical knowledge. This new United States Government Law requires the "Transporta- tion Market" to be technically published and filed similar to the laws of our legislatures. Transportation charges can be interpreted and ap- plied only by trained men. This new Federal law affects the cost of distribution, competition and the very life or development in many cases of 300,000 rated industries, now paying out $100,000,000 annually in ex- cess of what the law requires. There are thousands of positions open today for technically trained men who know every angle of the Interstate Commerce business. There are tens of thousands of positions as bookkeepers, general managers and freight bill auditors requiring men with a knowledge of Interstate Com- merce. There is a demand for thousands of trained men as Consulting Trafllc Experts to represent 290,000 industries not large enough to em- ploy a traffic manager. THE CONSULTING TRAFFIC "ATTORNEY." The position of the Consulting Traffic man is attractive and he enters an independent remunerative business, has an office like the lawyer in an office building and represents industries in an expert capacity, resulting in a profit of 100% to his clients and an income of $5,000 to $10,000 to himself. Interstate Commerce and Traffic positions pay $35, $50, $75, $100 and some as high as $500 per week because they are worth it — because the technical Interstate Commerce man earns profits in dollars and cents for his company or client. Conservative estimates show that thousands of trained men are neces- sary to represent the 300,000 industries in the United States. This is practically the only profession today not overcrowded. Some one is going to get these positions in the next few years. Why don't you qualify and get one of them? Traffic men in the past have come from the ranks. Their experience at the best covers only a small part of the technical information neces- sary to handle every angle of Interstate Commerce efficiently. There has been no college for their training as in Law, Engineering, Medicine, and the other professions. There is a great demand today for a systematic professional course of SAYING FREIG HT MONEY 101 study which will cover every fundamental principle on which the great ■business of transportation is based. The aim of this instruction would be to classify, systematize and make usable the expert knowledge which is req.uired to produce a profit in conducting Traffic work. It would he the aim of such a school to give both technical and general information in the whole field of Interstate Commerce, embracing not only the Freight Service, but also fundamental priciples with their application to Domestic and Foreign Commerce, Trade, Transportation, Business Practice, Interstate Commerce Law, and Business Law. This technical study would prepare men for positions as Traffic Managers, General Managers, Freight Bill Auditors, Consulting Traffic Experts, Managers of Shipping Departments, Bill Clerks, Rate Clerks, Classifica- tion Clerks, Routing Clerks, as well as for advancement in the Railroad Freight Service. LEADING INDUSTRIES STUDIED. Special attention should be given to the needs of the leading industries: Agricultural Implements. Iron and Steel. Asphalt. Liquors, Waters and Wines. Baskets, Crates, Carriers. Live Stock. Canned Goods. Lumber and Forest Products. Cement, Lime and Plaster. Machinery and Machines. Chemicals and Drugs. Nursery Stock. Clay and Clay Products. Ores, Metals and Minerals. Coal, Coke and Charcoal. Packing House Products. Coffee, Sugar, Rice, Molasses. Paint and Paint Materials. Cotton and Cotton Linters. Paper and Paper Stock. Cottonseed and Its Products. Petroleum and Its Products. Dairy Products, Poultry, Eggs. Railway Materials, etc. Earthenware, and Crockery. Roofing and Building Material. Fertilizers. Soap and Soap Materials. Fish and Oysters. Stone (crushed). Fruits and Vegetables. Textiles. Furniture and Furniture Stock. Tin and Tin Articles. Glass and Glassware. Tobacco. Grain, Grain Products, etc. Woodenware. Hemp, Ixtle, Istle, Sisal. Wool and Wool Waste. Hides, Leather, etc. The fundamental principles of this new profession could be covered in one year. A questionaire should be forwarded at the end of each month Tiringing out, applying and reviewing all the essentials of the course jpursued. The answers shoiUd be sent in to the Instructors for criticism 102 KLvnsr s. ketchum and suggestion. A minimum standing of 75% in each individual sub^ ject should be required, and upon satisfactory completion of the course under the rules and regulations of the School a diploma should be awarded. This diploma should certify that the recipient has completed the course and has attained proficiency. FEATUEJBS OF THE OOUBSE. Such a course might comprise the following features: 1. Interstate Commerce Law and Procedure: Twelve lectures on the interpretation and application of the law, powers of the commission and rights of Industries under the Law. One lecture each month. 2. Transportation, Trade and Commerce: Twelve practical lectures on the fundamental principles of Trade and Commerce and the scientific application of the laws relating thereto. These lectures mailed one each month. 3. Freight Eate Accountancy: Twelve practical lectures in the science of freight trafac — classifying, rating, and routing. Also how to file and collect overcharge, loss and damage claims. These lectures mailed one each month. 4. Business Practice and Law: Twelve practical lectures discussing the fundamental principles of business building by experienced business men who have helped to build some of the largest industries of the country. These lectures mailed one each month. 5. Traffic Service System: A standard automatic index guide for checking freight bills to determine lowest freight charges and billing ship- ments to save freight money — The application of the principles. 6. Expert Cbunsel: Information coupons entitling the holder to full advice, counsel and suggestion by traffic experts, relating to freight rates, and all other matters pertaining to Interstate Commerce. 7. Auditing and Legal Service: Actual practice in auditing, filing and collecting claims and overcharges and ways and means of lowering exorbitant rates. 8. Individual Instruction: The course includes technical instruction by quizzes, examinations, suggestions and personal correspondence. 9. Questionaire and Criticisms: At the end of each month the stit dent should receive a Questionaire bringing out all the essential points with their application to the immediate needs of business. 10. Examinations and Diploma: Upon the satisfactory completion of the course, a certificate should be conferred, certifying that the holder has attained proficiency in Interstate Commerce. SAVING FREIGHT MOKTBY 103 The technical information which such a course should cover is indi- cated by the following outline of lectured: SYNOPSIS OF COUESE. 1. LECTUBE— THE STRATEGY OF BAII£.OAD SYSTEMS. The Vanderbilt lines. The Pennsylvania System. The Harriman lines. The Hill lines. The Fight for Pittsburg. The Gould lines. The Eock Island System. The Atchison. The Chicago, Milwaukee & St. Paul. The Chicago & Northwestern. Rebuilding American Railroads. Early days of Railroading. 2. LESSON— THE SYSTEMATIC STUDY OF SHIPPING. General survey of the course. Essentials to be mastered. Intent of the Interstate Commerce Act. Shippers must look out for their Interests. Why expert rate accountants are indispensable. The scientific method of study. How to apply technical instruction, etc., etc. 3. LECTXJRE— RESOURCES OF THE UNITED STATES. Density of population compared with Europe. Percentage of land not under cultivation. Relation of wealth the cultivation of soil. Relation of Transportation to Extent of our Resources. Territorial transportation facilities. Centers of leading industries. Competi- tive freight rate points. Comparative sectional production. Ex- pansion of American Commerce. Early American trade. Future of American resources. Relation of supply and demand of raw materials. **■ 4. LESSON— OFFICIAL CLASSIFICATION TERRITORY. Description of territory. Exceptions to Official classification. Ap- plication of official classification — a. When destined to points in Western territory — b. To Southern territory — c. To Texas and New Mexico — d. To Arkansas — e. To Oklahoma — f. To Mexico, Canada, Cuba. 5. LECTURE- RELATONS OF RAILROADS TO COMMERCE. Transportation and material progress. Relation of new territory Development of railroads. Relation to extent of market. Trans- portation of vast resources. Freight cars as warehouses. Relation of cost of transportation to wages. Freight a fixed percentage of every commodity. Effect of the minimum cost of transportation. Effect of railroads on the development of the country and indus- tries. 6. LESSON— WESTERN CLASSIFICATION TERRITORY. Application of Illinois Classification. Iowa Classification. Excep- 104 iOiVIN S. KETCHTJM tions to Western Classification. Territories affected. Territorial description governed by Western Classification. Application when originating in Western Classification Territory destined — a. To Official Classification Territory — b. To Southern Classification Ter- ritory — c. To Canadian Classification Territory. 7. LECTURE— AMERICAN TRADE AND COMMERCE. America greatest manufacturing nation. Commodities most in de- mand. Work of Bureau of Manufacturers. Growth of leading in- dustries. Integration of Industries. Relation of Coal and Iron to Industrial Supremacy, Labor-Saving Machinery in Domestic Trade, i' Nature of Competition between Individual Industries and the Large Corporations. The Trust Question. Relation of Unionism to De- velopment of American Trade. 8. LESSON— SOUTHERN CLASSIFICATION TERRITORY. Georgia. Exceptions. Florida Exceptions, etc. Application when Originating in Southern Classification Territory Destined — a. To Western Territory — b. To Official Classification Territory — c. To Canadian Classification Territory. — d. To Texas and Mexico. 9. LECTURE— RAILROAD ORGANIZATION AND OPERATION. Graphic Representation of Departments. Inter-relation of Officers and Employees. Checking System. Uniform Accounting. Con- struction and Maintenance. Freight Department. Claim Depart- ment. Progress of a Shipment. How Railroads Handle Freight. Railroad Terminology. 10. LESSON— APPLICATION OF THROUGH RATES. In Official Classification Territory. Established Basing Points in Official Classification Territory. Application between Points in Official Classification Territory. When to Points in W. C. T. When to Points in S. C. T. When to Canadian Points. When to South- eastern Points. When to Mexico — Isthmus of Panama Points. When to Trans-Missouri Territory. When to Pacific Coast Points. 11. LECTURE— AMERICAN TRANS-CONTINENTAL LINES. Early Government Routes. First Charter by Missouri. First Through Route. Ogden as a Radiating Point. Harriman's Opera- tions. Elimination of Competition. Trans-Continental Lines under one Management. Relation to the Waterways. Relation to For- eign Trade. 12. LESSON— APPLICATION OF THROUGH RATES. In Western Classification Territory. Established Basing Points in Western Classification Territory. Application Between Points in W. C. T. To Points in Official Classification Territory. To Cana- dian Classification Territory. To Southern Classification Territory. SAVING FEEIGHT MONEY 105 : ■ ■■ ■ , , , ^ — — . 13. LECTXTBE— THE INTEBSTATE 0OMMEEC3E COMMISSION. Powers Defined by Law. Sessions and Hearings. Reports and Bnlletins. Number of Commissioners. How Appointed. Qualifica- tions. Efficiency. Names of Present Commissioners. Secretary and Duties. Relation to Courts. Relation to Shippers. Relation to the Railroads. Confliction of State Statutes and Rulings. Sher- man Anti-trust Law. 14. LESSON— APPLICATION OF COMMODITY AND CLASS BATES. Interstate Commerce Commission's Rulings. When Combination Class and Commodity Rates may be Applied. Method of Applying Conmiodity Rates How to Secure Reduction in Rates. When Combination of Local Class Rates, or Class and Commodity Rates make Lower than Through Rates. 15. LECTURE— CONSOLIDATION AND ELIMINATION OF COM- PETITION. Indirect Competition. Effect of Direct Competition. Combinations as Alternative. Differentials. Rate Agreements. Pools. Present Rate Agreements. Decisions of the Supreme Court. Relation of Public Policy. Shippers at Mercy of the Railroads. 16. LESSON— ROUTING AND MISROUTING SHIPMENTS. When Shipments should be Routed. Regarding Terminal Routing. Routing by Railroads. Liability for Misrouting. When Routing Instructions are Necessary. Selecting Connecting Routes. Through Routing. Fast Freight Lines. Storage in Transit. Redress Pro- vided by I. C. C. Rulings. 17. LECTURE— OVERCAPITALIZATION AND EXTORTIONATE RATES. Transportation a Natural Monopoly. Effect of Cheap Freight Rates on Labor and Commerce. Consolidation of Railways and "Watered Stock." The Crime of Overcapitalization. The Adr vancing Freight Rates. The Duty of Shippers to Organize. The Nature of Legislation Necessary to Protect Shippers. 18. LESSON— HOW TO DESCRIBE SHIPMENTS TO SECURE LOW- EST RATES. How to Prepare Shipments to Secure Lowest Rates. Regarding Mixed Carloads. Rules Governing Transportation of Goods. Mis- description of Goods. Methods of Packing Various Kinds of Goods. 19. LECTURE— CAUSES AND EFFECTS OF DISCRIMINATION. Nature and Injustice. Relation of Eciual Rates. Local Discrimi- nation. Personal Discrimination. Relation to Common Law. Con- ditions Before the I. C. Act. Provisions of the 2. C. Act. Elkin 106 ELVIN S. KETCHTJM Law. Long and Short Haul Clause. Effect of Legislation. Rela- tion to Small Industries. 20. LESSON— APPLICATION OF THE0XI6H BATES. In Southern Classification Territory. Established Basing Points in Southern Classification Territory. Application of Bates tn South- em Classification Territory. When to Ofllcial Classification Terri- tory. When to Western Classification Territory. When to Pacific Coast Points. When to Trans-Mississippi Territory. When to Canadian Territory. 21. LECTUBE— EAILEOAD METHODS OF DISCEIMINATION. Private Car Evils; Private Switches; Time Limited Tariffs; "Vest- pocket" Railroads; Purposely Puhlished Errors in Tariffs. Ex- cessive Icing Charges. Wrong Billing. Special Commodity Bates. Excessive Switching Charges. Overcharges. Wrong Routing. Employment of Shippers as "Agents." Special Bates on Goods "Supposed to be" for Other Eailroads. Non-billing. Payment of Imaginary Damage Claims, etc. 22. LESSON— DESCEIPTION OF TAEIFFS AND BATES. Origin of Classifications. Principles and Practice. Carload Lots. Uniformity. Commodity Tariffs. Creating Tariffs. Publishing Tariffs. Joint Tariffs. Rail and Water Tariffs. Association Tar- iffs. Intra-State Tariffs. Construction of Classification. Arbitra- ries. Import and Export Tariffs. Application of Rates. 23. LECTXJRE— STATE AND FEDERAL BEGULATION OF BATES. Power of the State. State Legislative and Judicial Functions. Delegation of Bate Making Power. Limitations by the Commerce Clause. Granger Movement. Existing State Legislation. Source of Federal Power. Limitations of Federal Power. Powers of the I. C. Act. Present Status Without Greater Federal Legislation. Limitations of Federal Legislation. Future Legislation Demanded by Shippers. 24. LESSON— BASIC PRINCIPLES OF RATE MAKING. Obligations of the Eailroads. Carriers as Toll Takers. Fixed Investment. Relation of Expenses and Traffic. Law of Increased Returns. Railroad as a Monopoly. Fair Returns on Capital. Maximum and Minimum Charges. Beasonable Bates. Cost of Service. Value of Service. Cost Theory of Service. Equal Mile- age Bates. "What the Tariff will Bear." Basis of Initial Rates, 25. LECTURE— GOVERNMENT OWNERSHIP OF RAILROADS. Railroads as Public Highways. The Political Graft. Belatlon of Railroads to Public Affairs. Evils of Present System. Security SAVING FREIGHT MONEY 107 for Capital, Possibility for Lower Bates. Lessons from Europe. Relation to Labor and Capital. Uniformity and Convenience, Inspection and Supervision. Effect on Industries. "Pro" and "Con" Arguments. 26. LESSON— BILLS OF LADING AND DELIVERIES. A Form of Contract. Specifications. Meaning and Construction, Negotiability and Liability. Uniform Bills of Lading. Relation of Deliveries to Routing. Switching Charges. Delays and Negli- gence. Delivery Discriminations. Nature of Demurrage. Car Service Rules. Reciprocal Demurrage. Reconsignments. Switch- ing Connections. Car Distribution. 27. LECTURE— UNITED STATES FOREIGN TRADE. Beginning of Foreign Trade. Comparison with Other Countries. Facilities for Foreign Trade. Manufacturing Goods for Bixport, Relations of the Panama Canal; Foreign Trade Statistics. Per- centage of Commodities Supplied. Relation of Ship Building, Subsidies by Government. 28. LESSON— RECIPROCAL SWITCHING AND TERMINALS. Absorption Charges. Terminal Privileges. Private Terminals, Side Track Installation. Side Track Maintenance. Just Charges. Jurisdiction of the Interstate Commerce Commission. Relation of the State Railway Commissions. 29. LECTURE — FOREIGN TRADE OPPORTUNITIES. Commodities Most in Demand. How to Find Opportunities. Who to Write in Foreign Countries. Foreign Trade Correspondence. United States Bureau of Manufactures. Consular Service in For- eign Trade. Names and Addresses of U. S. Foreign Consuls. Work of the United States Department of Commerce in re Foreign Trade, 30. LESSON— LAKE AND RAIL TRANSPORTATION. Rulings of the Commission. Responsibility of Carriers in Routing. Ocean and Rail Transportation. New England States to Texas- Mexico Points. New York-Philadelphia, etc. to Texas-Mexico Points. Atlantic Seaboard to Pacific Coast Points. To and From Great Lake Ports, Insurance, etc, 31. LECTURE— DIGEST OF INTERSTATE COMMERCE DECISIONS, Classes of Decisions. How and Where to Find Them. Commis- sions' Decisions. Supreme Court Decisions. State Decisions. Best Digests of Cases on Interstate Commerce. How to Use Decision^ in Filing Claims. Relation of Decisions to Statutes. Meaning of Legal Phrases. 108 ELVIN S. KETCHUM 32. LESSON— APPUCATION OF THE HEPBUBN LAW. Common Law Liabilities. Statutory Law Liabilities. Provisions Relating to Tariffs. Provisions Applicable to Rates. Construction of Long and Short Haul Clause. Reasonableness of Rates. Com- plaints filed with the Commission. Liability of Carriers for Mis- Routing. Law on Stoppage in Transit. Maintenance of Side Tracks. Discrimination in Deliveries. Contracts less than Pub- lished Rates. Provisions Relating to Private Cars, etc., etc. 33. LECTXJRE— COMMISSION'S SECRET SERVICE OPERATIONS. Traveling Detectives. Detectives as Employees. Method of Work. Reports to the Commission. Commission's Checking System. Bus- iness Offices in Washington. Nature of Information on File. How the Commission Can Help the Shipper. 