MASTER 
 NEGATIVE 
 
 NO. 94-82205- 14 
 
COPYRIGHT STATEMENT 
 
 The copyright law of the United States (Title 17, United States Code) 
 governs the making of photocopies or other reproductions of copyrighted 
 materials Including foreign works under certain conditions. In addition, 
 the United States extends protection to foreign works by means of 
 various international conventions, bilateral agreements, and 
 proclamations. 
 
 
 
 Under certain conditions specified in the law, libraries and archives are 
 authorized to furnish a photocopy or other reproduction. One of these 
 specified conditions is that the photocopy or reproduction is not to be 
 "used for any purpose other than private study, scholarship, or research." 
 If a user makes a request for, or later uses, a photocopy or reproduction 
 for purposes in excess of "fair use," that user may be liable for copyright 
 infringement. 
 
 The Columbia University Libraries reserve the right to refuse to accept a 
 copying order if, in its judgement, fulfillment of the order would involve 
 violation of the copyright law. 
 
Author: 
 
 Roberts 
 
 , George 
 
 Title: 
 
 Railway pools 
 
 Place: 
 
 [n.p.] 
 
 Date: 
 
QU-^9i^Cj9 -\A 
 
 MASTER NEGATIVE * 
 
 COLUMBIA UNIVERSITY LIBRARIES 
 PRESERVATION DIVISION 
 
 BIBLIOGRAPHIC MICROFORM TARGET 
 
 ORIGINAL MATERIAL AS FILMED - EXISTING BIBLIOGRAPHIC RECORD 
 
 D530.2 
 
 ■ 
 
 Blanchard, George Roberts, 1841-1900. 
 
 Railway pools. Argument before the committee of the 
 United States Senate on interstate commerce, bv G. R. 
 Blanchard. Washington, D. C, March 2, 1894. Con- 
 taining also bills now pending in the Senate and House 
 relating to the same subject. [U. p., 1894] 
 
 56 p. 22~. 
 
 1. Railroads— Pools. i. Title. 
 
 Title from Bureau of 
 
 A 13-2335 
 
 Railway Economics. Printed by L. C. 
 
 RESTRICTIONS ON USE: 
 
 TECHNICAL MICROFORM DATA 
 
 RLM SIZE: ^yovvvm 
 
 REDUCTION RATIO: K^ 
 
 IMAGE PLACEMENT: lA 
 
 © 
 
 IB MB 
 
 DATE FILMED: 9-';^\--^v\ 
 
 INITIALS 
 
 : ^ 
 
 TRACKING # : M^ OJ^BQf, 
 
 FILMED BY PRESERVATION RESOURCES, BETHLEHEM. PA. 
 

 Wo 
 
 3 
 
 CD' 
 
 m Hi 
 O' 
 
 3 — 
 ^\ ' 
 
 3 
 
 00 INI 
 
 CJl 
 
 «HIII|f^ 
 
 00 
 
 o m 
 
 CD Q 
 
 OQ 
 
 ^Mr^Bi'^ "^ I 
 
 _J[_!lllk ■HHHJI ■■■■■■II 
 
 ^■^ 1 ^^ 
 
 i Tl ^1 ^^^ 
 
 X 
 
 INI 
 
 X 
 M 
 
 
 
 •^ ^r 9* 
 
 % 
 ^^. 
 
 ■^ 
 
 o 
 o 
 
 3 
 
 i 
 
 m 
 o 
 
 3 
 3 
 
 
 III 
 
 
 
 s 
 
 3 
 3 
 
 
 K3 
 
 O 
 
 p«Ei;E|s|5|r 
 
 IfelsiSI 
 
 (X> 
 
 O^ 
 
 00 
 
 b 
 
 ro 
 
 to 
 In 
 
 1.0 mm 
 
 1.5 mm 
 
 2.0 mm 
 
 ABCDEFGHIJKLMNOPQRSTUVWXYZ 
 abcctefghi|mmnopcirstuvwxy7l234567890 
 
 ABCDEFGHIJKLMNOPQRSTUVWXYZ 
 abcdefghiiklnrinopqrstuvwxyzl234567890 
 
 ABCDEFGHIJKLMNOPQRSTUVWXYZ 
 
 abcdefghijklmnopqrstuvwxyz 
 
 1234567890 
 
 ABCDEFGHIJKLMNOPQRSTUVWXYZ 
 abcdefghijklmnopqrstuvwxyz 
 2.5 mm 1234567890 
 
 
 -^o 
 
 )^^ 
 
 V 
 
 
 
 vp 
 
 ^o 
 
 fo 
 
 ^^ 
 
 ¥p 
 
 
 
 4 
 
 
 "^I^ 
 
 'A^ 
 
 #' 
 
 ''<y 
 
 )^ 
 
 <^<* 
 .^^ 
 
 
 
 i' 
 
 m 
 
 o 
 o 
 
 "o m "o 
 
 QL,"0 
 
 > C cd 
 TJ 30 J5 
 
 7% O 00 
 
 m 
 
 3D 
 
 o 
 
 m 
 
 .***> 
 
 
 
 
 c^ 
 
 4^ 
 
 *«* 
 
 
 «^' 
 
 ^ 
 
 ^ 
 
 
 3 
 
 |o 
 
 •S-o 
 
 3 I 
 
 s| 
 
 5 O 
 
 2>< 
 
 DON 
 
 ro 
 
 3 
 3 
 
 Q) 
 
 CT 
 O ^ 
 
 — Q 
 
 3i 
 
 3 r- 
 
 *< JO 
 
 ^-< 
 
 00 M 
 O 
 
 
 
 ^Z^^ 
 "4^ ^ 
 
THE LIBRARIES 
 
 SCHOOL OF BUSINESS 
 
 >'**i'soiaatio-uv#, 
 
 
imiiiiii 
 
 B. 
 
 
 RAILWAY POOLS. 
 
 ARGUMENT 
 
 BEFOKE THE 
 
 '■:.i 
 
 Committee of the United States Senate 
 
 oir 
 
 INTERSTATiE COMMERCE, 
 
 i 
 
 Br 
 
 G. R. BLANCHARD. 
 
 \ 
 
 Washington, D. C, Mabch 2, 1894. 
 
 Containing also bills now pending in the Senate and House relating 
 
 to the same subject. 
 
 '-'» "I"" iiiiiiiiiiiiiiiiii|iiiiiiiiii 
 
 I III wliliiililllliiii'iiliiiiiiiiiiiiiliiiiili HiiIh |i4i| pii ipi III |ii||i|ll|iinii|llillltll||||l||iiiil mil 
 
1 
 
 w 
 
 Senate Committee on Interstate Commerce. 
 
 ! 
 
 SENATORS— Matthew^C. ButlIr^ 
 Arthur P. Gorman, 
 Calvin S. Bricb, 
 Edward D. White, 
 Johnson N. Camden, 
 William Lindsay, 
 Shelby M. Cullom, 
 James F. Wilson, 
 Wm. E. Chandler. 
 Edward O. Wolcott, 
 
 ANTHOffnr HiGGINS, 
 
 South Carolina. 
 
 Maryland. 
 
 Ohio. 
 
 Louisiana. 
 
 West Virginia. 
 
 Kentucky. 
 
 Illinois. 
 
 Iowa. 
 
 New Hampshire. 
 
 Colorado. 
 
 Delaware. 
 
 m ' 
 
 IBICl:! 
 
 iiiiiii II!! Ill::"* iiaiii! EiiiiTiiiiiiiim^^^^^^^^ 
 
 II III 
 
 ■I'-Jz i 
 
 ill' 
 i 
 
 RAILWAY POOLS. 
 
 
 ARGUMENT 
 
 f iji- 
 
 ■■■.'if 
 
 BEFORE THE 
 
 Committee of the United States Senate 
 
 ox 
 
 INTERSTATE COMMERCE, 
 
 BY 
 
 G. R. BLANCHARD. 
 
 I 
 
 (Bout pfi 111 *'^''*^ ^1 
 
 iayi^chci^'^<> ' 
 
 Coutaining also bills aow pending in the Senate and ^ome -elating 
 
 to the sanie'subgect. : : ' ' " 
 
 » . * • • 
 
 
 •*'Jff^:tii,ii& ' # ■ .. '^■_*: ■L^^^l.m* \jtl! .- *Lt -. :Lsiia ■' '"h ■ . .. .. ... Ji,>. 
 
 . -*, . ,i_ 
 
INTENTIONAL SECOND EXPOSURE 
 
 
 !»'" 
 
 Iff 
 
 
 /■' 
 
 Senate Committee on Interstate Commerce. 
 
 SBNATORa— MatthkwIC. BuTLfk^ 
 Arthub p. Gorman, 
 Calvin 8. Bricr, 
 Edward D. White, 
 JoBiisoN N. Camden, 
 William Lindsay, 
 Shelby M. Cullom, 
 James F. Wilson, 
 Wm. E. Chandler. 
 Edward O. Wolcott, 
 ANTHOflnr HiQOiNs, 
 
 South Carolina. 
 
 Maryland. 
 
 Ohio. 
 
 Louisiana. 
 
 West Virginia. 
 
 Kentucky. 
 
 Illinois. 
 
 Iowa. 
 