34. LESSON— OCEAN TRANSPORTATION. How to Export. How to Make Consular Invoices. How to Pack Goods for Export Trade. Export Agencies. Foreign Exchange. Credits and Drafts. Foreign Trade Relations. How to Get Cash for Goods, yet give the Foreign Customer Six Months' Credit. Schedules of Freight Steamers. Time of Transit. Competitive Rates. Insurance. Export Questions. 35. LECTURE— CURRENT INTERSTATE COMMERCE LEGISLA- TION. Bills Now Before Congress. Leading Bills Now Before State Leg- islatures. Questions Now Before the Commission. Special Feat- ures of Freight Legislation. How to Best Support Desirable Bills. Relation of Passage of Bills to Committees. Desirable Features of Future Legislation. 36. LESSON — METHODS OF HANDLING AND PREPARING CLAIMS. Statutes of Limitation on Claims and Overcharges. Filing Formal and Informal Complaints with the Commission. Methods of Pre- senting Formal and Informal Complaints. Interstate Commerce Commission's Procedure A. With Informal Complaints B. With Formal Complaints. Supreme Court Decisions. I. C. C. Rulings. 37. LECTURE— PSYCHOLOGY OF BUSINESS SERVICE. Fundamental Business Principles. Positive Mental Attitude. Re- lation of Supervision to Efficiency. Doctrine of Auto-Suggestion. Why Trained Men Win. Infallible Mental Laws. Positive Physi- cal Qualities. Measures of Service. Things Worth Knowing. How to Influence Minds of Others. SAVING FREIGHT MONEY 109 38. LESSON— TEAFFIC DEPARTMENT SYSTEMS. Indexing Tariffs. Indexing Customers. Rate and Route Cards and Maps. Checking Systems. Filing Tariffs. Preserving Important Data. Tracing Shipments. Preparing and Filing Claims. Tracing Claims. 39. LECTURE— TRANSPORTATION BIBLIOGRAPHY AND JOtTB- NAL. Books on General Discussion of Railroad Prohlema. Books on Transportation. Railroads and Trusts. Railroad Combinations and Pooling. Federal Reports and Legislation. State Railway Legis- lation. State Railroad Commissions. Trans-Missouri Decision. History of Great Railroad Operations. List of Books in Congres- sional Library on Transportation. Magazine Articles on Transpor- tation. Synopsis of Each of These Books. 40. LESSON— RAILROAD TRAFFIC ASSOCIATIONS. Judisdiction of A. The Trunk Line Committee B. The Central Freight Association C. The Western Trunk Line Committee D. The Trans-Missouri Freight Association E. The Trans-Continental Freight Association F. The Arkansas Freight Committee. Rela- tion to Pools and Joint Committees. Community of Interest Inter- railway Relations. Effects of Anti-Trust Laws. Powers and Func- tions. CONCENTRATED WISDOM OF TRAFFIC EXPERTS. The above course represents the money-saving secrets used by over 2,000 traffic experts, who are saving shippers hundreds of thousands of doUars annually. It is a singular fact that practically nothing has ever been published on the science of shipping. Shippers have been content to leave every- thing to the Railroads and pay any price which has been asked. In every other line of industry there are numerous books treating every phase of the subject. The demand for classified information in this important field has induced the Interstate Commerce Schools to prepare a series of technical Lessons and Lectures covering all the departments of shipping thoroughly. The aim of our instruction is to classify, systematize and boil down all this information. This is to the shipping world what the text books on chemistry and metallurgy are to their respective fields. A NEW FIELD FOR THE AMBITIOUS. The systematic study of the science of shipping opens up a new field of business endeavor both profitable and full of opportunity. It is a field in which the demand is greater than the supply and one which has 110 ELVIN S. KETCHUM bitherto been closed to the average man save through long aud tedious apprenticeship. By reducing to concrete form in a aeries of hooks the principles which govern the handling of trafB.c and through which a sav- ing in freight charges is produced, we are accomplishing that which will create an interest as widespread as did the enactment of the Interstate Commerce Act. In fact, the hooks supply a want created by that Act which has since been felt by every shipper and every clerk identified ■with shipping details throughout the country. The systematic study of the Science of Shipping comprises the expert knowledge possessed by men who are commanding large salaries because of its possession. The men by reason of their knowledge, e^erience aud executive ability, command salaries as large as Senators of the United States. All that they know, all that experience has taught them and all that has enabled them to command large salaries, save the one requisite of executive abiity, should be available to every shipper. WHO SHOUIJ> BE INTEEESTED. There are three classes of people upon whom this information will confer immediate and lasting benefits: First, it will help the young man seeking a career and he wiU find the study particularly alluring. The position of Tra£B.c Manager, or expert for shipping concerns, is one that pays well and commands respect. The man who occupies this position is thrown into close contact with his employer, as the development of new territory, the meeting of competition and the making of sales often de- pends upon his knowledge and ability to make them possible. In the hands of men of ability it is the stepping stone to positions of even greater responsibility and profit, as the traffic and sales departments are closely allied. Better, however, than anything else which may be said to the young man entering upon this field of work is the fact that every- one who masters this information from the very outset is put upon a higher plane than the ordinary beginner in commercial service, and com- mands the pay of an expert. Aside from the demand for experts in private service, there is a wide field among railroads for men who command the knowledge reciuisite to the quoting of rates to all points in the country. Bate clerks get better pay than the average of railroad employes, and there is a constant de- mand for competent men. The shipping clerk or other employe connected With the details of freight shipping, who wishes to advance himself and earn more salary, wiU realize the opportunity is fully as great. It will open to these an avenue of escape from the drudgery of mere manual labor and enable them to command more through increased knowledge and ability to save for the firms which employ them. SAVING FREIGHT MONEY 111 VALUABLE TO EVEEY SHIPPER AND RECEIVER. The shipper who is interested either in acquiring the knowledge for liis own use of for that of some employe, that he may profit thereby, is personally interested in this information. To the shipper who does not now enjoy the benefits to be derived from expert service in the handling of his freight, it offers an opportunity to test the (question of how much profit may be derived from the use of such knowledge. A great many shippers of the smaller class do not know the practical advantages to be gained by the employment of men to look after this department of their business. The expense attached to the employment of those who are leally competent is prohibitive. This information in the hands of present employes will enable them to demonstrate what expert service will save for them in the handling of freight and the cost of transportation. In addition this information will be beneficial to all men engaged in handling the details of traffic, as they will not only possess the knowledge and experience of others in the realm of rate making, but also an outline of methods in vogue that produce economy of management in the best traffic departments in the country. APPENDIX THE following pages contain the complete text of the Commerce Court Act and the Interstate Commerce Law. The changes made in the law by the last Congress are indicated in bold face type. ELVIN S. KETCHUM ACT TO CREATE A COMMERCE COURT. Be it enacted by the Senate and the House of Representatives of the United States of America in Congress assembled. That a court of the United States is hereby created which shall be known as the cominerce court and shall have the jurisdiction now pos- sessed by circuit courts of the United States and the judges thereof over all cases of the following kinds : First. All cases for the enforcement, otherwise than by adjudication and collection of a forfeiture or penalty or by infliction of criminal punish- ment, of any order of the Interstate Commerce Commission other than for the payment of money. Second. Cases brought to enjoin, set aside, annul, or suspend in whole or in part any order of the Interstate Commerce Commission. Third. Such cases as by section three of the Act entitled "An Act to further regulate commerce with foreign nations and among the States," approved February nineteenth, nineteen hundred and three, are author- ized to be maintained in a circuit court of the United States. Fourth. All such mandamus proceedings as under the provisions of section twenty or section twenty-three of the Act entitled "An Act to reg- ulate commerce," approved February fourth, eighteen hundred and eighty- seven, as amended, are authorized to be maintained in a circuit court of the United States. Nothing contained in this Act shall be construed as enlarging the jurisdiction now possessed by the circuit courts of the United States or the judges thereof, that is hereby transferred to and vested in the com- merce court. The jurisdiction of the commerce court over cases of the foregoing classes shall be exclusive ; but this Act shall not affect the jurisdiction now possessed by any circuit or district court of the United States over cases or proceedings of a kind not within the above-enumerated classes. The commerce court shall be a court of record, and shall have a seal of such form and style as the court may prescribe. The said court shall be composed of five judges, to be from time to time designated and as- signed thereto by the Chief Justice of the United States, from among the circuit judges of the United States, for the period of five years, except that in the first instance the court shall be composed of the five additional circuit judges to be appointed as hereinafter provided, who shall be designated by the President to serve for one, two, three, four, and five years, respectively, in order that the period of designation of one of the said judges shall expire in each year thereafter. In case of the death, resignation, or termination of assignmnet of any judge so designated, the Chief justice shall designate a circuit judge to fill the vacancy so caused and to serve during the unexpired period for which the original designa- tion was made. After the year nineteen hundred and fourteen no circuit judge shall be redesignated to serve in the commerce court until the ex- piration of at least one year after the expiration of the period of his list previous designation. The judge first designated for the five-year period INTERSTATE COMMERCE LAW shall be the presiding judge of said court, and thereafter thei judge senior in designation shall be the presiding judge. Each of the judges during the period of his service in the commerce court shall, on account of the regular sessions of the court being held in the city of Washington, receive in addition to his salary as circuit judge an expense allowance at the rate of one thousand five hundred dollars per annum. The President shall, by and with the advice and consent of the Sen- ate, appoint five additional circuit judges, no two of whom shall be from the same judicial circuit, who shall hold office during good behavior and who shall be from time to time designated and assigned by the Chief Justice of the United States for service in the circuit court of any district, or the circuit court of appeals for any circuit, or in the commerce court. The associate judges shall have precedence and shall succeed to the place and powers of the presiding judge whenever he may be absent or incapable of acting in the order of the date of their designations. Four of said judges shall constitute a quorum, and at least a majority of the court shall concur in all decisions. The court shall also have a clerk and a marshal, with the same duties and powers, so far as they may be appropriate and are not altered by rule of the court, as are now possessed by the clerk and marshal, respectively, of the Supreme Court of the United States. The offices of the clerk and marshal of the court shall be in the city of Washington, in the District of Columbia. The judges of the court shall appoint the clerk and marshal, and may also appoint if they find it necessary, a deputy clerk and deputy marshal; and such clerk, marshal, deputy clerk and deputy marshal shall hold office during the pleasure of the court. The salary of the clerk shall be four thousand dollars per annum ; the salary of the marshal three thou- sand dollars per annum ; the salary of the deputy clerk two thousand five hundred dollars per annum ; and the salary of the deputy marshal two thousand five hundred dollars per annum. The said clerk and marshal may, with the approval of the court, employ all requisite assistance. The costs and fees in said court shall be established by the court in a table thereof, approved by the Supreme Court of the United States, within four months after the organization of the court ; but such costs and fees shall in no case exceed those charged in the Supreme Court of the United States, and shall be accounted for and paid into the Treasury of the United States. The commerce court shall be always open for the transaction of business. Its regular sessions shall be held in the city of Washington, in the District of Columbia; but the powers of the court or of any judge thereof, or of the clerk, marshal, deputy clerk, or deputy marshal may be exercised anywhere in the United States ; and for expedition of the work of the court and the avoidance of undue expense or inconvenience to suitors the court shall hold sessions in diflferent parts of the United States as may be found desirable. The actual and necessary expenses of the judges, clerk, marshal, deputy clerk, and deputy marshal of the court incurred for travel and attendance elsewhere than in the city of Washing- ELVIN S. KETCHUM ton shall be paid upon the written and itemized certificate of such judge, clerk, marshal, deputy clerk, or deputy marshal by the marshal of the court, and shall be allowed to him in the statement of his accounts with the United States. The United States marshals of the several districts outside of the city of Washington in which the commerce court may hold its sessions shall provide, under the direction and with the approval of the Attorney- General of the United States, such rooms in the public buildings of the United States as may be necessary for the court's use ; but in case proper rooms cannot be provided in such public buildings, said marshals, with the approval of the Attorney-General of the United States, may then lease from time to time other necessary rooms for the court. If, at any time, the business of the commerce court does not require the services of all the judges, the Chief Justice of the United States may, by writing, signed by him and filed in the Department of Justice terminate the assignment of any of the judges or temporarily assign him for service in any circuit court or circuit court of appeals. In case of illness or other disability of any judge assigned to the commerce court the Chief Justice of the United States may assign any other circuit judge of the United States to act in his place, and may terminate such assignment when the exigence therefor shall cease; and any circuit judge so assigned to act in place of such judge shall, during his assignment, exercise all the powers and perform all the functions of such judge. In all cases within the jurisdiction the commerce court, and each of the judges assigned thereto, shall, respectively, have and may exercise any and all of the powers of a circuit court of the United States and of the judges of said court, respectively, so far as the same may be appropri- ate to the effective exercise of the jurisdiction hereby conferred. The commerce court may issue all writs and process appropriate to the full ex- ercise of its jurisdiction and powers and may prescribe the form thereof. It may also, from time to time, establish such rules and regulations con- cerning pleading, practice, or procedure in cases or matters within its juris- diction as to the court shall seem wise and proper. Its orders, writs, and process may run, be served, and be returnable anywhere in the United States ; and the marshal and deputy marshal of said court and also the United States marshals and deputy marshals in the several districts of the United States shall have like powers and be under like duties to act for and in behalf of said court as pertain to United States marshals and dep- uty marshals generally when acting under like conditions concerning suits or matters in the circuits of the United States. The jurisdiction of the commerce court shall be invoked by filing in the office of the clerk of the court a written petition setting forth briefly and succinctly the facts constituting the petitioner's cause of action, and specifying the relief sought. A copy of such petition shall be forthwith served by the marshal or a deputy marshal of the commerce court or by the proper United States marshal or deputy marshal upon every defendant therein named, and when the United States is a party defendant, the service shall be made by filing a copy of said petition in the office of the INTERSTATE COMMERCE LAW Secretary of the Interstate Commerce Commission and in the Department of Justice. Within thirty days after the petition is served, unless that time is extended by order of the court or a judge thereof, an answer to the petition shall be filed in the clerk's office, and a copy thereof mailed to the petitioner's attorney, which answer shall briefly and categorically respond to the allegations of the petition. No replication need be filed to the answer, and objections to the sufficiency of the petition or answer as not setting forth a cause of action or defense must be taken at the final hear- ing or by motion to dismiss the petition based on said grounds, which mo- tion may be made at any time before answer is filed. In case no answer shall be filed as provided herein the petitioner may apply to the court on notice for such relief as may be proper upon the facts alleged in the peti- tion. The court may, by rule, prescribe the method of taking evidence in cases pending in said court ; and may prescribe that the evidence be taken before a single judge of the court, with power to rule upon the admission of evidence. Except as may be otherwise provided in this Act, or by rule of the court, the practice and procedure in the commerce court shall con- form as nearly as may be to that in like cases in a circuit court of the United States. The commerce court shall be opened for the transaction of business at a date to be fixed by order of the said court, which shall be not later than thirty days after the judges thereof shall have been designated. Sec. 2. That a final judgment or decree of the commerce court may be reviewed by the Supreme Court of the United States if appeal to the Supreme Court be taken by an aggrieved party within sixty days after the entry of said final judgment or decree. Such appeal may be taken in like manner as appeals from a circuit court of the United States to the Supreme Court, and the commerce court may direct the original record to be transmitted -on appeal instead of a transcript thereof. The Supreme Court may affirm, reserve, or modify the final judgment or. decree of the commerce court as the case may require. Appeal to the Supreme Court, however, shall in no case supersede or stay the judgment or decree of the commerce court appealed from, unless the Supreme Court or a justice thereof shall so direct, and appellant shall give bond in such form and of such amount as the Supreme Court, or the justice of that court allowing the stay, may require. An appeal may also be taken to the Supreme Court of the United States from an interlocutory order or decree of the commerce court granting or continuing an injunction restraining the enforcement of an order of the Interstate Commerce Commission provided such appeal be taken within thirty days from the entry of such order or decree. Appeals to the Supreme Court under this section shall have priority in hearing and determination over all other causes except criminal causes in that court. Sec. 3. That suits to enjoin, set aside, annul, or suspend any order of the Interstate Commerce Commission shall be brought in the commerce Court against the United States. The pendency of such suit shall not of itself stay or suspend the operation of the order of the Interstate Com- ELVIN S. KETCHUM merce Commission ; but the commerce court, in its discretion, may restrain or suspend, in whole or in part, the operation of the Commission's order pending the final hearing and determination of the suit. No order or injunction so restraining or suspending an order of the Interstate Com- merce Commission shall be made by the commerce court otherwise than upon notice and after hearing, except that in cases where irreparable damage would otherwise ensue to the petitioner, said court, or judge there- of, may, on hearing after not less than three days' notice to the Interstate Commerce Commission and the Attorney-General, allow a temporary stay or suspension in whole or in part of the operation of the order of the Interstate Commerce Commission for not more than sixty days from the date of the order of such court or judge, pending application to the court for its order or injunction, in which case the said order shall contain a specific finding, based upon evidence submitted to the judge making the order and identified by reference thereto, that such irreparable damage would result to the petitioner and specifying the nature of the damage. The court may, at the time of hearing such application, upon a like finding, continue the temporary stay or suspension in whole or in part until its decision upon the application. Sec. 4. That all cases and proceedings in the commerce court which but for this Act would be brought by or against the Interstate Commerce Commission shall be brought by or against the United States, and the United States may intervene in any case or proceeding in the commerce court whenever, though it has not been made a party, public interests are involved. Sec. 5. That the Attorney-General shall have charge and control of the interests of the Government in all cases and proceedings in the commerce court, and in the Supreme Court of the United States upon ap- peal from the commerce court; and if in his opinion the public interest requires it, he may retain and employ in the name of the United States, within the appropriations from time to time made by the Congress for such purposes, such special attorneys and counsellors at law as he may think necessary to assist in the discharge of any of the duties incumbent Upon him and his subordinate attorneys ; and the Attorney-General shall stipulate with such special attorneys and counsel the amount of their Compensation, which shall not be in excess of the sums appropriated there- for by Congress for such purposes, and shall have supervision of their action: Provided, That the Interstate Commerce Commission and any party or parties in interest to the proceeding before the Commission, in which an order or requirement is made, may appear as parties thereto of their own motion and as of right, and be represented by their counsel, in any suit wherein is involved the validity of such order or requirement or any part thereof, and the interest of such party ; and the court wherein is pending such suit may make all such rules and orders as to such ap- pearances and representations, the number of counsel, and all matters of procedure, and otherwise, as to subserve the ends of justice and speed the determination of such suits ; Provided, further, That communities, associations, corporations, firms, and individuals who are interested in the INTERSTATE COMMERCE LAW controversy or question before the Interstate Commerce Commission, or in any suit which may be brought by any one under the terms of this Act, or the Acts of which it is amendatory or which are amendatory of it, re- lating to action of the Interstate Commerce Commission, may intervene in said suit or proceedings at any time after the institution thereof, and the Attorney-General shall not dispose of or discontinue said suit or pro- ceeding over the objection of such party or intervenor aforesaid, but said intervener or intervenors may prosecute, defend, or continue said suit or proceeding unaffected by the action or non-action of the Attorney- General of the United States therein. Complainants before the Interstate Commerce Commission interested in a case shall have the right to appear and be made parties to the case and be represented before the courts by counsel under such regulations as are now permitted in similar circumstances under the rules and practice of equity courts of the United States. Sec. 6. That until the opening of the commerce court as in section one hereof provided, all cases and proceedings of which from that time the commerce court is hereby given exclusive jurisdiction may be brought in the same courts and conducted in like manner and with like effect as is now provided by law; and if any such case or proceeding shall have gone to final judgment or decree before the opening of the commerce court, appeal may be taken from such final judgment or decree in like manner and with like effect as is now provided by law. Any such case or proceeding within the jurisdiction of the commerce court which may have been begun in any other court as hereby allowed before the said date shall be forthwith transferred to the commerce court, if it has not yet pro- ceded to final judgment or decree in such other court unless it has been finally submitted for the decision of such court, in which case the cause shall proceed in such court to final judgment or decree and further proceeding thereafter, and appeal may be taken direct to the Supreme Court, and if remanded such cause may be sent back to the court from which the appeal was taken or to the commerce court for further pro- ceeding as the Supreme Court shall direct; and all previous proceedings in such transferred case shall stand and operate notwithstanding the transfer, subject to the same control over them by the commerce court and to the same right of subsequent action in the case of proceeding as if the transferred case or proceeding had been originally begun in the commerce court. The clerk of the court from which any case or pro- ceeding is to be transferred to the commerce court shall transmit to and file in the commerce court the originals of all papers filed in such case or proceeding and a certified transcript of all record entries in the case or proceeding up to the time of transfer. It shall be the duty of every common carrier subject to the provisions of this Act, within sixty days after the taking effect of this Act, to desig- nate in writing an agent in the city of Washington, District of Columbia, upon whom service of all notices and processes may be made for and on behalf of said common carrier in any proceeding or suit pending before the Interstate Commerce Commission or before said commerce court, and. ELVIN S. KETCHUM to file such designation in the office of the secretary of the Interstate Com- merce Commission, which designation may from time to time be changed by Hke writing similarly filed; and thereupon service of all notices and processes may be made upon such common carrier by leaving a copy thereof with such designated agent at his office or usual place of residence in the city of Washington, with like effect as if made personally upon such common carrier, and in default of such designation of such agent, service of any notice or other process in any proceeding before said Interstate Commerce Commission or commerce court may be made by posting such notice or process in the office of the secretary. of the Interstate Commerce Commission. INTERSTATE COMMERCE LAW THE ACT TO EEGXTLATE COMMlEECB. Be it enacted by the Senate and House of Eepresentatives of the United States of America in Congress assembled. Sec. 1 (As amended June 29, 1906, and April 13, 1908). That the provisions of this Act shall apply to any corporation or any person or persons engaged in the transportation of oil or other commodity, except water and except natural or artificial gas, by means of pipe lines, or partly by pipe lines and partly by railroad, or partly by pipe lines and partly by water, and to telegraph, telephone and cable companies (whether wire or wireless) engaged in sending messages from one state, territory or district of the United States, to any other state, territory or district of the United States, or to any foreign country, . . . who shall be considered and held to be common carriers within the meaning and purpose of this Act, and to any common carrier or carriers engaged in the transportation of passengers or property wholly by railroad (or partly by railroad and partly by water when both are used under a common control, management, or arrangement for a continuous carriage or shipment), from one State or Territory of the United States, or the District of Columbia, to any other State or Terri- tory of the United States, or the District of Columbia, or from one place in a Territory to another place in the same Territory, or from any place in the United States to an adjacent foreign country, or from any place in the United States through a foreign country to any other place in the United States, and also to the transportation in like manner of property shipped from any place in the United States to a foreign country and carried from such place to a port of transshipment, or shipped from a foreign country to any place in the United States and carried to such place from a port of entry either in the United States or an adjacent foreign country: Provided, however, That the provisions of this Act shall not apply to the transportation of passengers or property, or to the receiving, delivering, storage, or handling of property wholly within one State and not shipped to or from a foreign country from or to any State or Territory as aforesaid, nor shall they apply to the transmission of messages by telephone, telegraph or cable wholly within one state and not transmitted to or from a foreign country from or to any state or territory as aforesaid. The term "common carrier" as used in this Act shall include express companies and sleeping car companies. The term "railroad" as used in this Act, shall include all bridges and ferries used or operated in connection with any railroad, and also all the road in use by any corporation operating a railroad, whether owned or operated under a contract, agreement, or lease, and shall also include all switches, spurs, tracks, and terminal facili- ties of every kind used or necessary in the transportation of the persons or property designated herein, and also all freight depots, yards, and grounds used or necessary in the transportation or delivery of any of said property ; and the term_ "transportation" shall include cars and other vehicles and all instrumentalities and facilities of shipment or carriage, irrespective of Approved Feb. 4, 1887; amended March 3, 1889, Feb. 10, 1891, Feb. 8, 1895 June 39, 1906, and June 18, 1910. ELVIN S. KETCHUM ownership or of any contract, express or implied, for the use thereof and all services in connection with the receipt, delivery, elevation, and transfer in transit, ventilation, refrigeration or icing, storage, and handling of property transported; and it shall be the duty of every carrier subject to the provisions of this Act to provide and furnish such transportation upon reasonable request therefor, and to establish through routes and just and reasonable rates applicable thereto; and to provide reasonable facilities for operating such through routes and to make reasonable rules and regula- tions with respect to the exchange, interchange and return of cars used therein, and for the operation of such through routes, and providing for reasonable compensation to those entitled thereto. All charges made for any service rendered or to be rendered in the transportation of passengers or property and for the transmission of mes- SEiges by telegraph, telephone or cable, as aforesaid, or in connection there- with, shall be just and reasonable; and every unjust and unreasonable charge for such service or any part thereof is prohibited and declared to be unlawful. Provided, that messages by telegraph, telephone or cable, subject to the provisions of this Act, may be classified into day, night, repeated, unrepealed, letter, commercial, press, government, and such other classes as are just and reasonable, and different rates may be charged for the different classes of messages; and provided further, that nothing in this Act shall be construed to prevent telephone, telegraph and cable companies from entering into contracts writh common carriers for the ex- change of services. And it is hereby made the duty of all common carriers subject to the provisions of this Act to establish, observe and enforce just and reasonable classifications of property for transportation, with reference to which rates, tariffs, regulations, or practices are or may be made or prescribed, and just and reasonable regulations and practices affecting classifications, rates, or tariffs, the issuance, form, and substance of tickets, receipts, and bills of lading, the manner and method of presenting, marking, packing and delivering property for transportation, the facilities for transportation, the carrying of personal, sample and excess baggage, and all other matters relating to or connected with the receiving, hand- ling, transporting, storing and delivery of property subject to the provisions of this Act which may be necessary or proper to secure the safe and prompt receipt, handling, transportation and delivery of property subject to the provisions of this Act upon just and reasonable terms, and every such unjust and unreasonable classification, regulation and practice with reference to commerce between the states and with foreign countries is prohibited and declared to be unlawful. No common carrier subject to the provisions of this Act shall, after January first, nineteen hundred and seven, directly or indirectly, issue or give any interstate free ticket, free pass, or free transportation for passen- gers, except to its employees and their families, its officers, agents, surgeons, physicians, and attorneys at law; to ministers of religion, traveling secre- taries of railroad Young Men's Christian Associations, inmates of hospitals and charitable and eleemosynary institutions, and persons exclusively engaged in charitable and eleemosynary work; to indigent, destitute and homeless persons, and to such persons when transported by charitable soci- eties or hospitals, and the necessary agents employed in such transportation ; INTERSTATE COMMERCE LAW to inmates of the National Homes or State Homes for Disabled Volunteer Soldiers, and of Soldiers' and Sailors' Homes, including those about to enter and those returning home after discharge; ("and Boards of Managers of such Homes") to necessary care takers of live stock, poultry, and fruit; to employees on sleeping cars, express cars, and to linemen of telegraph and telephone companies ; to Railway Mail Service employees, post-oflBce inspec- tors, customs inspectors and immigration inspectors; to newsboys on trains,, baggage agents, witnesses attending any legal investigation in which the common carrier is interested, persons injured in wrecks and physicians and nurses attending such persons : Provided, That this provision shall not be construed to prohibit the interchange of passes for the officers, agents, and employees of common carriers, and their families ; nor to prohibit any com- mon carrier from carrying passengers free with the object of providing relief in cases of general epidemic, pestilence, or other calamitous visitation. and provided further, that this provision shall not be construed to prohibit the privilege of passes or franks, or the exchange thereof with each other, for the officers, agents, employees, and their families of such telegraph, telephone and cable lines, and the officers, agents, employees and their families of other common carriers subject to the provisions of this Act. Provided further. That the term "employees" as used in this paragraph shall include furloughed, pensioned, and superannuated employees, persons who have become disabled or infirm in the service of any such common carrier, and the remains of a person killed in the employment of a carrier and ex-employees traveling for the purpose of entering the service of any such common carrier; and the term "families" as used in this paragraph shall include the families of those persons named in this proviso, also the families of persons killed, and the widows during widowhood and minor children during rninority of persons who died, .... while in the service of any such common carrier. Any common carrier violating this provision shall be deemed guilty of a misdemeanor and for each offense, on conviction, shall pay to the United States a penalty of not less than one hundred dollars nor more than two thousand dollars, and any person, other than the persons excepted in this provision, who uses any such interstate free ticket, free pass, or free trans- portation, shall be subject to a like penalty. Jurisdiction of offenses under this provision shall be the same as that provided for offenses in an Act entitled "An