 New Hampshire. 
 
 Colorado. 
 
 Delaware. 
 
 RAILWAY POOLS. 
 
 ARGUMENT 
 
 BEFORE THE 
 
 Committee of the United States Senate 
 
 ON 
 
 INTERSTATE COMMERCE, 
 
 
 BY 
 
 G. R. BLANCHARD. 
 
 
 ^ai/vc^aw- 
 
 Containing also bills now pending in the Senate and House -elatin 
 
 to the same'subject. : ; :.:.;.. 
 
 g 
 
 
RAILWAY POOLS. 
 
 ARGUMENT 
 
 BEFORE THE 
 
 Committee of the United States Senate 
 
 ON 
 
 INTERSTATE COMMERCE. 
 
 BY 
 
 G. R. BLANCHARD. 
 
 Washington, D. C, March 2, 1894. 
 
 Coataining also bills aow peoding in the Senate anc^ Borne "elating 
 
 to the same'subject. : ; 
 
 • . 4 » • 
 
 a » •. > 
 
 a t 
 
 1 • I t t > 
 
 F • t B i 
 
 ■ W i lWg l BPi ! 
 
■' ., '.»..v....f- 
 
 Illlllillllll 
 
 UL" 
 
 fk \ 
 
 
 • ••♦•••»•• • • 
 
 • t t 
 
 • • • • « ■ • «. . 
 
 • • t • • • ' 
 
 t lit • •« •••!• t 
 
 ••••••a • #■ ••! 
 
 • • p • • • »• • i • 
 
 * ••••• »•« 
 
 ARGUMENT AND EXAMINATION 
 
 CD 
 
 OF 
 
 G. R. BLANCHARD 
 
 BEFORE THE 
 
 5 Committee 
 
 en 
 
 <c 
 
 on Interstate Commerce 
 
 OF THK 
 
 United States Senate. 
 
 Washington, D. C, March 2, 1894. 
 
 The committee met at 10:30 o'clock a. m 
 
 T -^r*"*^ ,f ^""'*°''' ^"""" (Chairman), Gorman, Camden, 
 Lindsay, CuUom, Wilson and Higgins. 
 
 The Chairman. Mr. Blanchard, whom do yon represent? 
 
 oil' , rp^'*« "f ^^ "^"'"^ P°«'"°'^ ■« Commissioner of the 
 Central Traffic Association, at Chicago, but I represent only my 
 own views. ■' ' 
 
 11^S7S^tT'' """^ ®=''''^™™ o^ THE Committee: February 
 •l/ i ^''^ ''°°'"' *° aPPe^"- before the Senate Com- 
 
 mittee on Commerce to discuss' the Reagan Interstate Railway 
 Bill, then pending, at which time I said, touching pools: 
 
 „f "J'',"'!?'"^™'''*^™''"''"''^ joint contracts I oppose the losic 
 of the last ten years with all their contests and receiyersWp the a^ 
 most unanimous sentiment of the thoughtful mercantile pubic and 
 eratfoi't"/.'''"^ railway officer whose opinion is worth the consfd 
 Iw™. ^-^ '=""""'"««' «>«» »«ch railway contracts, being ie- 
 
 aie intended to and will secure the public against discriminations are 
 ma national, corporate and individual sense, desirable, and ha 'they 
 off« a better panacea for mercantile ills than the proWsions of this 
 
 These words, true then, are true of to-day 
 
 Of the fifteen years since then, eight were given to discussing 
 the prob em, culminating in Senator Cullom's able committee 
 Its report, and its proposed law. That report indicted our rail! 
 
 r 
 
 
 Y 
 
 wmmn 
 
 ' Wlllll l LLi.. -..J 
 
I i lllllll 
 
 ^i 
 
 
 
 
 way system on eighteen counts, three relating to excessive rates, 
 eleven to discriminations, the others to capitalization, manage- 
 ment, freight olassitications and engaging in extraneous busi- 
 nesS'* 
 
 There is no present issue touching the reasonableness of our 
 average rates, now but little more than one-half those of '79, 
 and which averaged in '92 but 73 per cent, of the lowest foreign 
 average — Prussia. 
 
 Extravagance in management warrants no present comment. 
 Bailways have substantially abandoned extraneous business and 
 claBBifications have been and are yet being merged. 
 
 That committee said: 
 
 i.» ♦ » » The most important, and, in fact, nearly all of the 
 foregoing complaints, are based upon the practice of discrimination 
 in one form or another." 
 
 Therefore the Act then introduced dealt mainly with that 
 issue, but the committee said of its own bill: 
 
 "That a problem of such magnitude, importance and intricacy 
 can be summarily solved by any master-stroke of legislative wisdom 
 is beyond the bounds of reasonable belief." 
 
 Seven years have tested the Act as it was changed by Con- 
 gress, and both sides should now know and fairly state its re- 
 sults. 
 
 Faulty as it has proven, I think some benefits have come from 
 it. It met with unequal support, because a benefit in New York 
 might prove a hardship in the Carolinas or Wyoming, etc. ; but 
 it has secured more publicity of rates, lessened rate wars and 
 resulting trade disturbances, has corrected some undue discrimi- 
 nations between long and short rates, has silenced much un- 
 founded clamor against railways, has induced more uniform 
 railway procedure in instances, has induced more consideration 
 of the inter-relations of localities, and its police or warning 
 powers— as intelligently administered as practicable by a legal 
 body from which railway men were excluded— have proven 
 mutually educational, as appears from the fact that less than one- 
 ienth of its findings have been legally contested. 
 
 All these results, whether of principle, revenue or cost, are 
 clue to the railways. Those who besought the law have not 
 given it like support. In sixty days and at great expense the 
 
 carriers changed practices of sixty years, conforming enormous 
 systems to it by methods undisturbing to trade. 
 
 Nevertheless, undue discriminations continue, resulting from 
 both secret practices and more recent open contentions. The 
 law has therefore failed in its chiefest purpose. Aside from the 
 magnitude of the task this has been principally because: 
 
 First. The law was not intended, as enacted, to protect alike 
 the railways and the public, and is therefore unjust. 
 
 Second. It regarded the railways alone responsible for all 
 the conditions it sought to correct, and therefore devolved their 
 correction upon them alone, however much it theoretically ap- 
 plied to shippers. 
 
 Third. Its conditions were all mandatory and in no broad 
 sense remedial, and did not create a mutual interest between 
 railways and the governmental commission. 
 
 Fourth. It helped to continue the radical error that wasteful 
 railway warfare is legitimate business competition. 
 
 Fifth. It held the fallacy that, although rates must be alike 
 via one railway under like conditions, they might or should be 
 legally different upon competing railways under the same con- 
 ditions. 
 
 Sixth. In other aspects it reasoned falsely that rival rail- 
 ways of different facility, financial responsibility, connections, 
 speed and regularity of transit, could obtain equal rates. 
 
 Seventh (and most important). It prohibited the joint con- 
 tracts unfortunately called "pools," which deal only with ton- 
 nage and not with rates. 
 
 Eighth. Because of its legal failures touching important 
 principles, the last involved in Judge Grosscup's decision at 
 Chicago, the 26th ult. , and which have encouraged a growing 
 disrespect and disregard for its provisions. 
 
 If the lawyers who amended the Act so erred in their own 
 domain of reason and legal precedents they were clearly more 
 apt to stumble in their transportation conclusions. 
 
 These causes and errors did not exist with the Cullom Com- 
 mittee so much as in Congress, but because they exist the law 
 clearly requires comprehensive reconstruction. 
 
 s 
 
*.^ 
 
 "•f 
 
 
 .1 
 ■J 
 
 • I 
 1-1 
 
 I' 
 1. 
 i< ■ 
 
 1 
 
 J 
 
 
 I 
 
 
 6 
 
 Its failures proceed largely from its refusal to authorize joint 
 
 Goutraots, concerning which that committee said: 
 
 "The committee does not deem it prudent to recommend the pro- 
 hibition of pooling." 
 
 and: 
 
 " The ostensible object of pooling is in harmony with the spirit of 
 
 regulative legislation." 
 
 It farther said: 
 
 «i ♦ • « * in any event, the evils to be attributed to pooling 
 are not those which most need correction, and, if agreements between 
 carriers should prove necessary to the success of a system of estab- 
 lished and public rates, it would seem wiser to permit such agree- 
 ments rather than by prohibiting them to render the enforcement and 
 maintenance of agreed rates impracticable. The majority of the com- 
 mittee are not disposed to endanger the success of the methods of regu- 
 lation proposed for the prevention of unjust discriminations, by recom- 
 mending the prohibition of pooling, but prefer to leave that subject 
 for investigation by a commission when the effects of -the legislation 
 herein suggested shall have been developed and made apparent." 
 
 These wise conclusions come from their larger knowledge of 
 the subject. They interrogated 149 persons regarding pools, 
 discriminations, rebates, uniformity and stability of rates. 
 Twenty-four were railroad men, twenty were or had been rail- 
 road commissioners, sixty-one represented mercantile interests, 
 sixteen farmers, nine manufacturers, seven lawyers, etc. 
 