Act to further regulate commerce with foreign nations and among the States," approved February nineteenth, nineteen hundred and three, and any amendment thereof. (See section 23.) From and after May first, nineteen hundred and eight, it shall be unlawful for any railroad company to transport from any State, Territory, or the District of Columbia, to any other State, Territory, or the District of Columbia, or to any foreign country, any article or commodity, other than timber and the manufactured products thereof, manufactured, mined, or produced by it, or under its authority, or which it may own in whole, or in pari;, or in which it may have any interest direct or indirect except such articles or commodities as may be necessary and intended for its use in the conduct of its business as a common carrier. Any common carrier subject to the provisions of this Act, upon appli- ELVIN S. KETCHUM cation of any lateral, branch line of railroad, or of any shipper tendering interstate traffic for transportation, shall construct, maintain, and operate upon reasonable terms a switch connection with any such lateral, branch line of railroad, or private side track which may be constructed to connect with its railroad, where such connection is reasonably practicable and can be put in with safety and will furnish sufficient business to justify the construction and maintenance of the same; and shall furnish cars for the movement of such traffic to the best of its ability without discrimination in favor of or against any such shipper. If any common carrier shall fail to install and operate any such switch or connection as aforesaid, on applica- tion therefor in writing by any shipper or owner of such lateral, branch line of railroad such shipper or owner of such lateral, branch Hne of railroad . . . may make complaint to the Commission, as provided in section thirteen of this Act, and the Commission shall hear and investigate the same and shall determine as to the safety and practicability thereof and justification and reasonable com- pensation therefor^ and the Commission may make an order, as provided in section fifteen of this Act, directing the common carrier to comply with the provisions of this section in accordance with such order, and such order shall be enforced as hereinafter provided for the enforcement of all other orders by the Commission, other than orders for the payment of money. Sec. 2. That if any common carrier subject to the provisions of this Act shall, directly or indirectly, by any special rate, rebate, drawback, or other device, charge, demand, collect, or receive from any person or persons a greater or less compensation for any service rendered, or to be rendered, in the transportation of passengers or property, subject to the provisions of this Act, than it charges, demands, collects, or receives from any other person or persons for doing for him or them a like and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and conditions, such common carrier shall be deemed guilty of unjust discrimination, which is hereby prohibited and declared to be unlawful. Sec. 3. That it shall be unlawful for any common carrier subject to the provisions of this Act to make or give any undue or unreasonable preference or advantage to any particular person, company, firm, corpora- tion, or locality, or any particular description of traffic, in any respect whatsoever, or to subject any particular person, company, firm, corporation, or locality, or any particular description of traffic, to any undue or unrea- sonable prejudice or disadvantage in any respect whatsoever. Every common carrier subject to the provisions of this Act shall, according to their respective powers, afford all reasonable, proper, and equal facilities for the interchange of traffic between their respective lines, and for the receiving, forwarding, and delivering of passengers and property to and from their several lines and those connecting therewith, and shall not discriminate in their rates and charges between such connecting lines; but this shall not be construed as requiring any such common carrier to give the use of its tracks or terminal facilities to another carrier engaged in like business. Sec. 4. That it shall be unlawful for any common carrier subject to the provisions of this Act to charge or receive any greater compensation in INTERSTATE COMMERCE LAW the aggregate for the transportation of passengers or of like kind of prop- erty, ("under substantially similar circumstances and conditions") for a shorter than for a longer distance over the same line or route in the same direction, the shorter being included within the longer distance, or to charge any- greater compensation as a through route than the aggregate of the inter- mediate rates subject to the provisions of this Act; but this shall not be construed as authorizing any common carrier within the terms of this Act to charge and receive as great compensation for a shorter as for a longer distance: Provided, however, That upon application to the Interstate Commerce Commission ("appointed under the provisions of this act") such common carrier may, in special cases, after investigation ("by the commission") be authorized to charge less for longer than for shorter distances for the transportation of passengers or property; and the Commission may from time to time pre- scribe the extent to which such designated common carrier may be relieved from the operation of this section: ........ ("of this act") . Provided further, That no rates or charges lawfully existing at the time of the passage of this amendatory Act shall be required to be changed by reason of the provisions of this section prior to the expiration of six months after the passage of this Act, nor in any case where application shall have been filed before the Commission in accordance with the provisions of this section, until a determination of such application by the Commission. Whenever a carrier by railroad shall in competition with a water route or routes reduce the rates on the carriage of any species of freight to or from competitive points, it shall not be permitted to increase such rates unless after hearing by the Interstate Commerce Commission it shall be found that such proposed increase rests upon changed conditions other than the elimination of water competition. Sec. 5. That it shall be unlawful for any common carrier subject to the provisions of this Act to enter into any contract, agreement, or combination with any other common carrier or carriers for the pooling of freights of different and competing railroads, or to divide between them the aggregate or net proceeds of the earnings of such railroads, or any portion thereof ; and in any case of an agreement for the pooling of freights as aforesaid, each day of its continuance shall be deemed a separate offense. Sec. 6. (Amended March 2, 1889. Following section substituted June 29, 1906.) That every common carrier subject to the provisions of this Act shall file with the Commission created by this Act and print and keep open to public inspection schedules showing all the rates, fares, and ELVIN S. KETCHUM charges for transportation between different points on its own route and between points on its own route and points on the route of any other carrier by railroad, by pipe line, or by water when a through route and joint rate have been established. If no joint rate over the through route has been established, the several carriers in such through route shall file, print, and keep open to public inspection, as aforesaid, the separately established rates, fares and charges applied to the through transportation. The schedules printed as aforesaid by any such common carrier shall plainly state the places between which property and passengers will be carried, and shall contain the classification of freight in force, and shall also state separately all terminal charges, storage charges, icing charges, and all other charges which the Commission may require, all privileges or facilities granted or allowed and any rules or regulations which in any wise change, affect, or determine any part or the aggregate of such aforesaid rates, fares, and charges, or the value of the service rendered to the passenger, shipper, or consignee. Such schedules shall be plainly printed in large type, and copies for the use of the public shall be kept posted in two public and conspicuous places in every depot, station, or office of such carrier where passengers or freight, respectively, are received for transportation, in such form that they shall be accessible to the public and can be conveniently inspected. The provisions of this section shall apply to all traffic, transportation, and facilities defined in this Act. Any common carrier subject to the provisions of this Act receiving freight in the United States to be carried through a foreign country to any place in the United States shall also in like manner print and keep open to public inspection, at every depot or office where such freight is received for shipment, schedules showing the through rates established and charged by such common carrier to all points in the United States beyond the foreign country to which it accepts freight for shipment; and any freight shipped from the United States through a foreign country into the United States the through rate on which shall not have been made public, as required by this Act, shall, before it is admitted into the United States from said foreign country, be subject to customs diities as if said freight were of foreign production. Xo change shall be made in the rates, fares, and charges or joint rates, fares, and charges which have been filed and published by any common carrier in compliance with the requirements of this section, except after thirty days' notice to the Commission and to the public published as aforesaid, which shall plainly state the changes proposed to be made in the schedule then in force and the time when the changed rates, fares, or charges will go into effect; and the proposed changes shall be shown by printing new schedules, or shall be plainly indicated upon the schedules in force at the time and kept open to public inspection: Provided, That the Commission may, in its discretion and for good cause shown, allow changes upon less than the notice herein specified, or modify the requirements of this section in respect to publishing, posting, and filing of tariffs, either in particular instances or by a general order appli\^able to special or peculiar circumstances or conditions. The names of the several carriers which are parties to any joint tarii? shall be specified therein, and each of the parties thereto, other than the INTERSTATE COMMERCE LAW one filing the same, shall file with the Commission such evidence of concur- rence therein or acceptance thereof as may be required or approved by the Commission, and where such evidence of concurrence or acceptance is filed it shall not be necessary for the carriers filing the same to also file copies of the tariffs in which they are named as parties. Every common carrier subject to this Act shall also file with said Com- mission copies of all contracts, agreements, or arrangements with other common carriers in relation to any traffic affected by the provisions of this Act to which it may be a party. The Commission may determine and prescribe the form in which the schedules required by this section to be kept open to public inspection shall be prepared and arranged and may change the form from time to time as shall be found expedient. No carrier, unless otherwise provided by this Act, shall engage or participate in the transportation of passengers or property, as defined in this Act, unless the rates, fares, and charges upon which the same are transported by said carrier have been filed and published in accordance with the provisions of this Act; nor shall any carrier charge or demand or collect or receive a greater or less or different compensation for such trans- portation of passengers or propert}^ or for any service in connection there- with, between the points named in such tariffs than the rates, fares, and charges which are specified in the tariff filed and in effect at the time; nor shall any carrier refund or remit in any manner or by any device any portion of the rates, fares, and charges so specified, nor extend to any shipper or person any privileges or facilities in the transportation o± passengers or property, except such as are specified in such tariffs: Provided, That wherever the word "carrier" occurs in this Act it shall be held to mean ''common carrier." That in time of war or threatened war preference and precedence shall, upon the demand of the President of the United States, be given, over all other traffic, to the transportation of troops and material of war, and carriers shall adopt every means within their control to facilitate and expedite the military traffic. The Commission may reject and refuse to file any schedule that is tendered for filing which does not provide and give lawful notice of its effective date, and any schedule so rejected by the Commission' shall be void and its use shall be unlawful. In case of failure or refusal on the part of any carrier, receiver, or trustee to comply with the terms of any regulation adopted and promul- gated or any order made by the Commission under the provisions of this section, such carrier, receiver, or trustee shall be liable to a penalty of five hundred dollars for each such offense, and twenty-five dollars for each and every day of the continuance of such offense, which shall accrue to the United States, and may be recovered in a civil action brought by the United States. If any common carrier subject to the provisions of this Act, after written request made upon the agent of such carrier hereinafter in this section referred to, by any person or company for a written statement of the rate or charge applicable to a described shipment between stated places under the schedules or tariffs to which such carrier is a party, shall ELVIN S. KETCHUM refuse or omit to give such written statement within a reasonable time, or shall misstate in writing the applicable rate, and if the person or company making such request suffers damage in consequence of such refusal or omission or in consequence of the misstatement of the rate, either through making the shipment over a line or route for which the proper rate is higher than the rate over another available line or route, or through entering into any sale or other contract whereunder such person or company obligates himself or itself to make such shipment of freight at his or its cost, then the said carrier shall be liable to a penalty of two hundred and fifty dollars, which shall accrue to the United States and may be recovered in a civil action brought by the United States. It shall be the duty of every carrier by railroad to keep at all times conspicuously posted in every station where freight is received for trans- portation the name of an agent resident in the city, village or town where such station is located, to whom application may be made for the infor- mation by this section required to be furnished on written request; and in case any carrier shall fail at any time to have such name so posted in in any station, it shall be sufficient to address such request in substantially the following form: "The station agent of the company at station," together with the name of the proper post-office, inserting the name of the carrier company and of the station in the hlanks, and to serve the same by depositing the request so addressed, ■with postage thereon prepaid, in any post-office. Sec. 7. That it shall be unlaTi'ful for any common carrier subject to the provisions of this Act to enter into any combination, contract, or agree- ment, expressed or implied, to prevent, by change of time schedule, carriage in difEerent cars, or by other means or devices, the carriage of freights from being continuous from the place of shipment to the place of destination; and no break of bulk, stoppage, or interruption made by such common carrier shall prevent the carriage of freights from being and being treated as one continuous carriage from the place of shipment to the place of destination, unless such break, stoppage, or interruption was made in good faith for some necessary purpose, and without any intent to avoid or unnecessarily interrupt such continuous carriage or to evade any of the provisions of this Act. Sec. 8. That in case any common carrier subject to the provisions of this Act shall do, cause to be done, or permit to be done any act, matter, or thing in this Act prohibited or declared to be unlawful, or shall omit to do any act, matter, or thing in this Act required to be done, such com- mon carrier shall be liable to the person or persons injured thereby for the full amount of damages sustained in consequence of any such violation of the provisions of this Act, together with a reasonable counsel or attorney's fee, to be fixed by the court in every case of recovery, which attorney's fee shall be taxed and collected as part of the costs in the case. Sec. 9. That any person or persons claiming to be damaged by any common carrier subject to the provisions of this Act may either make com- plaint to the Commission as hereinafter provided for, or may bring suit in his or their own behalf for the recovery of the damages for which such common carrier may be liable under the provisions of this Act, in any district or circuit court of the United States of competent jurisdiction; INTERSTATE COMMERCE LAW but such person or persons shall not have the right to pursue both of said remedies, and must in each case elect which one of the two methods of procedure herein provided for he or they will adopt. In any such action brought for the recovery of damages the court before which the same shall be pending may compel any director, officer, receiver, trustee, or agent of the corporation or company defendant in such suit to attend, appear, and testify in such case, and may compel the production of the books and papers of such corporation or company party to any such suit; the claim that any such testimony or evidence may tend to criminate the person giving such evidence shall not excuse such witness from testifying, but such evidence or testimony shall not be used against such person on the trial of any criminal proceeding. Sec. 10. (As amended March 2, 1889.) That any common carrier subject to the provisions of this Act, or, whenever such common carrier is a corporation, any director or officer thereof, or any receiver, trustee, lessee, agent, or person, acting for or employed by such corporation, who, alone or with any other corporation, company, person, or party, shall will- fully do or cause to be done, or shall willingly suffer or permit to be done, any act, matter, or thing in this Act prohibited or declared to be