 Fifty-five opposed pooling, presumably leaving ninety- four 
 unopposed. Forty-two favored pooling generally, twenty-six 
 the legislation of pools, forty-one, pools governed by law, and 
 fifteen were indefinite. 
 
 None who opposed them offered adequate substitutes, nor 
 have any been suggested in Congress or elsewhere. 
 
 Senator Higgins. Can you say the law gave the railroads no 
 help when it provided penalties ? 
 
 Mr. Blanchard. Penalties were a hindrance and not a help. 
 They incited secret and undiscoverable methods. 
 
 Supporting my first contention, that the law does not protect 
 or assist railways, I cite the text of the Act, the exemption of 
 parallel water carriers, the prohibition of the right of contract, 
 the penalties visited upon the railway officers; that no concession 
 was asked from the public; that it required the reduction of 
 way rates and therefore a reduced average of all rates, that the 
 railways were alone charged to correct the preferences and 
 
 7 
 
 wrongs caused by some shippers; to guard themselves against 
 the undue practices of rivals; and withal protect their own well 
 meaning patrons. It treated a disease declared to be serious 
 and forbade the use of the best remedy. 
 
 It was as if a national medical congress had disregarded the 
 reports of sanitary experts and said to a hospital of suffering 
 patients: "We enact that you shall cure yourself , but you shall 
 not take the remedy which our experience and yours has proven 
 most curative." 
 
 It was impracticable prohibition, not practical prevention. 
 It prohibited, yet it outlawed the best measures to prohibit or 
 prevent. It incited antagonism instead of aid. 
 
 Next, it held the railways alone culpable. The following 
 facts fully disprove that assumption. 
 
 In 1893, 182,575 false descriptions and weights of goods 
 were detected and corrected on west-bound shipments from New 
 York City, Boston and Philadelphia only, with only one month 
 at Boston. 
 
 Senator Higgins. By whom were the misdescriptions de- 
 tected? 
 
 Mr. Blanchard. By the railroads. 
 
 Senator Higgins. What do you mean by * * misdescriptions f ' 
 Mr. Blanchard. If oil-cloth is classified third-class and Irish 
 linen first-class, boxes are described as containing oil-cloth which 
 really hold linen. All those misdescriptions were intentional 
 except in few instances where some article was not classified 
 and might have been honestly classed by the shipper by what 
 he deemed its nearest analogy. 
 
 Senator Cullom. When did this occur ? 
 Mr. Blanchard. In 1893. 
 
 Senator Higgins. Those were efforts on the part of merchants 
 to cheat the railroads? 
 
 Mr. Blanchard. Yes. 
 
 Senator Higgins. Is the inspector the inspector of the rail- 
 road company? 
 
 Mr. Blanchard. Yes. 
 
 The Association I represent also collected net in '92 more than 
 
•l ,1- .■ 
 
 4 
 
 
 u 
 
 ^ 
 
 i 
 
 ^ 
 
 i- J 
 
 
 ■ 
 
 jUj 
 
 ^■^ 
 
 4 
 
 • ^ 
 
 » 
 
 i 
 
 8 
 
 eiglit times its entire expenses by the discovery and correction of 
 
 devices to evade legal tariffs and regulations. 
 
 Senator Higgim. Was that in the case of one railway f 
 
 Mr. Blanchard. The first instance involved all the westward 
 
 raUways from three points, Boston, Philadelphia and New York; 
 
 the second onr western lines. 
 
 /Senator CmIIom. How does your Association get at the facts 
 about these cheating operations ? 
 
 Mr, Blanchard. From daily reports. 
 
 Senator Cullom. How do you learn the facts? 
 
 Mr. Blanchard. By inspectors at the stations, and opening 
 packages when necessary. 
 
 Senator Cullom. That is what I wish to know. 
 
 Senator Camden. You do not represent a single railroad? 
 
 Mr Blanchard. No; I act for associated railways. 
 
 The Chairman. Where do you make the examinations, at 
 the point of shipment or at the point of delivery ? 
 
 Mr. Blanchard. At both, where westbound goods are received 
 inspectors are stationed. As goods are taken from wagons, if 
 there be reason to think deception has been practiced, the boxes 
 are opened, perhaps in the presence of the cartmen who repre- 
 sent the forwarders. In other instances we inspect when pro- 
 perty is unloaded, as we can not pay inspectors at all small 
 points where freight is loaded. 
 
 Semdor Cullom. It is a sort of customs inspection. 
 
 Mr. Blanchard. It resembles the United States customs 
 infpections. We find that we have also protected other property 
 and our own by finding concealed explosives, acids, etc., in boxes 
 otherwise described. For further example, our classification 
 makes brass pipe fittings one rate and iron pipe fittings a class 
 rate lower. I knew of a box in which there were but two pieces 
 of iron, all the others brass, yet it literally contained iron pipe 
 fittiogs. Some merchants thus evade their due obligations to 
 carriers, reduce our rates, say fifteen per cent, and take trade 
 from honest persons who truly describe their goods. 
 
 I recently knew of a car loaded apparently with lumber. 
 When the inspectors stripped the lumber off the top, they found 
 dry goods underneath. 
 
 9 
 
 The Chairman. Did the shipper represent that the car was 
 loaded with lumber? 
 
 Mr. Blanchard. Yes. 
 
 The Chairman. While in fact it was loaded with dry goods ? 
 
 Mr. Blanchard. Dry goods in the inside surrounded with 
 lumber. I was advised of a case where a cask was shipped as 
 containing chains. The cask fell off the platform, disclos- 
 ing fine English cutlery, the difference in value being, say $400, 
 if we had lost or damaged it. 
 
 Senator Higgins. Is that the value of the freight or does 
 that represent the freight charges ? 
 
 Mr. Blanchard. The value of the goods. Such cases arise 
 often, yet railroad companies are generally held to be the sole 
 malefactors. 
 
 Senator Higgins. I should like to ask whether the Grand 
 Trunk and Canadian Pacific Eailways are in the Association? 
 
 Mr. Blanchard. The Canadian Pacific is not, but its Ameri- 
 can connections are. The Grand Trunk is. 
 
 Senator Higgins. Do you subject cars coming over those 
 railroads when they enter American territory to such inspection 
 as you have described ? 
 
 Mr. Blanchard . Yes, and it is due those companies to say 
 that they support us in this respect. 
 
 Senator Higgins. Do you find as much cheating coming from 
 that side of the line? 
 
 Mr. Blanchard. I could not say. 
 
 Senator Higgiyis. Do you find some cheating ? 
 
 Mr. Blanchard. Of course. 
 
 Senator Higgins. Does your inspection, which is thus made 
 for the purposes of protecting your own freight rates, ever de- 
 tect violations of the customs laws? 
 
 Mr. Blanchard. We have nothing to do with the customs. 
 
 Senator Higgins. Is there no report of that made to you ? 
 
 Mr. Blanchard. No. All the goods we carry that are subject 
 to customs are transported in bond, and are delivered by and to 
 the customs officers, who look after those questions themselves. 
 
9' 
 
 10 
 
 ; 
 
 f 
 
 Senator Higgim. 
 iiftrs in those cases. 
 
 Mr. Blanchard. 
 
 Senator Biggins. 
 hiMBmf 
 
 Mr. Blanchard. 
 
 YoD do not brmk the seals to inspect the 
 
 No. 
 
 Do you have your inspectors at the custom 
 
 No; but the customs' authorities certify 
 wiat goods shipments are. They usually take the place of our 
 inspectors in that respect, but we do not always have the co- 
 opsration from them which is desirable. 
 
 Beferring to my first statement, I ask what public clamor 
 would ensue if the same railways had reported at the same 
 pomts 182,575 discovered instances in one year of similar de- 
 vices against well-meaning shippers and honest carriers? No 
 trade association is known to have taken steps to stop them or 
 the receipt of illegal preferences by its members, or to protect 
 thuir own members who do not receive them, or the railways 
 which decline such payments. 
 
 Senator CuUom. Did they ever do anything of the kind 
 before the law was passed? 
 
 Mr. Blanchard. No, and probably they never will. 
 They forbid reducing their own commission, storage, insur- 
 mm and other rates and their members are disciplined who cut 
 them yet they most bestow their tonnage upon railway agents, 
 members of the same bodies, who violate their rate agreements 
 and the law by drawbacks, and esteem their fellow members 
 justifiably acute and fortunate who secure them. 
 
 Bailways rarely pay unsolicited rebates, and the ceaseless 
 applications for reduced rates in preferential forms would sur 
 prise this committee. An amount of importunity, adroit inti- 
 mation and threats to divert business are resorted to, which 
 devolve upon well-meaning carriers, not mere moral resistance 
 but the loss of business, the protection of well-meaning ship- 
 pers and a watch upon more pliable lines. If one carrier ie 
 nores persuasions which another has conceded, and perhaps 
 necessarily, and thereby loses business, the first becomes more 
 disposed to yield to like importunities upon continued diminu- 
 tions of its traffic, no aids to permanent resistance being fur- 
 nished by the law. 
 
 A railway manager may, therefore, duly control his own 
 
 11 
 
 agents, but he, his share-holders, his agents, his treasury and 
 his patrons are at the mercy of agents of other companies more 
 fully than if they were his own. Given thirty eastbound agents 
 in Chicago, twenty-nine would eventally be compelled to adopt 
 the cuts of one upon competitive tonnage or suffer its loss. 
 