unlaw- ful, or who shall aid or abet therein, or shall willfully omit or fail to do any act, matter, or thing in this Act required to be done, or shall cause or willingly suffer or permit any act, matter, or thing' so directed or required by this Act to be done not to be so done, or shall aid or abet any such omission or failure, or shall be guilty of any infraction of this Act for ■which no penalty is otherwise provided, or -who shall aid or abet therein, shall be deemed guilty of a misdemeanor, and shall, upon conviction thereof in any district court of the United States within the jurisdiction of which such offense was committed, be subject to a fine of not to exceed five thousand dollars for each offense: Provided, That if the offense for" which any person shall be convicted as aforesaid shall be an unlawful discrimination in rates, fares, or charges, for the trans- portation of passengers or property, such person shall, in addition to the fine hereinbefore provided for, be liable to imprisonment in the peniten- tiary for a term of not exceeding two years, or both such fine and im- prisonment, in the discretion of the court. Any common carrier subject to the provisions of this Act, or, when- ever such common carrier is a corporation, any officer or agent thereof, or any person acting for or employed by such corporation, who, by means of false billing, false classification, false weighing, or false report of weight, or by any other device or means, shall knowingly and willfully assist, or shall willingly suffer or permit, any person or persons to obtain transporta- tion for property at less than the regular rates then established and in force on the line of transportation of such common carrier, shall be deemed guilty of a misdemeanor, and shall, upon conviction thereof in any court of the United States of competent jurisdiction within the district in which such offense was committed, be subject to a fine of not exceeding five thousand dollars, or imprisonment in the penitentiary for a term of not exceeding two years, or both, in the discretion of the court, for each offense. ELVIN S. KETCHUM y Any person, corporation, or company, or any agent or officer thereof, ("and any oflBcer or agent of any corporation or") who shall deliver property for transportation to any common carrier subject to the provisions of this Act, or for whom as consignor or consignee any such carrier shall transport property, who shall knowingly and willfully, di- rectly or indirectly, himself or by employee, agent, officer, or otherwise, by false billing, false classification, false weighing, false representation of the contents of the package, or the substance of the property, false report of weight, or by any other device or means, whether with or without the consent or connivance of the carrier, its agent or ("agents") officer, . . obtain transportation for such property at less than the regular rates then established and in force on the line of transportation, or who shall knowingly and willfully, directly or indirectly, himself or by employee, agent,officer, or otherwise, by false statement or representation as to cost, veJue, nature, or extent of injury, or by the use of any false bill, bill of lading, receipt, voucher, roll, account, claim, certificate, affidavit, or deposition, knowing the same to be false, fictitipus, or fraudulent, or to contain any false, fictitious, or fraudulent statement or entry, obtain or attempt to obtain any allowance, refund, or payment for damage or otherwise in connection with or growing out of the transpor- tation of or agreement to transport such property, whether with or with- out the consent or connivance of the carrier, w^hereby the compensation of such carrier for such transportation, either before or after payment, shall in fact be made less than the regular rates then established and in force on the line of transportation, . . .... shall be deemed guilty of fraud, which is hereby declared to be a misde- meanor, and shall, upon conviction thereof in any court of the United States of competent jurisdiction within the district in which such offense was wholly or in part . committed, be subject for each offense to a fine of not exceeding five thousand dollars or imprisonment in the penitentiary for a term of not exceeding two years, or both, in the discretion of the court: Provided, That the penalty of imprisonment shall not apply to artificial persons. If any such person, or any officer or agent of any such corporation or company, shall, by payment of money or other thing of value, solicitation, or otherwise, induce or attempt to induce . _ . . . any common carrier subject to the provisions of this Act, or any of its officers or agents, to discriminate unjustly in his, its, or their favor as against any other consignor or consignee in the transportation of property, or shall aid or abet any common carrier in any s\ich imjust discrimination, siich person or such officer or agent of such corporation or company shall be deemed guilty of a misdemeanor, and shall, upon convic- tion thereof in any court of the United States of competent jurisdiction within the district in which such offense was committed, be subject to a fine of not exceeding five thousand dollars, or imprisonment in the peni- tentiary for a term of not exceeding two years, or both, in the discretion INTERSTATE COMMERCE LAW of the court, for each ofEense; and such person, corporation, or company shall also, together with said common carrier, be liable, jointly or sever- ally, in an action ("on the case") to be brought by any consignor or consignee discriminated against in any court of the United States of competent juris- diction for all damages caused by or resulting therefrom. Sec. 11. That a Commission is hereby created and established to be known as the Interstate Commerce Commission, which shall be composed of five Commissioners, who shall be appointed by the President, by and with the advice and consent of the Senate. The Commissioners first appointed under this Act shall continue in office for the term of two, three, four, five, and six years, respectively, from the first day of January, Anno Domini eighteen hundred and eighty-seven, the term of each to be designated by the President; but their successors shall be appointed for terms of six years, except that any person chosen to fill a vacancy shall be appointed only for the unexpired time of the Commissioner whom he shall succeed. Any Commissioner may be removed by the President for inef- ficiency, neglect of duty, or malfeasance in office. Not more than three of the Commissioners shall be appointed from the same political party. No person in the employ of or holding any official relation to any common carrier subject to the provisions of this Act, or owning stock or bonds thereof, or who is in any manner pecuniarily interested therein, shall enter upon the duties of or hold such office. Said Commissioners shall not engage in any other business, vocation, or employment. No vacancy in the Commission shall impair the right of the remaining Commissioners to exercise all the powers of the Commission. (See section 24, enlarging Commission and increasing salaries.) Sec. 12. (As amended March 2, 1889, and February 10, 1891.) That the Commissioli hereby created shall have authority to inquire into the management of the business of all common carriers subject to the provisions of this Act, and shall keep itself informed as to the manner and method in which the same is conducted, and shall have the right to obtain from such common carriers full and complete information necessary to enable the Commission to perform the duties and carry out the objects for which it was created; and the Commission is hereby authorized and required to execute and enforce the provisions of this Act; and, upon the request of the Commission, it shall be the duty of any district attorney of the United States to whom the Commission may apply to institute in the proper court and to prosecute under the direction of the Attorney-General of the United States all necessary proceedings for the enforcement of the provisions of this Act and for the punishment of all violations thereof, and the costs and expenses of such prosecution shall be paid out of the appropriation for the expenses of the courts of the United States ; and for the purposes of this Act the Commission shall have power to require, by subpoena, the attend- ance and testimony of witnesses and the production of all books, papers, tariffs, contracts, agreements, and documents relating to any matter under investigation. Such attendance of witnesses, and the production of such documentary evidence, may be required from any place in the United States, at any desig- ELVIN S. KETCHUM bated place of hearing. And in case of disobedience to a subpoena the Commission, or any party to a proceeding before the Commission, may invoke the aid of any court of the United States in requiring the attendance and testimony of witnesses and the production of books, papers, and docu- ments under the provisions of this section. And any of the circuit courts of the United States within the juris- diction of which such inquiry is carried on may, in case of contumacy or refusal to obey a subpoena issued to any common carrier subject to the pro- visions of this Act, or other person, issue an order requiring such common carrier or other person to appear before said Commission (and produce books and papers if so ordered) and give evidence touching the matter in question; and any failure to obey such order of the court may be punished by such court as a contempt thereof. The claim that any such testimony or evidence may tend to criminate the person giving such evidence shall not excuse such witness from testifying; but such evidence or testimony shall not be used against such person on the trial of any criminal proceeding. The testimony of any witness may be taken, at the instance of a party in any proceeding or investigation depending before the Commission, by deposition, at any time after a cause or proceeding is at issue on petition and answer. The Commission may also order testimony to be taken by deposition in any proceeding or investigation pending before it, at any stage of such proceeding or investigation. Such depositions may be taken before any judge of any court of the United States, or any commissioner of a circuit, or any clerk of a district or circuit court, or any chancellor, justice, or judge of a supreme or superior court, mayor or chief magistrate of a city, judge of a county court, or court of common pleas of any of the United States, or any notary public, not being of counsel or attorney to either of the parties, nor interested in the event of the proceeding or investigation. Eeasonable notice must first be given in writing by the party, or his attorney, proposing to take such deposition to the opposite party or his attorney of record, as either may be nearest, which notice shall state the name of the witness and the time and place of the taking of his deposition. Any person may be compelled to appear and depose, and to produce documentary evi- dence, in the same manner as witnesses may be compelled to appear and testify and produce documentary evidence before the Commission as here- inbefore provided. Every person deposing as herein provided shall be cautioned and sworn (or affirm, if he so request) to testify the whole truth, and shall be carefully ■examined. His testimony shall bo reduced to writing by the magistrate taking the deposition, or under his direction, and shall, after it has been i'educed to writing, be subscribed by the deponent. If a witness whose testimony may be desired to be taken by deposition be in a foreign country, the deposition may be taken before an officer or person designated by the Commission, or agreed upon by the parties by stipulation in writing to be filed with the Commission. All depositions must be promptly filed with the Commission. Witnesses whose depositions are taken pursuant to this Act, and the magistrate or other officer taking the same, shall severaJly be entitled to the ?ame fees as are paid for like services in the courts of the United States. INTERSTATE COMMERCE LAW Sec. 13. That any person, firm, corporation, company, . or association, or any mercantile, agricultural, or manufacturing society, or other organization, or any body politic or municipal organization, or any common carrier, ..... complaining of anything done or omitted to be done by any common carrier subject to the provisions of this Act in contraven- tion of the provisions thereof, may apply to said Commission by petition, which shall briefly state the facts; whereupon a statement ("of the charges") of the complaint ........ . . « thus made shall be forwarded by the Commission to such common carrier, who shall be called upon to satisfy the complaint or to answer the same in writing within a reasonable time, to be specified by the Commission. If such common carrier, within the time specified, shall make reparation for the injury alleged to have been done, said carrier shall be relieved of liability to the complainant only for the particular violation of law thus complained of. If such carrier or carriers ...... ....... shall not satisfy the complaint within ^the time specified, or there shall appear to be any reasonable ground for investigating said complaint, it shall be the duty of tlie Commission to investigate the matters complained of in such manner and by such means as it shall deem proper. Said Commission shall in like manner, and with the same authority and powers, ..... investigate any complaint for- warded by the railroad commissioner or railroad commission of any State or Territory, at the request of such commissioner or commission, and the Interstate Commerce Commission shall have full authority and power at any time to ■ ("may") institute an ("any") inquiry on its own motion, ("In the same manner and to the same effect as though complaint had been made") in any case and as to any matter or thing concerning which a complaint is authorized to be made, to or before said Commission by any provi- sion of this act, or concerning which any question may arise under any of the provisions of this Act, or relating to the enforcement of any of the provisions of this act. And the said Commission shall have the same powers and authority to proceed with any inquiry instituted on its own motion as though it had been appealed to by complaint or petition under any of the provisions of this Act, including the power to make and enforce any order or order* in the case, or relating to the matter or thing concerning which the inquiry is had, excepting orders for the payment of money. No complaint shall at any time be dismissed because of the absence of direct damage to the complainant. ELVIN S. KETCHUM Sec. 14. (Amended March 2, 1889, and June 29, 1906.) That when- ever an investigation shall be made by said Commission, it shall be its duty to make a report in writing in respect thereto, which shall state the conclu- sions of the Commission, together with its decision, order, or requirement in the premises ; and in case damages are awarded such report shall include the findings of fact on which the award is made. All reports of investigations made by the Commission shall be entered of record, and a copy thereof shall be furnished to the party who may have complained, and to any common carrier that may have been complained of. The Commission may provide for the publication of its reports and decisions in such form and manner as may be best adapted for public information and use, and such authorized publications shall be competent evidence of the reports and decisions of the Commission therein contained in all courts of the United States and of the several States without any further proof or authentication thereof. The Commission may also cause to be printed for early distribution its annual reports. Sec. 15. (As amended June 39, 1906.) That .... <"the commission is authorized and empowered and it shall be its duty") whenever, after full hearing upon a complaint made as provided in section thirteen of this Act, or ("upon complaint of any common carrier, it") after full hearing under an order for investigation and hearing made by the Commission on its own initiative (either in extension of any pending complaint or without any complaint whatever), the Commission shall be of opinion that any individual or joint rates, or charges whatsoever, demanded, charged, or collected by any common carrier or carriers, subject to the provisions of this Act, for the transportation of persons or property or for the transmission of messages by telegraph or telephone as defined in the first section of this Act, or that any individual or joint classifications, regulations or practices whatsoever of such carrier or carriers ("affecting such rates") subject to the provisions of this Act, . . . .... are unjust or unreasonable, or unjustly dis- criminatory, or unduly preferential or prejudicial, or otherwise in violation of any of the provisions of this Act, the Commission is hereby authorized an empowered to determine and prescribe what will .... be the just and reasonable individual or joint rate or rates, charge or charges, to be thereafter observed in such case as the maximum to be charged; and what individ- ual or joint classification, regulation or practice ("in respect to such transportation") is just, fair, and reasonable _ . to be thereafter followed ; and to make an ordei that the carrier or carriers shall cease ••••..• and desist from such violation, to the extent to which the Commission find the same to exist, and shall not thereafter publish, demand, or collect INTERSTATE COMMERCE LAW any rate or charge for such transportation or transmission in excess of the maxirmim rate or charge so prescribed, and shall adopt the classification and shall conform to and observe the regulation or practice so prescribed. All orders of the Commission, except orders for the payment of money, shall take effect within such reasonable time, not less than thirty days, and shall continue in force for such period of time, not exceeding two years, as shall be prescribed in the order of the Commission, unless the same shall be suspended or modiiied or set aside by the Com- mission or be suspended or set aside by a court of competent jurisdiction. Whenever the carrier or carriers, in obedience to such order of the Com- mission or otherwise, in respect to joint rates, fares, or charges, shall fail to agree among themselves upon the apportionment or division thereof, the Commission may after hearing make a supplemental order prescribing the just and reasonable proportion of such joint rate to be received by each carrier party thereto, which crder shall take effect as a part of the original order. Whenever there shall be filed with the Commission any schedule stating a new individual or joint rate, fare, or charge, or any new individual or joint classification, or any new individual or joint regulation or practice affecting any rate, fare, or charge, the Commission shall have, and it is hereby given, authority, either upon complaint or upon its own initiative without complaint, at once, and if it so orders, without answer, or other formal pleading by the interested carrier or carriers, but upon reasonable notice, to enter upon a hearing concerning the propriety of such rate, fare, charge, classification, regulation, or practice; and pending such hearing and the decision thereon the Commission upon filing with such schedule and delivering to the carrier or carriers affected thereby a statement in writing of its reasons for such suspension may suspend the operation of such schedule and defer the use of such rate, fare, charge,, classification, regulation, or practice, but not for a longer period than, one hundred and twenty days beyond the time when such rate, fare, charge, classification, regulation, or practice would otherwise go into effect; and after full hearing, whether completed before or after the rate, fare, charge, classification, regulation, or practice goes into effect, the Commission may make such order in reference to such rate, fare, charge, classification, regulation, or practice as would be proper in a proceeding initiated after the rate, fare, charge, classification, regulation, or practice had become effective; provided, that if any such hearing cannot be concluded within the period of suspension, as above stated, the Interstate Commerce Commission may, in its discretion, extend the time of suspen- sion for a further period not exceeding six months. At any hearing involving a rate increased after January first, nineteen hundred and ten, or of a rate sought to be increased after the passage of this Act, the burden of proof to show that the increased rate or proposed increased rate is just and reasonable shall be upon the common carrier, and the Commission shall give to the hearing and decision of such questions preference over all other questions pending before it and decide the same as speedily as possible. The Commission may also, after hearing on a complaint, or upon its own initiative without complaint, establish through routes and joint clas* ELVIN S. KETCHUM sifications and may establish joint rates as the maximum to be charged and pre- scribe the division of such rates as hereinbefore provided, and the terms and conditions under which such through routes shall be operated, ("when that may be necessary to give effect to any provision of this act and") whenever the carriers themselves shall have refused or neglected to estab- lish voluntarily euch through routes or joint classifications or joint rates; ("provided no reasonable or satisfactory through route exists") and this provision shall apply when one of the con- necting carriers is a water line. The Commission shall not, however, established any through route, classification, or rate between street electric passenger railways not engaged in the general business of trans- porting freight in addition to their passenger and express business and railroads of a different character, nor shall the Commission have the right to establish any route, classifications, rate, fare, or charge, when the transportation is wholly by water, and any transportation by water affected by this act shall be subject to the laws and regulations applicable to transportation by water. And in establishing such through route, the Commission shall not require any company, without its consent, to embrace in such route substantially less than the entire length of its railroad and of any inter- mediate railroad operated in conjunction and under a common manage- ment or control therewith which lies between the termini of such proposed through route, unless to do so would make such through route unreasonably long as compared with another practicable through route which could otherwise be established. In all cases w^here at the time of delivery of property to any railroad corporation being a common carrier, for transportation subject to the provisions of this Act to any point of destination, between which and the point of such delivery for shipment two or more through routes and through rates shall have been established as in this Act provided to which through routes and through rates such carrier is a party, the person, firm or corporation making such shipment, subject to such reasonable exceptions and regulations as the Interstate Commerce Commission shall from time to time prescribe, shall have the right to designate in writing by which of such through routes such property shall be transported to destination, and it shall thereupon be the duty of the initial carrier to route said property and issue a through bill of lading therefor as so directed, and to transport said property over its ow^n line or lines and deliver the same to a connecting line or lines according to such through route, and it shall be the duty of each of said connecting carriers to receive said property and transport it over the said line or lines and deliver the same to the next succeeding carrier or consignee according to the routing instructions in said bill of lading: Provided, however. That the shipper shall in all instances have the right to determine, where competing lines of railroad constitute portions of a through line or route, over which of said competing lines so constituting a portion of said through line or route his freight shall be transported. It shall be unlawful for any common carrier subject to the provisions of this Act, or any officer, agent, or employee of such common carrier, INTERSTATE COMMERCE LAW or for any other person or corporation lawfully authorized by such common carrier to receive information therefrom, knowingly to disclose to or permit to be acquired by any person or corporation other than the shipper or consignee, without the consent of such shipper or consignee, any infor- mation concerning the nature, kind, quantity, destination, consignee, or routing of any property tendered or delivered to such common carrier for interstate transportation, which information may be used to the detri- ment or prejudice of such shipper or consignee, or which may improperly disclose his business transactions to a competitor; and it shall also be unlawful for any person or corporation to solicit or knowingly receive any such information which may be so used: Provided, That nothing in this Act shall be construed to prevent the giving of such information in response to any legal process issued under the authority of any state or federal court, or to any officer or agent of the government of the United States, or of any State or Territory, in the excercise of his powers, or to any officer or other duly authorized person seeking such information for the prosecution of persons charged with or suspected of crime; or infor- mation given by a common carrier to another carrier or its duly authorized agent, for the purpose of adjusting mutual traffic accounts in the ordinary course of business of such carriers. Any person, corporation or association violating any of the provisions of the next preceding paragraph of this section shall be deemed guilty of a misdemeanor, and for each offense, on conviction, shall pay to the United States a penalty of not more than one thousand dollars. If the owner of property transported under this Act directly or indi- rectly renders any service connected with such transportation, or furnishes any instrumentality used therein, the charge and allowance therefor shall be no more than is just and reasonable, and the Commission may, after hearing on a complaint, determine what is a reasonable charge as the maximum to be paid by the carrier or carriers for the service so rendered or for the use of the instrumentality so furnished, and fix the same by appropriate order, which order shall have the same force and effect and be enforced in like manner as the orders above provided for in this section. The foregoing enumeration of powers shall not exclude any power which the Commission would otherwise have in the making of an order under the provisions of this Act. Sec. 16. (Amended March 2, 1889. Following section substituted June 29, 1906.) That if, after hearing on a complaint made as provided in section thirteen of this Act, the Commission shall determine that any party complainant is entitled to an award of damages under the pro- visions of this Act for a violation thereof, the Commission shall make an order directing the carrier to pay to the complainant the sum to which he is entitled on or before a day named. If a carrier does not complj- with an order for the payment of money within the time limit in such order, the complainant, or any person for whose benefit such order was made, may file in the circuit court of the United States for the district in which he resides or in which is located the principal operating office of the carrier, or through which the road of the carrier runs, or in any state court of general jurisdiction having jurisdic- tion of the parties, a petition setting forth briefly the causes for which he ELVIN S. KETCHUM claims damages, and the order of the Commission in the premises. Such suit in the circuit court of the United States shall proceed in all respects like other civil suits for damages, except that on the trial of such suit the findings and order of the Commission shall be prima facie evidence of the facts therein stated, and except that the petitioner shall not be liable for costs in the circuit court nor for costs at any subsequent stage of the proceedings unless they accrue upon his ap- peal. If the petitioner shall finally prevail he shall be allowed a reasonable attorney's fee, to be taxed and collected as a part of the costs of the suit. All complaints for the recovery of damages shall be filed with the Com- mission within two years from the time the cause of action accrues, and not after, and a petition for the enforcement of an order for the payment of money shall be filed in the circuit court or state court within one year from the date of the order, and not after. ("Provided that claims accrued prior to passage of this act may be presented within one year.") In such suits all parties in whose favor the Commission may have made an award for damages by a single order may be joined as plaintiffs, and all of the carriers parties to such order awarding such damages may be joined as defendants, and such suit may be maintained by such joint plaintiffs and against such joint defendants in any district where any one of such joint plaintiffs could maintain such suit against any one of such joint defendants ; and service of process against any one of such defendants as may not be found in the district where the suit is brought may be made in any district where such defendant carrier has its principal operating office. In case of such joint suit the recovery, if any, may be by judgment in favor of any one of such plaintiffs, against the defendant found to be liable to such plaintiff. Every order of the Commission shall be forthwith served ("by mailing to any one of the principal officers or agents of the carrier at his usual place of business a copy thereof and the registry mailed receipt shall be prima facie evidence of the receipt of such order by the carrier in due course of mail") upon the designated agent of the carrier in the city of Washington or in such other manner as may be provided by law. The Commission shall be authorized to suspend or modify its orders upon such notice and in such manner as it shall deem proper. It shall be the duty of every common carrier, its agents and employees, to observe and comply with such orders so long as the same shall remain in effect. Any carrier, any officer, representative, or agent of a carrier, or any receiver, trustee, lessee, or agent of either -A them, who knowingly fails or neglects to obey any order made under the provisions of section fifteen of this Act shall forfeit to the United States the sum of five thousand dollars for each offense. Every distinct violation shall be a separate offense, and in case of a continuing violation each day shall be deemed a separate offense. The forfeiture provided for in this Act shall be payable into the INTERSTATE COMMERCE LAW Treasury of the United States, and shall be recoverable in a civil suit in the name of the United States, brought in the district vvrhere the carrier has its principal operating office, or in any district through which the road of the carrier runs. It shall be the duty of the various district attorneys, under the direc- tion of the Attorney-General of the United States, to prosecute for the recovery of forfeitures. The costs and expense of such prosecution shall be paid out of the appropriation for the expenses of the courts of the United States. The Commission may ("with the consent of the Attorney-General employ special counsel in any pro- ceeding under this act, paying the expenses of such employment out of its own appropriation.") employ such attorneys as it finds necessary for proper legal aid and service of the Commission or its members in the conduct of their work or for proper representation of the public interests in investigations made by it or cases or proceedings pending before it, whether at the Commis- sion's own instance or upon complaint, or to appear for and represent the Commission in any case pending in the commerce court; and the expenses of such employment shall be paid out of the appropriation for the Cc/mmission. If any carrier fails or neglects to obey any order of the Commission, other than for the payment of money, while the same is in effect, ("any party injured thereby, or the Commission in its own name, may apply to the Circuit Court in the District where such carrier has its principal operating office, or in which the violation or disobedience of such order shall happen, for an enforcement of such order. Such application shall be by petition, which shall state the substance of the order, and the respect in which the carrier has failed of obedience, and shall be served upon the carrier in such manner as the Court may direct, and the Court shall prosecute such inquiries and make such investigations, through such means as it shall deem needful in the ascer- tainment of the faots at issue, or which may arise upon the hearing of such petition. If, upon such hearing as the Court may determine to be necessary, it appears that the order was regularly made and duly served, and that the carrier Is in disobedience of the same, the Court shall enforce obedience to such order by a writ of injunction, or other proper process, mandatory or otherwise, to restrain such carrier, its officers, agents, or representatives, from further dis- obedience of such order, or to enjoin upon it, or them, obedience to the same; and in the enforcement of such process the Court shall have those powers ordi- narily exercised by it in compelling obedience to its writs of injunction and mandamus. "From any action upon such petition an appeal shall lie by either party to the Supreme Court of the United States, and in such Court the case shall have priority in hearing and determination over all other causes except criminal causes, but such appeal shall not vacate or suspend the order appealed from. "The venue of suits brought in any of the Circuit Courts of the United States against the Commission to enjoin, set aside, annul, or suspend any order or requirement of the Commission, shall be in the District where the carrier against whom such order or requirement may have been made, has its principal operating office, and may be brought at any time after such order is promul- gated. And if the order or requirement has been made against two or more carriers, then in the District where any one of said carriers has its principal operating office and if the carrier has its principal operating office in the District of Columbia, then the venue shall be in the district where said carrier has its principal office; and jurisdiction to hear and determine such suits is hereby vested in such courts. The provisions of 'Aa ELVIN S. KETCHUM Act to Expedite the Hearing and determination of suits in equity and so forth,' approved February eleventh, 1903, shall be, and are hereby made applicable to all such suits, including the hearing on an application for a preliminary injunc- tion, and are also made applicable to any proceeding in equity to enforce any order or requirement of the Commission, or any of the provisions of the act to regulate commerce approved February fourth, eighteen hundred and eighty- seven, and all acts amendatory thereof or supplemental thereto. It shall be the duty of the attorney-general in every such case to file the certificate pro- vided for in said expediting act of February 11, 1903, as necessary to the appli- cation of the provisions thereof, and upon appeal as therein authorized to the Supreme Court of the United States, the case shall have in such Court priority In hearing and determination over all other causes except criminal causes; Provided, that no injunction, interlocutory order or decree suspending or re- straining the enforcement of an order of the Commission shall be granted, except on hearing after not less than five days' notice to the Commission. An appeal may be taken from any interlocutory order or decree granting or continuing an injunction in any suit, but shall lie only to the Supreme Court of the United States; Provided, further, that the appeal must be taken within thirty days from the entry of such order or decree, and it shall take precedence in the Appellate Court over all other causes except causes of like character and criminal causes.") the Interstate Commerce Commission or any party injured thereby, or the United States, by its Attorney-General, may apply to the commerce court for the enforcement of such order. If, after hearing, that court determines that the order was regularly made and duly served, and that the carrier is in disobedience of the same, the Court shall enforce obedience to such order by a writ of injunction or other proper process, mandatory or otherwise, to restrain such carrier, its officers, agents, or representatives, from further disobedience of such order, or to enjoin upon it or them obedience to the same. The copies of schedules and classifications .... and tariffs of rates, fares, and charges, and of all contracts, agreements, or arrangements between common carriers filed with the Commission as herein provided, and the statistics, tables, and figures contained in the annual or other ..... reports of carriers made to the Com- mission, as required by the provisions of this Act, shall be preserved as public records in the custody of the secretary of the Commission, and shall be received as prima facie evidence of what they purport to