 How, therefore, can honest forwarders and railways relying 
 mutually upon printed tariffs only, retain, secure and equitably 
 divide business. We may moralize, commissions may warn and 
 attorneys may prosecute, but the law has not cured the causes, 
 nor will mere theories of prohibition do it, which have failed in 
 countries of lesser complications. Give railway companies in- 
 terests and incentives to act effectually with the commission. 
 Legalize joint contracts which will lessen concessions and un- 
 reasonably reduced rates to shippers in order to get their busi- 
 ness, enable them to get tonnage from their associates at reason- 
 able equal rates, which at the same time require shippers to pay 
 like charges for like service, and you will take the first mutual 
 and practical step to make the law effective and respected. 
 
 All efforts to stop discrimination have failed and will fail un- 
 less accompanied by authority and effort to divide traffic in 
 equitable parts between rival carriers. 
 
 I contend next, that the law falsely theorizes that railway 
 strife is legitimate trade competition. No greater fallacy can 
 exist. 
 
 Cut rates are not justifiable carrying competition more than 
 are sales of bankrupt or damaged stocks at auction legitimate 
 business competition. 
 
 The Interstate Commission said in its first report, 
 
 " Excessive and unreasonable competition is a public injury." 
 
 The Senate Committee of '86 said, in reviewing like conclu- 
 sions reached by the Parliamentary Committee of 1872, that 
 
 "Its lessons were especially valuable in at least bringing about a 
 general recognition of the fact that the relations between the rail- 
 ways and the community require special treatment and cannot be 
 defined or governed in accordance with the natural laws regulating 
 ordinary commercial intercourse. " 
 
 Mr. F. J. Firth, of Philadelphia, has ably said: 
 
 " Unrestrained competition develops dishonest and unlawful prac- 
 tices, places trusts and monopolies in positions of vantage as compared 
 with individual shippers, business is forced into large competitive 
 

 
 
 
 countiy St large. 
 I quote Honorables Allen G. Thurman, Elihn B. Washburn 
 and Thomas M. Cooley, in reporting upon differences in freight 
 rates to the seaboard cities in 1882. 
 
 '■ A speciei of railway competition has prevailed from time to time 
 which has brought satisfaction to but few persons and which has re- 
 sulted m inequalities and disorders greatly detrimental to trade 
 The mere statement of these results is sufficient to show that this is 
 
 ?1Ih •"' • ^r r?'"!'' '■' ''"°''° """^ designated as competition. 
 Competition is the life of trade, but this is its destruction. " 
 
 They also said : 
 fain 1.*. X *K ' w* ""■' °' '^°"Pe««°'' we have mentioned it is 
 
 ageis. having nothing to lose, may offer rates which solvent railroads 
 cannot meet without beingdragged into bankruptcy with them • • ' 
 It isa state of things that, like awar between nations, from its very 
 destructiveuess, cannot be a normal condition, but must speedily 
 terminate in peace or disaster. " h "■ j- 
 
 Senator Higgins. What occasion had those gentlemen to 
 make such a report? 
 
 ^r. Blanehard. They were appointed by railroad companies 
 .n the contention of Mr. Vanderbilt against the Pennsylvania 
 Md Ba timore and Ohio Companies that rates from the west to 
 Philadelphia and Baltimore were unduly below those to New 
 York. 
 
 Senator CuUom. And they fixed differential rates f 
 Mr. Blarwhard. Yes, the difference between New York and 
 R« timore had been usually five cents on grain. Upon the report 
 of these gentlemen it was reduced to three cents, etc 
 
 Mercantile axioms have small application to railway charges 
 Commerce involves speculative elements and risks losses in 
 hopes of profit. Railway rates must not be similarly uncertain 
 or speculative, but as far as practicable must be public, stable, 
 uniform and reasonable. Beyond those proper conditions tb^ 
 public and law have no concern whatever with what is done with 
 their proceeds. 
 
 Prof. Hadley, of Yale, said on this point: 
 
 mnmlllr^^T^^^^ regularityland publicity of rates are 
 
 more important than mere average cheapness. 
 
 tuX'^omr'' '"■'"'' *'''^' '' "'^^'^ '^'^' '"^^^^ ^^'^^ '' ^«^ *« fl"«- 
 
 13 
 
 The great English Commission of '72 said: 
 
 *• While Committees and Commissions carefully chosen, have for 
 the past thirty years clung to one form of competition or another, it 
 has nevertheless become more and more evident that competition 
 must fail to do for railways what it does for ordinary trade. " 
 
 It also said: 
 
 ****** reliance upon competition between railways to regulate 
 rates and maintain them upon a fair basis and to prevent unjust dis 
 criminations will have to be abandoned as a failure. " 
 
 The CuUom Committee of '86 said: 
 
 "Competition doea not prevent personal discrimination, for the 
 evil is most conspicuous when and where competition is most active. " 
 
 A trite illustration supports these authorities. Given two 
 competitors in trade. When one fails he retires from rivalry. 
 Given two rival railways. When one fails it continues in business 
 and is often deemed by its successors, its competitors, and usually 
 by the public, as then best equipped to grant the lowest rates, being 
 the one business which may be increased upon insolvent capital. 
 One railway, moreover, should be prevented from depleting the 
 revenues of others under the veneer of competition carried to 
 points which injure competing investments under good manage- 
 ment. It is at least a reasonable duty of legislation to aid the 
 latter to proceed against such companies if they have agreed to 
 maintain reasonable rates and equitably divide the tonnage 
 forwarded thereunder. 
 
 In a volume published in London in 1891, W. M. Ac worth 
 said of so-called American railway competition: 
 
 *' Let this one fact suffice. Between Chicago and Cairo, a distance 
 of 365 miles, there are twenty-two railway companies whose lines 
 cross that of the Illinois Central. Eighteen out of these twenty-two 
 have passed into the hands of receivers since 1874. " 
 
 It is widely believed that a pool which corrects this misnomer 
 for competition is a combination to advance rates and stop real 
 competition. 
 
 I contend that after rivers, lakes, oceans and economic forces 
 have spent their combined natural and national powers in deter- 
 mining rates which are reasonable, such rates cannot be made 
 excessive by combination nor should they be reduced by conten- 
 tion. 
 
 The natural factors of due competition, too strong to be 
 ignored by artificial combinations, are 
 
filpt"^ 
 
 I 
 
 14 
 
 FirH. The competition of unregulated water- ways, both nat - 
 ural and artificial and combined with each other. 
 
 Seccmd. The competitions of producing districts, as Kansas 
 with Minnesota and manufacturing centers, as Chicago with 
 bt. Louis, Philadelphia with Lowell, etc. 
 
 Third. The competitions of domestic selling markets for ex- 
 port and domestic trade, as Boston with Baltimore. 
 
 Fourth. The rivalries of nations, such as Russia, India and 
 the Argentine Republic with the United States in the production 
 and sale of the same ond competing cereals in European centers, 
 thereby more affecting our exports. 
 
 Fifth. Because all these conditions find combined express- 
 ion through rival shippers, singly and in trade bodies to prevent 
 increases and secure reductions of rates, and through numberless 
 agents who concede even m6re than actual conditions justly 
 require. '' ^ 
 
 Sixth. Because managers adjust their charges to move the 
 largest tonnage at low rates rather than smaller amounts at 
 higher rates, and thereby develop increased travel and freight 
 at local stations at more profitable local rates. 
 
 All these causes unite with such power that no enterprise is 
 sub,«,t to as many limitations as railway transportation in this 
 coantry. When they determine our rates they are reasonable. 
 and we are entitled to charge and retain them unless reductions 
 therefrom are justified by other reasons. 
 
 Cuts from other causes are losses and wastes of reasonable 
 incomes, to which no one is entitled. Rates are then no longer 
 reasonable as required by law for there is equal unreason in un- 
 due low anil high rates. 
 
 SmmioT Biggins. Your argument as to points of water com- 
 petition apphes, I presume, only to that class of lines and not 
 to those where there is not water competition . 
 
 Mr. Blumkard. I will illustrate how legitimate water com- 
 petition IS carried by voluntary railway action to points waters 
 do not reach. East of the Mississippi Biver and north of the 
 Ohio the long and short haul clause prevails. Even when open 
 through rates are, from any cause, nnreasonably low, they are 
 simultaneously reduced between all intermediate points, of which 
 west and the east, there are over 6,000. 
 
 J5 
 
 If the grain rate is ten cents per 100 pounds Chicago to New 
 York, it would be twelve cents locally to Boston and seven to 
 Baltimore, and all local rates between Chicago and those cities 
 would be reduced to those maxima, regardless of the fact that 
 most of the traffic would be taken from local starting points and 
 delivered at local destinations where no water competition existed 
 and if it did, the railway carriage would, in such event, be the 
 cheaper. For example, there is no water competition from 
 Springfield, 111. , to Harrisburgh, Pa. 
 
 Thus, in effect, we take the Great Lakes, the Erie Canal and 
 St. Lawrence, Mississippi, Ohio and Hudson Rivers, etc., to the 
 western corn crib and to eastern stores. If such traffic were 
 pooled it would not advance such rates. 
 