be for the purpose of investigations by the Commission and in all judicial pro- ceedings; and copies of or extracts from any of said schedules, tariffs, contracts, agreements, arrangements, or reports made public records as aforesaid, certified by the secretary under ("its") the Commission's seal, shall be received in evidence with like effect as the originals. Sec. 16a. (Added June 29, 1906.) That after a decision, order, or requirement has been made by the Commission in any proceeding any party thereto may at any time make application for rehearing of the same, or any matter determined therein, and it shall be lawful for the Commission in its discretion to grant such a rehearing if sufficient reason therefor be made to appear. Applications for rehearing shall be governed by such general rules as the Commission may establish. No such application shall INTERSTATE COMMERCE LAW excuse any carrier from complying with or obeying any decision, order, or requirement of the Commission, or operate in any manner to stay or post- pone the enforcement thereof, without the special order of the Commission. In case a rehearing is granted the proceedings thereupon shall conform as nearly as may be to the proceeding in an original hearing, except as the Commission may otherwise direct; and if, in its judgment, after such rehearing and the consideration of all facts, including those arising since the former hearing, it shall appear that the original decision, order, or requirement is in any respect unjust or unwarranted, the Commission may reverse, change, or modify the same accordingly. Any decision, order, or requirement made after such rehearing, reversing, changing, or modifying the original determination shall be subject to the same provisions as an original order. Sec. 17. (As amended March 3, 1889.) That the Commission may conduct its proceedings in such manner as will best conduce to the proper dispatch of business and to the ends of justice. A majority of the Com- mission shall constitute a quorum for the transaction of business, but no Commissioner shall participate in any hearing or proceeding in which he has any pecuniary interest. Said Commission may, from time to time, make or amend such general rules or orders as may be requisite for the order and regulation of proceedings before it, including forms of notices and the service thereof, which shall conform, as nearly as may be, to those in use in the courts of the United States. Any party may appear before said Commission and be heard, in person or by attorney. Every vote and official act of the Commission shall be entered of record, and its proceed- ings shall be public upon the request of either party interested. Said Commission shall have an official seal, which shall be judicially noticed. Either of the members of the Commission may administer oaths and affirmations and sign subpoenas. Sec. 18. (As amended March 2, 1889.) [See section 24, increasing salaries of Commissioners.] That each Commissioner shall receive an annual salary of seven thousand five hundred dollars, payable in the same manner as the judges of the courts of the United States. The Commis- sion shall appoint a secretary, who shall receive an annual salary of three thousand five hundred dollars,^ payable in like manner. The Commis- sion shall have authority to employ and fix the compensation of such other employees as it may find necessary to the proper performance of its duties. Until otherwise provided by law, the Commission may hire suit- able offices for its use, and shall have authority to procure all necessary office supplies. Witnesses summoned before the Commission shall be paid the same fees and mileage that are paid witnesses in the courts of the United States. All of the expenses of the Commission, including all necessary expenses for transportation incurred by the Commissioners, or by their employees under their orders, in making any investigation, or upon official business in any other places than in the city of Washington, shall be allowed and paid on the presentation of itemized vouchers therefor approved by the chairman of the Commission. ' Increased to $5,000 by sundry civil act of March 4, 1907, 34 Stat. L., 1311. ELVIN S. KETCHUM Sec. 19. That the principal office of the Commission shall be in the city of Washington, where its general sessions shall be held; but whenever the convenience of the public or the parties may be promoted, or delay or expense prevented thereby, the Commission may hold special sessions in any part of the United States. It may, by one or more of the Commis- sioners, prosecute any inquiry necessary to its duties, in any part of the United States, into any matter or question of fact pertaining to the business of any common carrier subject to the provisions of this Act. Sec. 20. (As amended June 29, 1906, and February 25, 1909.) That the Commission is hereby authorized to require annual reports from all common carriers subject to the provisions of this Act, and from the owners of all railroads engaged in interstate commerce as defined in this Act; to prescribe the manner in which such reports shall be made, and to require from such carriers specific answers to all questions upon which the Commission may need information. Such annual reports shall show in detail the amount of capital stock issued, the amounts paid therefor, and the manner of payment for the same ; the dividends paid, the surplus fund, if any, and the number of stockholders; the funded and floating debts and the interest paid thereon; the cost and value of the carrier's property, franchises, and equipments; the number of employees and the salaries paid each class; the accidents to passengers, employees, and other persons, and the causes thereof; the amounts expended for improvements each year, how expended, and the character of such improvements; the earnings and receipts from each branch of business and from all sources; the operating and other expenses; the balances of profit and loss; and a complete exhibit of the financial operations of the carrier each year, including an annual balance sheet. Such reports shall also contain such information in rela- tion to rates or regulations concerning fares or freights, or agreements, arrangements, or contracts affecting the same as the Commission may require; and the Commission may, in its discretion, for the purpose of enabling it the better to carry out the purposes of this Act, prescribe a period of time within which all common carriers subject to the provisions of this Act shall have, as near as may be, a uniform system of accounts, and the manner in which such accounts shall be kept. ("Said detailed reports shall contain all the required statistics for the period of twelve months ending on the 30th day of June in each year, and shall be made out under oath and filed with the Commission at its office in Washington, on or before the 30th day of September then next following, unless additional time be granted in any case by the Commission; and if any carrier, person or corporation subject to the provisions of this act, shall fail to make and file said annual reports within the time above specified, or within the time extended by the Commission for making and filing the same, or shall fail to make spe- cific answer to any question authorized by the provisions of this section within thirty days from the time it is lawfully required so to do, such party shall forfeit to the United States the sum of one hundred dollars for each and every day it shall continue to be In default with respect thereto. The Commission shall also have authority to require said carriers to file monthly reports of the earnings and expenses or special reports within a specified period, and if any Buch carrier shall fail to file such reports within the time fixed by the Com- mission, it shall be subject to the forfeiture last above provided.") Said detailed reports shall contain all the required statistics for the period of twelve months ending on the thirtieth day of June in each year. INTERSTATE COMMERCE LAW or on the thirty-first day of December in each year if the Commission by order substitute that period for the year ending June thirtieth, and shall be made out under oath and filed with the Commission at its office in Washington within three months after the close of the year for which the report is made, unless additional time be granted in any case by the Commission; and if any carrier, person, or corporation subject to the provisions of this Act shall fail to make and file said annual reports within the time above specified, or within the time extended by the Commission, for making and filing the same, or shall fail to make specific answer to to any questions authorized by the provisions of this section w^ithin thirty days from the time it is lawfully required so to do, such party shall forfeit to the United States the sum of one hundred dollars for each and every day it shall continue to be in default with respect thereto. The Commis- sion shall also have authority by general or special orders to require said carriers, or any of them, to file monthly reports of earnings and expenses, and to file periodical or special, or both periodical and special reports concerning any matters about which the Commission is authorized or required by this or any other law to inquire or to keep itself informed or which it is required to enforce; and such periodical or special reports shall be under oath whenever the Commission so requires; and if any such carrier shall fail to make and file any such periodical or special report within the time fixed by the Commission, it shall be subject to the forfeitures last above provided. Said forfeitures shall be recovered in the manner provided for the recovery of forfeitures under the provisions of this Act. The oath required by this section may be taken before any person authorized to administer an oath by the laws of the State in which the same is taken. i j The Commission may, in its discretion, prescribe the forms of any and all accounts, records, and memoranda to be kept by carriers subject to the provisions "of this Act, including the accounts, records, and memo- randa of the movement of traffic as well as the receipts and expenditures of moneys. The Commission shall at all times have access to all accounts, records, and memoranda kept by carriers subject to this Act, and it shall be unlawful for such carriers to keep any other accounts, records, or mem- oranda than those prescribed or approved by the Commission, and it may employ special agents or examiners, who shall have authority under the order of the Commission to inspect and examine any and all accounts, records, and memoranda kept by such carriers. This provision shall ap- ply to receivers of carriers and operating trustees. In case of failure or refusal on the part of any such carrier, receiver, or trustee to keep such accounts, records, and memoranda on the books and in the manner prescribed by the Commission, or to submit such ac- counts, records, and memoranda as are kept to the inspection of the Commission or any of its authorized agents or examiners, such carrier, re- ceiver, or trustee shall forfeit to the United States the sum of five hundred dollars for each such ofEense and for each and every day of the continu- ance of such offense, such forfeitures to be recoverable in the same manner as other forfeitures provided for in this Act. Any person who shall willfully make any false entry in the accounts of any book of accounts or in any record or memoranda kept by a carrier, or ELVIN S. KETCHUM ■who shall willfully destroy, mutilate, alter, or by any other means or device falsify the record of any such account, record, or memoranda, or who shall willfully neglect or fail to make full, true, and correct entries in such accounts, records, or memoranda of all facts and transactions appertain- ing to the carrier's business, or shall keep any other accounts, records, or memoranda than those prescribed or approved by the Commission, shall be deemed guilty of a misdemeanor, and shall be subject, upon con- viction in any court of the United States of competent jurisdiction, to a fine of not less than one thousand dollars nor more than five thousand dollars or imprisonment for a term not less than one year nor more than three years, or both such fine and imprisonment: Provided, That the Commission may in its discretion issue orders specifying such operating, accounting, or financial papers, records, books, blanks, tickets, stubs, or documents of carriers which may, after a reasonable time, be destroyed, and prescribing the length of time such books, papers, or documents shall be preserved. Any examiner who divulges any fact or information which may come to his knowledge during the course of such examination, except in so far as he may be directed by the Commission or by a court or judge thereof, shall be subject, upon conviction in any court of the United States of competent jurisdiction, to a fine of not more than five thousand dollars or imprisonment for a term not exceeding two years, or both. That the circuit and district courts of the United States shall have jurisdiction, upon the application of the Attorney-General of the United States at the request of the Commission, alleging a failure to comply with or a violation of any of the provisions of said Act to regulate com- merce or of any Act supplementary thereto or amendatory thereof by any tommon carrier, to issue a writ or writs of mandamus commanding such common carrier to comply with the provisions of said Acts, or any of them. And to carry out and give effect to the provisions of said Acts, or any of them, the Commission is hereby authorized to employ special agents or examiners who shall have power to administer oaths, examine witnesses, and receive evidence. That any common carrier, railroad, or transportation company re- ceiving property for transportation from a point in one State to a pomt in another State shall issue a receipt or bill of lading therefor and shall be liable to the lawful holder thereof for any loss, damage, or injury to such property caused by it or by any common carrier, railroad, or transportation company to which such property may be delivered or over whose line or lines such property may pass, and no contract, receipt, rule, or regulation shall exempt such common carrier, railroad, or transporta- tion company from the liability hereby imposed: Provided, That noth- ing in this section shall deprive any holder of such receipt or bill of lading of any remedy or right of action which he has under existing law. That the common carrier, railroad, or transportation company issu- ing such receipt or bill of lading shall be entitled to recover from the common carrier, railroad, or transportation company on whose line the loss, damage, or injury shall have been sustained the amount of such INTERSTATE COMMERCE LAW loss, damage, or injury as it may be required to pay to the owners of such property, as may be evidenced by any receipt, judgment, or transcript thereof. Sec. 21. (As amended March 2, 1889.) That the Commission shall, on or before the first day of December in each year, make a report, which shall be transmitted to Congress, and copies of which shall be distributed as are the other reports transmitted to Congress. This report shall con- tain such information and data collected by the Commission as may be considered of value in the determination of questions connected with the regulation of commerce, together with such recommendations as to addi- tional legislation relating thereto as the Commission may deem neces- sary ; and the names and compensation of the persons employed by said Commission. Sec. 22. (As amended March 2, 1889, and February 8, 1895.) [See section 1, 4th par.] That nothing in this Act shall prevent the carriage, storage, or handling of property free or at reduced rates for the United States, State or municipal governments, or for charitable purposes, or to or from fairs and expositions for exhibition thereat, or the free car- riage of destitute and homeless persons transported by charitable societies, and the necessary agents employed in such transportation, or the issuance of mileage, excursion, or commutation passenger tickets ; nothing in this Act shall be construed to prohibit any common carrier from giving re- duced rates to ministers of religion, or to municipal governments for the transportation of indigent persons, or to inmates of the National Homes or State Homes for Disabled Volunteer Soldiers, and of Soldiers' and Sailors' Orphan Homes, including those about to enter and those return- ing home after discharge, under arrangements with the boards of man- agers of said homes; nothing in this Act shall be construed to prevent railroads from giving free carriage to their own officers and employees, or to prevent the principal officers of any railroad company or companies from exchanging passes or tickets with other railroad companies for their officers and employees ; and nothing in this Act contained shall in any way abridge or alter the remedies now existing at common law or by statute, but the provisions of this Act are in addition to such remedies : Provided, That no pending litigation shall in any way be affected by this Act : Provided further. That nothing in this Act shall prevent the issu- ance of joint interchangeable five-thousand-mile tickets, with special privi- leges as to the amount of free baggage that may be carried under mileage tickets of one thousand or more miles. But before any common carrier, subject to the provisions of this Act, shall issue any such joint inter- changeable mileage tickets with special privileges, as aforesaid, it shall file with the Interstate Commerce Commission copies of the joint tariffs of rates, fares, or charges on which such joint interchangeable mileage tickets are to be based, together with specifications of the amount of free baggage permitted to be carried under such tickets, in the same manner as common carriers are required to do with regard to other joint rates by section six of this Act ; and all the provisions of said section six relat- ing to joint rates, fares, and charges shall be observed by said common ELVIN S. KETCHUM carriers and enforced by the Interstate Commerce Commission as fully with regard to such joint interchangeable mileage tickets as with regard to other joint rates, fares, and charges referred to in said section six. It shall be unlawful for any common carrier that has issued or authorized to be issued any such joint interchangeable mileage tickets to demand, collect, or receive from any person or persons a greater or less compensa- tion for transportation of persons or baggage under such joint interchange- able mileage tickets than that required by the rate, fare, or charge spec- ified in the copies of the joint tariff of rates, fares, charges filed with the Commission in force at the time. The provisions of section ten of this Act shall apply to any violation of the requirements of this proviso. NEW SECTION. (Added March 2, 1889.) [Sec. 23.] That the circuit and district courts of the United States shall have jurisdiction upon the relation of any person or persons, firm, or corporation, alleg- ing such violation by a common carrier, of any of the provisions of the Act to which this is a supplement and all Acts amendatory thereof, as prevents the relator from having interstate traffic moved by said common carrier at the same rates as are charged, or upon terms or conditions as favorable as those given by said common carrier for like traffic under simi- lar conditions to any other shipper, to issue a writ or writs of mandamus against said common carrier, commanding such common carrier to move and transport the traffic, or to furnish cars or other facilities for trans- portation for the party applying for the writ: Provided, That if any question of fact as to the proper compensation to common carrier for the service to be enforced by the writ is raised by the pleadings, the writ of peremptory mandamus may issue, notwithstanding such question of fact is undetermined, upon such terms as to security, payment of money into the court, or otherwise, as the court may think proper, pending the determination of the question of fact : Provided, That the remedy hereby given by writ of mandamus shall be cumulative, and shall not be held to exclude or interfere with other remedies provided by this Act or the Act to which it is a supplement. Sec. 24. (Added June 29, 1906.) That the Interstate Commerce Commission is hereby enlarged so as to consist of seven members with terms of seven years, and each shall receive ten thousand dollars com- pensation annually. The qualifications of the Commissioners and the manner of the payment of their salaries shall be as already provided by law. Such enlargement of the Commission shall be accomplished through appointment by the President, by and with the advice and consent of the Senate, of two additional Interstate Commerce Commissioners, one for a term expiring December thirty-first, nineteen hundred and eleven, one for a term expiring December thirty-first nineteen hundred and twelve. The terms of the present Commissioners, or of any successor appointed tO' fill a vacancy caused by the death or resignation of any of the present Com- missioners, shall expire as heretofore provided by law. Their successors and the successors of the additional Commissioners herein provided for shall be appointed for the full term of seven years, except that any person appointed to fill a vacancy shall be appointed only for the unexpired term INTERSTATE COMMERCE LAW of the Commissioner whom he shall succeed. Not more than four Com- missioners shall be appointed from the same political party. (Additional provisions in Act of June 29, 1906.) (Sec. 9.) That all existing laws relating to the attendance of witnesses and the produc- tion of evidence and the compelling of testimony under the Act to regu- late commerce and all Acts amendatory thereof shall apply to any and all proceedings and hearings under this Act. (Sec. 10.) That all laws and parts of laws in conflict with the pro- visions of this Act are hereby repealed; but the amendments herein pro- vided for shall not affect causes now pending in courts of the United States, but such causes shall be prosecuted to a conclusion in the manner heretofore provided by law. (Sec. 11.) That this Act shall take effect and be in force from and after its passage. ADDITIONAL PROVISION-ACT JUNE, 1910. That nothing in this Act contained shall undo or impair any proceedings heretofore taken by or before the Interstate Commerce Commission or any of the Acts of said Commission; and in any cases, proceedings, or matters now pending before it, the Commission may exercise any of the powers hereby con- ferred upon it, as would be proper in cases, proceedings, or matters hereafter intiated; and nothing in this Act contained shall operate to release or affect any obligation, liability, penalty or forfeiture heretofore existing against or incurred by any person, corporation, or association. ADDITIONAL PROVISION-ACT JUNE, 1910. That the President is hereby authorized to appoint a Commission to investigate questions pertaining to the issuance of stocks and bonds by railroad corporations, subject to the provisions of the Act to regulate commerce, and the po'wer of Congress to regulate or affect the same, and to fix the compensation of the members of such Commission. Said Commission shall be and is hereby authorized to employ experts to aid in the work of inquiry and examination, and such clerks, stenographers, and other assistants as may be necessary, which employees shall be paid such compensation as the Commission may deem just and reasonable upon a certficate to be issued by the chairman of the Commission. The several departments and bureaus of the government shall detail from time to time such officials and employees and furnish such information to the Commission as' may be directed by the President. For the purpose of its investigations the Commission shall be authorized to incur and have paid upon the certi- ficate of its chairman such expenses as the Commission shall deem necessary: Provided, however. That the total expense authorized or incurred under the provisions of this section for compensation, employees, or otherwise, shall not exceed the sum of twenty-five thousand dollars ADDITIONAL PROVISION-ACT JUNE, 1910. That no interlocutory injunction suspending or restraining the enforcement, operation, or execution of any statute of a State by restraining the action of any officer of such State in the enforcement or execution of such statute shall be issued or granted by any justice of the Supreme court, or by any circuit court of the United States, or by any judge thereof, or by any district judge acting as circuit judge, upon the ground of the unconstitutionality of such statute, unless the application for the same shall be presented to ELVIN S. KETCHUM a justice of the Supreme court of the United States, or to a circuit judge, or to a district judge acting as circuit judge, and shall be heard and determined by three judges, of whom at least one shall be a justice of the Supreme court of the United States or a circuit judge, and the other two may be either circuit or district judges, and unless a majority of said three judges shall concur in granting such application. Wherever such appli- cation as aforesaid is presented to a justice of the Supreme court of the United States, or to a judge, he shall immediately call to his assistance to hear and determine the application two other judges: Provided, however. That one of such three judges shall be a justice of the Supreme court of the United States or a circuit judge. Said application shall not be heard or determined before at least five days' notice of the hearing has been given to the Governor and to the Attorney-General of the State, and to such other persons as may be defendants in the suit; Provided, That if of opinion that irreparable loss or damage would result to the complainant unless a temporary restraining order is granted, any justice of the Supreme court of the United States, or any circuit or district judge, may grant such temporary restraining order at any time before such hearing and determination of the application for an interlocutory injunc- tion, but such temporary restraining order shall only remain in force until the hearing and determination of the application for an interlocu- tory injunction upon notice as aforesaid. The hearing upon such appli- cation for an interlocutory injunction shall be given precedence and shall be in every way expedited and be assigned for a hearing at the earliest practicable day after the expiration of the notice hereinbefore provided for. An appeal may be taken directly to the Supreme court of the United States from the order granting or denying, after notice and hear- ing, an interlocutory injunction in such case. ADDITIONAL PROVISION-ACT, 1910. That this Act shall take effect and be in force from and after the expiration of sixty days after its passage except as to sections twelve and sixteen, which sections shall take effect and be in force immediately. (Explanation — These section numbers refer to sections 12 and 16 of the amend- ments as passed June 18, 1910. Section 12 is section 15 of this book and section 16 is the provision act on the preceding page.) ELVIN S. KETCHUM QUIZ QUESTIONS. 1. What historical event resulted in the development of Interstate Commerce? 2. When and why was agitation started relative to super- vision over Freight Rates by the Federal Govern- ment? 3. What is the gist of the report of the Cullom committee made to Congress in 1886 ? 4. When was the Act to Regulate Commerce passed and what sections of it were modified by the Hepburn Amendment of 1906? 5. What were the principal evils which the Act to Regu- late Commerce aimed to correct? 6. What were the defects in the original Act to regulate Commerce and how were some of them eliminated? 7. Discuss Attorney-Greneral Moody's opinion relative to the authority of Congress to regulate Interstate Commerce. 8. Mention ten of the leading features of the Interstate Commerce Act which relate to Freight Traffic. 9. What things can shippers or carriers do which are not specified in the Act? 10. What important matter relating to reasonable Freight Charges does not come under the Act to Regulate Commerce ? 11. Discuss the relation of railroad consolidation to the elimination of competition. 12. What effect may over-capitalization have on reason- able Freight Rates and how may it be controlled? INTERSTATE COMMERCE LAW 13. What are the chief functions of a railroad and how should the Interstate Commerce Law be amended to give equal transportation to all concerned? 14. What is included in the term "common carriers" and "transportation" as defined in the Act to Regulate Commerce ? 15. Does the Interstate Commerce Act apply to trans- portation wholly within a state ? 16. Does the Interstate Commerce Act have jurisdiction over express companies and sleeping car com- panies? 17. What is legally meant by the term "railroad"? 18. What are the provisions of the Act relative to just and reasonable charges for transportation? 19. What classes of people may receive free passes? Who are exempt? 20. What specifications in the Law forbid the transporta- tion of commodities in which common carriers are interested? What is the Supreme Court decision on this clause? 21. What does the Law provide in enabling shippers to secure switching connections? 22. What authority has the commission in requiring com- mon carriers to provide switching connections for shippers? 23. In what manner is unjust discrimination forbidden? 24. Discuss the application of the Law to unreasonable preference or advantage of one shipper over another. 25. What authority does the Law exercise over facilities for the interchange of traffic? ELVIN S. KETOHUM 26. What provision is made in the Law to eliminate dis- crimination between connecting lines? 27. What is meant by the long and short haul clause and what authority has the commission to relieve car- riers from the operation of this section of the law? 28. How is the pooling of freight and the division of earn- ings of transportation lines forbidden? 29. What eight requirements are specified by section 6 relative to the publication of Freight Trafl&c Sched- ules? 30. What supervision is exercised by the Interstate Com- merce Law over the publication of schedules of rates on freight carried through a foreign country? 31. Is freight subject to customs duty in case the rates are not published? 32. What is the statutory notice for the publication of rates and under what conditions may it be modified? 33. What specifications must be contained in the tariffs of common carriers ? 34. What evidence of conference or acceptance is neces- sary to make tariffs legal? 35. What provision is made in the Law relative to filing contracts and agreements relative to traffic with the Interstate Commerce Commission? 36. What jurisdiction has the commission in prescribing the form for the publication of freight schedules ? 37. Are common carriers permitted to engage in trans- portation without publishing their tariffs in accord- ance with the provisions of the Interstate Com- merce Act? INTERSTATE COMMERCE LAW 38. May published rates be deviated from, under any cir- cumstances? 39. Discuss the requirements relative to the continuous carriage of freight from point of origin to destina- tion. 40. What provisions are made for the liability of common carriers for damages to goods in transit? 41. What provisions are made for testimony on the part of officers, and can evidence rendered be used to incriminate the person giving testimony? 42. What are the penalties for violation of the Act by car- riers, also what punishment may be inflicted upon officers, or employees? 43. In case of false billing, weighing, or other devices, what penalties are specified by the statutes ? 44. Do penalties for violation of the Act apply to both shipper and carrier alike, and is there any penalty for inducing carriers to discriminate unjustly? 45. What are the requirements for the appointment of Interstate Commerce commissioners ? 46. What is the salary of a commissioner and his term of office? 47. What authority has the commission to inquire into the business of common carriers? 48. Can the commission enforce provisions of the Inter- state Commerce Law? 49. Discuss the relation of district attorneys to prose- cution under the Act to Regulate Commerce. 50. How may the commission require an inspector to se- cure testimony? ELVIN S. KETCHUM 51. What are the provisions regarding the examinations of books, papers, tariffs, contracts, etc., of railroads and shippers ? 52. Can testimony be taken by deposition? 53. Who may make complaints to the commission, what forms may be used, and how are such complaints served upon common carriers ? 54. What is meant by reparation by common carriers and under what circumstances can the commission grant it? 55. What authority has the commission in the investiga- tion of complaints when carriers are not satisfied as to charges made ? 56. Has the Interstate Commerce Commission any juris- diction over complaints filed by state railroad com- missions ? 57. What specifications are made by the Law relative to the commission making a report of investigations? 58. How is the commission required to enter all investi- gations on record? 59. What authority has the commission under the law to prescribe just and reasonable rates to be observed as maximum charges? 60. Has the commission any authority under the law to prescribe regulations and practices for the control of common carriers? 61. How long are rulings made by the commission to re- main in force, and under what condition may they be set aside? 62. What authority has the commission over the estab- lishment of through routes and joint rates? INTERSTATE COMMERCE LAW 63. Who may determine what is a just or reasonable charge or allowance for service rendered by the owner of property in transit? 64. What method may be taken to compel common carriers to comply with an order for the payment of money? 65. In Avhat kind of cases are the filings of facts by the commission considered prima facie evidence ? 66. Where must venue of suits be brought against a party to set aside or suspend commissioners ' orders ? 67. What authority has the commission to prescribe the form of reports which shall be made by carriers to the commission and what penalty may be inflicted when reports are not filed according to law? 68. What authority has the commission relative to a Uni- form System of accounting for railroad offices? 69. What penalties are prescribed for any person who shall wilfully make false entries or keep records not prescribed by the commission? 70. Who has authority to require the issuance of a man- damus to compel compliance with the provisions of the Interstate Commerce Act ? 71. What are the provisions of the law relative to the im- munity of witnesses ? 72. What changes in the Interstate Commerce Law are now being agitated by the railroads and by the industries ? A NEW PROFESSION Not Overcrowded; Created by the 1910 Railroad Law WHY NOT SELL YOUR SERVICES FOR MORE MONEY ? Answer This Question Is it worth while for you to spend a few minutes and a few paltry cents each day to qualify yourself for positions in Interstate Commerce which will pay you all the rest of your life 1 to 1 000 times the cost of this practical education, or will you continue in the great army of the untrained and underpaid? Enter this new field where the great opportunities are budding, and where there is a great demand for trained men. $100,000,000 Lost Annually This is the little bag of money lost by Shippers, Manufacturers, Job- bers, and those who don't know what they ought to pay under the new Interstate Commerce Law. Trained men saved last year about $24,000,000 and received salaries ranging from $35.00 to $50.00, to $75.00, to $1 00.00 and even as high as $300.00 per week. There are 300,000 rated concerns which demand the services of trained men. Do you want to be one of them? We Can Help You A man is worth what he can earn. With a technical knowledge of Interstate Commerce he is practically master of markets. He can earn a large amount of money for his concern and command a large salary. We recently placed a man only half through the course at a greater increase in saleury than he had received in the past 6 years. Our Legal, Auditing, Consulting and Instruction Services will fit you for this new field of business. ■~ GET FULL PARTICULARS TODAY TEAR OFF HERE A Technical Lecture Free Interstate Commerce Dept. 2715-17-19 Michrgan Avenue, CHICAGO, ILL. Gentlemen'-—! am interested in your Interstate Commerce Service and hindiy request that you send me full particulars with- out cbli fation including a sample Lecture- Jfame Occupation Company Address City and State -D»*« Tear out this page and hand it to some ambitious young man seeking permanent advancement. TEAR OFF HERE A Technical Lecture Free Interstate Commerce Dept. Sa ^nlk SxtPttfiion Htttorattg 2715-17-19 Michigan Avenue, CHICAGO, ILL. OenUemen-—I am interested in your Interstate Commerce Service and kindly request that you send me full particulars with- out obligation including a sam^ple Lecture. Jfam,e Occupation Company — Address City and State _ Date TEAR OFF HERE A Technical Lecture Free Interstate Commerce Dept. Ha ^allp Sxtpnaton Hnterattg 2715.17-19 Michigan Avenue, CHICAGO, ILL. Oentlemen'-—! am interested in your Interstate Commerce Service and kindly request that you send me full particulars with- out obligation including a sample Lecture. iN'ame Occupation Company Address - City and State -Da*e —