 Senator Higgins. For instance, the Pennsylvania Railroad, 
 in order to get its share of the traffic from Chicago, say, to Bos- 
 ton or New York or Baltimore, will give the advantage of any 
 equally reduced rate from the corn crib wherever it may be to 
 Chicago ? 
 
 Mr. Blanchard. Let me answer by an actual instance. Un- 
 der our scale system, points outside a radius of say 100 miles 
 east of Chicago, take less rates than from Chicago. At Fort 
 Wayne, it is 90 per cent, to New York of the rate Chicago to 
 New York. 
 
 Senator Cullom. You divide the country into districts ? 
 
 Mr. Blanchard. Yes. Each point or group of points has a 
 proper percentage of the rate Chicago to New York. If we re- 
 duce the grain rate from Chicago to New York to ten cents, the 
 rate to Erie, Buffalo, Pittsburg, etc., would be say six cents, and 
 from those points to New York about the same. The rate there- 
 fore works to both purposes and in both directions. At points 
 further from New York than Chicago, the rates increase. Mis- 
 sissippi River point rates are 116 per cent, of Chicago rates 
 and ten cents Chicago to New York means without law or wait- 
 ing eleven and a half cents from East St. Louis to New York, 
 and so on, although there is no compelling water competition. 
 
 All the intermediate rates go down simultaneously in such 
 cases without regard to actual water competition. They may occur 
 — as last December — when waterways were closed. The due com- 
 petitions I have recited presented no new forces or phases then. 
 
r 
 
 I 
 
 16 
 
 because all the equities had operated fully when the prior stand- 
 ard rates were reached, tt represented a state of wrong, losses, 
 readjustments and railway profligacy which benefitted mainly 
 foreign buyers. 
 
 There being therefore no such comprehensive, flexible and 
 ©heap rail transportation on earth as ours, and none which so 
 much needs correction, we are entitled to have it somewhat pro- 
 tected by you. 
 
 Judge Cooley said in the Omaha case: 
 
 "Nothing seems plainer than that, under the law m it stands, the 
 protection of carriers against destructive rivalry and rates that lead 
 directly to bankruptcy must be found chiefly in prudent management, 
 
 in the cultivation of reasonable relations among themselves etc '' 
 
 « « -• « 
 
 "Every change in rates affects values, it disturbs trade and alters 
 to some extent the value of contracts. The general public is there- 
 fore interested in rates being steady and a cut in rates for a time 
 • * ♦ ♦ may, ^lien all its effects are taken into considerai ion, be 
 found to be more harmful than beneficial. 
 
 Prof. Hadley well said : 
 
 "We are thus reduced to the simple alternative— pooling or dis- 
 crimination. Each effort to prohibit both at the same time, only 
 makes the necessity more clear. The governments of continental 
 Europe have ceased to struggle against.it Rightly judging that dis- 
 crimination is the main evil, they recognize pools as the most effective 
 method of combating them. " 
 
 Chairman Cooley said further, in the same Omaha case: 
 
 "If a rate when made by one company as a single rate would in 
 law be unobjectionable, it would be equally so when made by several 
 as a joint rate. The policy of tht law and the convenience of business 
 favor the making of joint rates, and the more completely the whole 
 railroad system of the country can be treated as a unit, as if it were 
 all under one management, the greater will be the benefit of its ser. 
 vice to the public and the less the liability to unfair exactions." 
 
 The act is next fallacious because it requires through rates to 
 be alike on one railway but stimulates different rates upon com- 
 peting railways. 
 
 When a new railroad competes for tonnage formerly enjoyed 
 by others, it warrants at least former reasonable rates if not an 
 increase, to compensate for the reduced business of each. The 
 practice has wholly differed. The newer and therefore usually 
 weaker line, generally diminishes the traffic of the older routes 
 by reduced rates often made necessary by its untried and com- 
 
 17 
 
 paratively deficient facilities and the indisposition of shippers to 
 give it freight at equal rates. 
 
 Nevertheless, if public policy requires one line to charge like 
 reasonable rates to all, why should dissimilar rates prevail over 
 different lines for a like service? If the all-rail rate on grain 
 Chicago to New York be twenty-five cents per 100 pounds via 
 some routes and fifteen cents via others, the preferences forbid- 
 den by the act ensue both to individuals and localities precisely 
 as if the same dissimilar rates existed simultaneously on one rail- 
 way. 
 
 If each of ten lines eastwardly from Chicago should issue dif- 
 ferent yet legal rates, ranging from twenty-five cents to twelve 
 and a half, it would not only demoralize trade there, but at local 
 points under the long and short haul section, and just protests 
 would be made by all of them. 
 
 On the other hand, all railways cannot secure equal freight 
 rates any more than equal passenger fares, and yet secure the 
 portions of traffic to which they are justly entitled as chartered, 
 and therefore presumably needful instrumentalities of commerce. 
 Briefly then, the government denies us the right to distribute 
 the traffic; some railways and shippers are interested to prevent 
 it, other shippers are justified in not doing it, weaker lines will 
 not remain idle and strong lines cannot permanently ignore their 
 action. 
 
 Concealed methods therefore prevail, resulting in non- agreed 
 instead of agreed shares of carriage, and non-agreed instead of 
 agreed actual rates. Have not these seven years clearly demon- 
 strated that it is more to the public interest that stronger lines 
 concede reasonable portions of their larger tonnages to weaker 
 lines if uniform reasonable rates are thereby maintained than that 
 we be longer legally prohibited from giving or receiving tonnage, 
 such prohibition having undeniably produced the very differences 
 and preferences, open or hidden, or both, forbidden by the law? 
 
 Judge Cooley said to a convention of State Railway Commis- 
 sioners in Washington, May 28, '90, as to British Railways: 
 
 " It may seem altogether proper that the government should make 
 or permit to be made some provision whereby the comparatively 
 feeble road may be supported, not entirely by Jhe resources cf the 
 district which it serves, but to some extent also by a tax upon the 
 

 * I 
 
 f 
 1. 
 
 t t 
 *I 
 
 
 ^ 
 
 
 
 f 
 
 18 
 
 business or the resources of other roads. A provision to this end is 
 not 11 n common. 
 
 The idea is that any road that the government provides for, the 
 government will be allowed to be legitimately supported with the 
 aid, if need be, of the stronger roads." 
 
 The secoiid animal report of the Interstate Commission said: 
 
 "If it is important to the public that a railroad once constructed 
 should be maintained, the ability to make any charges that will ren- 
 der its maintenance possible is also of public importance. When, 
 therefore, the rate sheets are such that reasonable returns are not 
 probable and public injury is threatened, and the injury is accom- 
 plished when the natural result of bankruptcy is realized » » * » 
 it will generally be found that reasonable rates, adjusted equitably 
 over the whole field of service, would have been as much better to the 
 community as to the carrier itself." 
 
 The present coodition was amply foretold to Senator Cullom's 
 committee, conceded by it, and then turned down legislatively 
 as the eipressions of railway aggrandizement and alarm. We 
 should dismiss theories now and respect these old facts and the 
 
 new ones. 
 
 The act Is now afflicted with progressive paralysis and needs 
 urgent and quick remedies if it is to stand and go. 
 
 Stephenson, the younger, said to a Committee of Parliament: 
 
 '* We do not impute to Parliament that it is dishonest, but we impute 
 that it 18 incompetent. Neither its practical experience nor its time, 
 nor its system of procedure is adapted for railway legislation. 
 
 *FA«/ we ask is knowledge * * •* ♦ ^/^ we ask is that it shall 
 be a tribunal that is impartial and , that it is thoroughly informed^ 
 and if impartiality and intelligence are secured, we do not fear of 
 the result." 
 
 Sermtor Cullom. Would you favor making the Interstate 
 Commerce Commission or any Commission, a court? 
 Mr. Blanchard. No. 
 
 Compare, Mr. Chairman, the non-discriminations, uniformity 
 and stability of higher foreign rates with ours, and, if we heed 
 them, we must conclude that the chief trouble proceeds from 
 our disregard of juster foreign legislation. 
 
 At this point if the Committee will permit, Mr. Counselman 
 requested me to make an explanation on his behalf, feeling that 
 he had not quite made himself clear when he said the recent re- 
 duction in rates from Chicago to New York injmed western 
 farmers. 
 
 MIHI 
 
 19 
 
 Mr. Coiven. Some of the members of the committee did not 
 hear Mr. Counselman' s proposition, and possibly you had better 
 repeat it. 
 
 Mr. Blanchard. On the 2d of last December one com- 
 pany, believing that rates were being cut by the concealed meth- 
 ods of others, openly reduced the grain rate from Chicago to 
 New York from twenty-five to twenty cents. 
 
 Further reductions followed until the rate reached fifteen cents, 
 a lower rate in midwinter than has existed by rail in midsummer 
 since the law took effect. Those reductions were all open and 
 legal and the Interstate Commission was duly notified, but the 
 various reductions and the subsequent advance produced about 
 as many discriminations as if they had been concealed. 
 
 Mr. Counselman meant to say, in answer to questions asked 
 by the Honorable Senator from Delaware (Mr. Higgins) and 
 the Honorable Senator from New Hampshire (Mr. Chandler) as 
 to the effect upon western farmers, that such reduction injured 
 them. He said that 5 cents per 100 pounds is 2. 8 cents, upon a 
 bushel of fifty-six pounds of corn, and that the New York and 
 eastern markets fell about that much when the freight rate from 
 Chicago to New York was reduced 5 cents, thereby affecting not 
 oqly all corn in transit but also in store at the seaboard. There- 
 fore the farmer could not sell his property en route or in store 
 except at, say 2} cents per bushel less. He wished to make it 
 clearer that instantly the price of corn in New York went down 
 2i cents, the price of corn in Chicago, St. Louis, Kansas City, 
 etc. , went down as much, including also grain stored at those 
 points, but the freight charges tvest of those points not being 
 reduced, the western farmer who desired to ship and sell his 
 grain or who then had it in store at those places, must neces- 
 sarily have accepted 2^ cents per bushel less for his property. 
 
 Mr. Cowen. On the reduction of 5 cents in freight from 
 Chicago to New York? 
 
 Mr. Blanchard. Yes, and at every station from Arkansas to 
 Minneapolis. When the rate went down 10 cents the farmer's 
 loss was increased if he sold. Commercial causes may have 
 operated to arrest some portion of that reduction, but the mar- 
 ket did not recover its former price when the rates advanced. 
 
 Senator Cullom. A farmer told me the other day when I re- 
 
■■■■■■■ 
 
 ^BBiMAfl 
 
 I 
 
 ^* 
 
 i 
 
 1? 
 
 20 
 
 puled that statement to him that in his case the eflFect had been 
 entirely different; that he had been able to sell his corn during 
 the reduction of rates and had not been able to do it before . 
 
 Mr. Blanchard. Then the loss, as Mr. Counselman explained, 
 was made by himself instead of the farmer and by the rail- 
 ways. 
 
 In the discussion of this question before the House Commit- 
 tee last year, I thought pooling was not made clear, and 1 
 would now like to make it so. 
 
 An experienced transporation associate has well said: 
 
 " The aggregate competitive business must be divided under some 
 plan between the parties claiming interest in its result. The question 
 is, shall the plan be dishonest, private, preferential and unlawful, or 
 shall it be honest and public without unjust discrimination and 
 In accordance with the law? At present it is the former. It may 
 be the latter." 
 
 In the debate of '86, Senator Piatt, of Connecticut, defined a 
 pool sharply as: 
 
 "simply an agreement between competing railroads to apportion 
 the competitive business." 
 
 Prof. Atwater, of Princeton, accurately described pools as 
 agreements among railways 
 
 "for each to accept as its share of the competitive business, at 'a 
 moderately remunerative rate common to all, what shall be judged to 
 be its Just proportion by an umpire or board selected by them all to 
 make the apportionment. " 
 
 Here I wish to draw a clear line of contrast between pool 
 
 agreements and rate agreement. 
 
 Some agreements must and will be made as to classifications 
 and rates. Otherwise how can we know what to charge our 
 patrons? How will shippers and consignees know what to pay? 
 What will they cable abroad ? How give publicity and how file 
 tariffs as required by law? A predetermination of rates by the 
 ' luest methods of experience is, therefore, a railroad, commercial 
 and legal necessity. What would shippers do if no man knew 
 his rate until goods were brought to shipping stations requiring 
 that they bargain there in each case for varying prices of freight 
 carriage or personal travel ? There must not only be reason- 
 ablenefls but readiness and foreknowledge. Hence some form of 
 association is essential if for that purpose only. All this must 
 
 l ili ll i lM ^^^^^ 
 
 be done whether there be pools or not, but a pool is a subse- 
 quent function. 
 
 Senator Higgins. Does or does not the pool fix the rate? 
 
 Mr. Blanchard. It does not. I cannot state this too clearly 
 or frequently. 
 
 The Chairman. Let me ask you a question in order to 
 make that statement perfectly clear. I understand the system 
 of pooling simply amounts to a distribution of the tonnage 
 of the various companies. 
 
 Mr. Blanchard. That is all. 
 
 The Chairman. Under the system which you have just sug- 
 gested there is an umpire to determine what proportion should 
 go to each road, the matter of rates not being affected at all. 
 
 Mr. Blanchard, That is correct unless the roads agree with- 
 out such umpire. 
 
 Senator Lindsay. Do the pools distribute the tonnage or the 
 receipts from the carriage of the tonnage? 
 
 Mr. Blanchard. Both, as I will explain. Every pool agree- 
 ment of which I have had knowledge first consolidated substan- 
 tially the facilities of the united railways as if they were on© 
 enlarged company carrying the tonnage of the community as 
 one firm. They especially replaced one line with others in time 
 of strike or casualty. As to the details of a pool, and respond- 
 ing possibly to your thought: Pool agreements are separate, 
 independent of and different from agreements upon rates, be- 
 cause pools are intended to be permanent and to continuously 
 divide the tonnage or earnings, or both, of the agreeing rail- 
 ways in agreed or awarded proportions whatever the rates may 
 be, or however they may change. The rates themselves are 
 never stated in pool contracts. Much of the present discussion 
 18 therefore, immaterial, and should be addressed to the rates 
 themselves and not the division of tonnage after rates have 
 been determined. We do not propose to change any normal 
 tariff rates and you can have general assurances to that effect 
 If such tariffs are unreasonable now, they have been so since 
 the law and you should address that fact. In other words the 
 standard tariff grain rate from Chicago to New York has been 
 continuously twenty-five cents. By change of two and one- 
 
iHi 
 
 T 
 1*1 
 
 CUdk 
 
 ir/i, !," ' ?^ " '""" "^ *"''"^^ ""-■ " those changes 
 existed under pools not a line of any pool contract wonld be 
 
 changed, because settlements wonld be made either in tonnage 
 or money, according to the tariff rate« variously charged. Does 
 not this explanation dissipate some of your donbts as to the 
 fnnc ,ons of pools? They sustain rates but do not make them. 
 \VheD a pool has been agreed to be formed, the parties thereto 
 next me.t and consider the statistics of the like "traffic of each 
 and all for agreed prior periods. 
 
 From snch data they agree to divide the total tonnage into 
 portions nsnally represented by periods when the best or nni- 
 form conditions prevailed, perhaps made uniform when all 
 granted c„t rates. If managers disagree and the apporfion- 
 njent ,s arbitrated, the same data are laid before the arbi 
 trators. We believe in snbmitting railroad qnestions to rail- 
 road men. government refers army subjects to a board it 
 IS an army board; if relating to the navy, to a navy boa'id 
 and to courts and counsel for legal qnestions. In the case of 
 . the Interstate Commission, such policy did n.,t prevail I 
 asked the president of the Ordnance Board of the Army last 
 night what he would think of a national law which permanently 
 required that a board of lawyers, exclusively, report upon the 
 fortitications and armament of the country. With due defer 
 ence to our law-makers, railroad men believe that having con- 
 ceded legal participation upon a Railway Commission we should 
 have railway representatives there also. 
 
 Assuming, then, that percentages have been determined for 
 the participating railways, they thereafter severally report their 
 tonnages to a pool officer, who states the equated monthly re 
 suits to each company, showing bow much each may have car- 
 ried over or under its allotment. The companies in excess are 
 then asked todeliver to those in deficit an equivalent of tonnage 
 or, If money, it is computed upon some agreed basis. 
 
 Let us assume that the Lake Shore Company is awarded 
 15 per cent, of the total east-bound tonnage from Chicago, but at 
 the end of a mouth it has carried 17 per cent., although in my 
 experience with normal conditions I have seldom known a com 
 pany to exceed its legitimate proportion that much. 
 
 ii i lilM ^ ^ ^^ 
 
 23 
 
 The Chairman. What do you mean by 17 per cent? 
 
 Mr. Blanchard. Seventeen per cent of the total tonnage 
 carried eastwardly from Chicago by rail. Suppose, therefore, 
 17 percent, of a total of 250, OOO tons; 2 per cent, more than 
 its proportion would be 5.000 tons. The Lake Shore Company 
 would therefore be a^ked to deliver— say to the Pennsylvania 
 and Baltimore & Ohio Com})anies — 2,500 tons each. Such 
 transfers assume the willingness of shippers to have their wares 
 go over routes other than those first chosen by them. Diverted 
 business is usually unconsigned traffic; about which shippers 
 have expressed no preferences. Suppose shippers decline assent 
 or that the excess is in tonnage consigned to New England and 
 the Ballimore & Ohio was short. New England tonnage can not 
 bt- transferred from the Lake Shore and New York Central to the 
 Baltimore route liecause of geographical obstacles. The latter 
 company, therefore, may say, "We are willing to accept money. 
 Yon have carried this traffic at the full tariff rates. Pay the 
 excess to us, and when we are over we will refund to you." It 
 thus equalizes, and but little money ultimately passes. It is 
 ratlier a proof of good faith. Is it not more the public interest 
 that railroads over-pay over, say 2 per cent, of their money de- 
 rived from reasonable, stable and non- preferential rates than 
 that all refund larger secret rebates, which ultimately 
 touch most of the competitive traffic and which end in transfers 
 of a less tonnage and loss and wrong to every interest involved. 
 
 While I administered the eastward pools at Chicago, East St. 
 Louis, Peoria, Cincinnati, Louisville and Indianapolis the aver- 
 age difference of tonnage or money transfers was not greater 
 than approximately 4 per cent, over or under the percentage of 
 anygiven company, so that in, say $12,000,000 per annum, the 
 transfers of tonnage or money were approximately $300,000, 
 paid by all companies. What one company paid in one month 
 it perhaps received back in the next. What possible interest 
 had the general public in these methods and results except to 
 allay its conjectures of wrong? 
 
 The Chairman. That represents the sum of money that 
 actually changed hands among the railroads? 
 
 Mr. Blanchard. Yes, approximately, and back and forth, 
 whereas strifes in rates not extending beyond reductions of 10 
 
r 
 
 p 
 
 ■ 
 
 ?! 
 
 m 
 
 J 
 
 ACT' 
 
 'i 
 
 f 
 
 ^ 
 
 1 
 
 f 1 
 
 1 
 
 1 
 
 1* 
 f 1 
 
 24 
 
 IMir cent would have paid 11,200,000; but such contests never 
 stop at 10 per cent, when cutting gets started. Have I answered 
 Senator Lindsay's question? 
 
 Senator Lindsay. Yes. 
 
 Mr. Blanchard. It has recently been proposed to obviate 
 money payments as much as possible, as follows: That money 
 deposits be held in trust for, say two months, and if business 
 did not equalize itself in that time that the money be distributed 
 thereafter. In other words, the companies would have sixty 
 days after the expiration of each month in which to voluntarily 
 bring their adjustments within the original conditions, and for 
 traders and markets to equalize. 
 
 The Chairman. 1 should like to ask some questions right 
 tliiir©. Is not knowledge as to the arrangement of freight 
 Irailc on railroads or any other system of common carriers 
 acquired only after long practical experience when studied by 
 men who devote themselves entirely to that business and nothing 
 
 Mr. Blanchaird. I think so; clearly it is so. 
 
 The Chairman. In other words, is it not a very difficult and 
 complicated question to deal with, and can anybody except an 
 •■pert deal with it? 
 
 Mr. Blanchard. It is a large and difficult question and 
 should be dealt with mainly by specialists. My railroad experi- 
 ence began at fifteen years of age, when my father's failure sent 
 !■• to a freight office instead of a college. Had I gone to col- 
 lege I might have been upon the commission and known relatively 
 little of these great propositions. 
 
 Senator Lindsay. There has never been a practical man on 
 the commission ? 
 
 Mr. Blanchard. No. Judge Cooley came the nearest. He 
 an honest, very faithful and able man. 
 
 Senator Lindsay. Would it be possible to get a competent, 
 practical railroad man to act as commissioner for the compensa- 
 tion paid ? 
 
 Mr. Blanchard. I doubt it. 
 
 This is our greatest public problem. Import tariffs are less 
 difficult, yet you formulate them only after conferences with ex- 
 
 /j 
 M 
 
 25 
 
 perts from free trade and protective leagues and from a careful 
 review of prior national policies and experiences. You justly 
 seek to duly and impartially protect various American interests 
 as demonstrated necessary by their expert representatives, and 
 under a broad, uniform and public national policy, but when 
 thus determined the charges are impartial. You recognize only 
 legitimate national and international forces and considerations in 
 making that tariff, and you do not allow goods brought cheaper 
 through New York than Boston, nor at reduced charges for 
 larger quantities, nor encourage preferences between persons 
 and places under the mask of competition. 
 
 The standards of those uniform charges become the war cries 
 of parties, but neither democrat, republican or populist dare 
 ask that their uniformity and inflexibility be abated to any one 
 until Congress so authorizes. Why should reasonable public 
 railway charges made upon the basis of like forces and with like 
 care on our part be reduced until a competent authority so 
 authorizes, and why should not Congress give our larger inter- 
 ests equal study and protection? 
 
 You can prove our statements, reasoning and results by the 
 reports of the Interstate Commission, by the English Board of 
 Trade reports, by experts here, by the railroad procedure of 
 our States and by every country of Europe. We can not deceive 
 you about our rates per ton per mile and the results. You can 
 get the aggregate and average figures from Poor's Manual and 
 the Financial Chronicle. With equal study and equal credence 
 to our experts and the facts, you would be convinced of our 
 claims to your aid. We do not ask for protection, or even that 
 you equalize our tariffs against European freight charges, as 
 the iron and other interests are doing, but having given you 
 rates greatly below theirs we simply ask to be assisted to collect 
 and retain them undiminished by concealed reductions. Our 
 arguments are too much regarded as appeals of monopolistic 
 capitalists. The Interstate Commission reports for 1892 said 
 that one-fifth of the population of^the States depended upon the 
 disbursements of transportation Hues. We ask reconsideration 
 because of that fact, because the direct and indirect payments to 
 labor and small investors greatly exceed the emoluments of railway 
 
 ■■ 
 
 '.•'ii 
 f 
 
JI!«Y" 
 
 iiiMiiiiiiPi 
 
 '} 
 
 
 'f 
 
 }• 
 
 I* t 
 
 26 
 
 cUpital, and because a seven years test of the law has proven our 
 
 contention true and equitable. 
 
 To return to pools: 
 
 With over 8,0(K) shipping points in our association territory 
 there were but seven eastward pools at the pivotal points, but 
 
 they steadied rates elsewhere. They were the flywheels of the 
 great engine. These seven pools were made by, say twenty 
 initial coinpanies, while in the same territory there were ninety or 
 
 more railroads, which retained all their rights and powers in 
 
 dftermininfir rates. 
 
 With pools from district centers, small points and shippers will 
 be more uniformly benefited under the short hanl feature of law 
 and the general railway rate scale before explained. Lopal 
 points are a majority in number and supply a majority of the 
 tonnage, because of the facilities of through bills of lading and 
 through cars from local origin points to local destinations. 
 Stable through rates between trade centers will therefore also 
 stirunlate direct shipments from producer to consumer. 
 
 Senator Lrndsay. Let me see if I understand you. You say 
 the long and short haul clause is observed so far as the public 
 rates are concerned? 
 
 Mr, Blane'imrd, Yes. 
 
 Semiior iincteay. But that when a secret concession is given, 
 the intermediate pomts get none of the advantages? 
 Mr. Blanchard. Not as a rule. 
 
 Senator Lindsay. They still go according to the published 
 rate ? 
 
 Mr. Blaitcftard. Yes, usually. Open reductions of rates 
 extend to local stations, but I do not wish to be understood as 
 saying that concealed preferences are always given to all smaller 
 stations and forwarders. The Committee would find interest in 
 the statement of President Smith of the Louisville and Nash- 
 ville Company, dealing in part with results south of the Ohio 
 Biver upon this point. 
 
 Senator Higgim. In what paper is that statement contained? 
 
 JIfr. Blandmrd, In a published letter withdrawing from the 
 Southern Association. 
 
 27 
 
 Senator Higgins. Will you state whether or not a pool affects 
 freight rates, and if it does, how it does so? 
 
 Mr. Blanchard. I have some statistics on that subject also 
 which will appear later on. 
 
 Kailways can not be legislated to a parity of facility or man- 
 agement nor the public to divide their business impartially, any 
 more than competing ocean steamers and ports. We must be 
 assisted by law, and any law which substitutes theories for such 
 needs and facts and paradoxes for principles, will continue 
 impracticable and void. 
 
 We ask but little from the law, and that is, if strong lines con- 
 cede some of their tonnages to weaker ones, and the deficient lines 
 prefer to thus secure it and thereby maintain uniform rates via 
 both classes of railroads they be legalized in a joint contract to 
 such mutual ends. The joint plan will sooner make the weaker 
 lines more efficient and more disposed and able to adhere to tariffs; 
 forwarders may enjoy the use of the stronger routes at equal 
 rates if they desire, and all lines will he enabled to make econ- 
 omies which will better satisfy them that the very low present 
 standard of rates is reasonable. 
 
 Moreover, if small shippers assent that their tonnage be 
 used to thus equalize joint agreements, knowing that their 
 concurrence assures them a parity with larger forwarders and 
 localities, it is an added and potential argument. The largest 
 shippers now get the best terms while those who most need those 
 terms are the smaller forwarders. They should at least secnre 
 equality. Such joint contracts will therefore best remove all 
 participants, large and small shippers, localities, railroad com- 
 panies, and contending agents, from undue motives and methods 
 now forceful, stop the selling or buying of transportation for 
 less than its due worth, and best and quickest secure the non- 
 discriminating parity which is the chief desideratum of the law. 
 
 There is another phase of the question which the future may 
 press upon our consideration. 
 
 Our accamulations of surplus grain and the need for foreign 
 markets of sale against other sources of production may make it 
 a desirable national policy to authorize the carriers to take it from 
 western farmers to shipping ports at rates less thereto than 
 those charged to residents thereat. It is difficult to see how 
 
►i 
 
 • 
 
 I 
 
 28 
 
 serration of rates and Ll^w ** """^ P**"^' **>« P'*" 
 
 oould all be ts aXlfrrtr'^7"^^^^^^ 
 pools. wompjisded by the equalizing procedure of 
 
 In view of all my premises, I now reneat ♦!.«>» 
 never yet satisfactorily answered: questions. 
 
 What concern have others in thu ,,~._-.-i- 
 
 lei carriers divide betwirthemselveThe Z "/'f P""'" 
 able and legal rates ? '"^^se'^es the proceeds of reason- 
 
 Wherein lies more danger from pooHnir ♦««„ n. . 
 Bonable rates fixed independent^f n!!^ ^^ traflic taken at rea- 
 
 -aintaining the same rates b^tW In" T ""Z '"*" "" 
 ments? ^ ®^ ^^^ permissible agree- 
 
 ♦hJ;:bH:.rS" "^ *'^ p'°''""«'"' ^^ ?-«-« -^-ced 
 
 The Interstate Commission said in its first report- 
 
 vis'JXun'fo'r'^.^rr '•'^ •"™"'^ f-™,™fflewas de- 
 rates might be maintained." * '°**°'' "''^^''y steadiness in 
 
 ^'•- ^^^hard. Yes ; quite true. 
 
 ^*yy*iNf. mere is a creneral de1iiam» ^« *i. a • 
 lect in your opinion? aeiusion on that sub- 
 
 ilfr. Bkmchard. Yes an<l uf^or, i 
 
 as more who would now concur, that if railwav n«fr^l , 
 
 oonB„,ted.the proposals to secure eq^al :„rt ToinT" *; " 
 contracts duly legalized and regulated would be L", ,7 
 adopted. The negatives wouW oom; m^nlv frit l'^ 
 
 • have enjoyed preferences, those who belTe'f 'thev "a^ Tr " 
 
 to secure them desoite f h« io«, *k "7"®^® '^^©y can continue 
 
 m aespite the law, those who hope to receive them 
 
 29 
 
 or those who are unable to compete fairly in business without 
 them. 
 
 Important support of these averments and the pending pro- 
 posal is furnished by a recent report of five gentlemen to the 
 Boston Associated Board of Trade, from which I quote the fol- 
 lowing : 
 
 "In 1893 the matter (pooling) was referred to the Interstate Com- 
 missioners by the United States Senate, with the request that they 
 should furtherinvestigate the subject, and report the'' indings and 
 suggestions. The following circular was issued to all ne commercial 
 bodies, and various parties conversant with trangportfltion matters 
 for their reply and suggestions: 
 
 De^ Sir:— Will you kindly address a communication to the Inter 
 state Commerce Commission giving your opinion as to whether it is 
 practicable, and, if so, advisable, to amend the fifth section of the act 
 to regulate commerce so as to legalize such contracts between compe- 
 ting roads as would tend to diminish unlawful discrimination stating 
 the form of amendment that you think will best accomplish such re- 
 sult. Your paper will be confidential as to its source, if vou desire 
 but we prefer to be at liberty to give it the authority of your name' 
 
 A reply as early as practicable is desired. 
 
 Answers were received from large numbers, representing all the 
 classes alluded to, and the result was that 89 per cent, now favored 
 either the abrogation of the clause prohibiting pooling or the entire 
 repeal of trie Interstate law, and 11 per cent, did not favor the elimi- 
 nation of the clause." 
 
 If, instead of now enacting such and other indorsements into 
 law, the present act be only so amended as to impose more pen- 
 alties for violations, transgressions will continue adroit and 
 proofs even more impossible to obtain. 
 
 The railways which, necessarily or preferably, grant prefer- 
 ences, and forwarders who receive them, will not stop their use. 
 Suffering shippers will not allege discriminations because of lack 
 of legal proofs, and because they hope for and may secure like 
 benefits from the same or other railways. 
 
 Competing railroads will not accuse rival lines nor shippers, 
 because of similar lack of legal evidence, because such charges' 
 would permanently alienate patrons, and because it is not conso- 
 nant with high honor. 
 
 Another consideration I strongly urge is, that the public is not 
 entitled to less than reasonable rates, especially when obtained by 
 combination or device, or from a yielding carrier; if the public 
 should be protected against loss from excessively high charges. 
 
I Iff 
 
 ■■■■I 
 
 .iiiil 
 
 ill 
 
 liii 
 
 ,M 
 
 ■ 
 
 30 
 
 the carriers should be equally protected from losses 
 through undue low charges. The law itself says that 
 ©amers shall not charge ** more or less ^' than their legally 
 filed tariffs. We therefore ask equal legislative effect for both 
 oooditions. The shipper is protected by his bill of lading against 
 more Mian the tariffs. We seek protection by legal agreements in 
 the collection and retention of the rates in those bills of lading. 
 Senator Lindm^, Very much to ray regret I did not hear 
 the beginning of the discussion. If pooling be legalized, how 
 far is the Interstate Commerce Commission qualified, and how far 
 will it be able to determine whether the rates fixed by the pool 
 or the railroads are reasonable ? 
 
 Mr. Blanchard, Primarily, the rates are not fixed by pool 
 agreements. Larger interests and factors decide them. Next, the 
 tariffs are now upon reasopable bases. Since the Interstate act 
 there have been no charges that average rates are excessive. The 
 transportation heart of the United States, affording about 75 
 per cent, of its whole tonnage, lies between the Mississippi 
 rifer and the seaboard, and north of the Ohio and Potomac 
 rivers, and there is no question of reasonableness touching the 
 rates therein. 
 
 When the present law took effect the first class rate from Chi- 
 cago to New York was $1 00, and 75 cents in the reverse direc- 
 tion. Promptly the eastbound rate was made 75 cents with 
 other classes in proportion. All reasonable reductions have 
 thus occurred, with others that are unreasonable. 
 
 Comparison of oar rates with those of European countries 
 and with our own water rates, also prove the reasonableness of 
 the national average of our rail rates. When we consider that 
 such average is increased because of the greater rates in Colo- 
 rado, Oregon, the South, etc., where gradients, sparsity of 
 traffic, etc., justify them, we the more appreciate the rates 
 greatly below the average, in the eastern area described. 
 
 Moreover, the proposition is that the reasonableness of rates 
 be first passed upon by the commission, subject, in the event of 
 their non-concurrence, to that appeal to the courts which is the 
 right of every citizen in every other respect. 
 
 Senator Lindsay. That is what I desire to know, whether the 
 commission is to be consulted as to the reasonableness of the 
 rates ? 
 
 31 
 
 The Chairman. That is the proposition. 
 
 Senator Higgins. The commission is to be the primary referee." 
 
 Senator Cullom. Did I understand you to say, (possibly it 
 was Mr. Cowen who said it) that you would be willing to accept 
 the bill pending in the House, which I understand contains a 
 provision that the commission shall have absolute power over 
 the question of rates without reference to the courts at all? 
 
 Mr. Blanchard. I do not think the commission ought to have 
 that power, and that is the view I think the commission ought 
 to take of it. 
 
 Resuming my argument. 
 
 In every other respect than pooling, the law followed the 
 practical experiences and legislative precedents of other coun- 
 tries. In this particular they ignored them and the law has 
 failed largely for that reason. Canadian railways may now pool 
 their traffic in Canada taken in competition with American rail- 
 ways, as for example, from opposite Detroit eastward ly, and 
 may also pool with competing steamboat lines on the great lakes. 
 Competing lines may pool within our own state limits. 
 
 England has for forty years granted the powers we seek and 
 with acknowledged benefits to its public interests. The present 
 English Clearing House Act recognizes pools called " Joint 
 Purses ' ' as follows : 
 
 ** Whereas, ♦ * * ♦ etc, for the purpose of affording in re- 
 spect to such passengers, minerals, animals and goods the same 
 or like facilities as if such lines had belonged to one company, etc.^* 
 
 Prior to its purchase of its main railway lines, a committee of 
 the German Empire reported as follows: 
 
 "The uniting of the property, of the traflac, and of the management 
 of the inland main lines under the strong arm of the state are the 
 only efficient and proper means to solve the task," 
 
 France is districted and no railway rivalries are permitted 
 within assigned territories. 
 
 Belgium owns its principal private lines, and has in effect 
 pooled all their receipts. 
 
 Can the railway unity, which years of contest proved desirable as 
 governmental measures in these countries, be wholly wrong here 
 under lower rates duly protected by statute ? 
 
 Permit brief reference to some reasons given for opposing 
 Buch contracts. 
 
 ■HIIBI 
 
 BUI 
 
 ■■■■ 
 
 IBHIIII 
 
j*i 
 
 I 
 
 '\' 
 
 I 
 
 * 
 
 I 
 
 If 
 
 u2 
 
 It is siiid that former pools did not cure the evils treated or 
 auhieve their Tannted benefits. That discriminations continued 
 despite them is true, but pooling did not cause them. They 
 would have been greater without pools. New lines, at first de- 
 icient in comparative strength, facilities, equipment, etc., could 
 not secure business at equal rates and therefore resorted to de- 
 vices to get it. They sometimes declined to join pools until they 
 had made tonnage records by drawbacks, etc. To retain their 
 former business or due shares thereof, older lines met their rates. 
 All this cutting was in violation of rate agreements and affected 
 the stability of pools, but would be vastly lessened now with 
 lesser railway construction. Through rates were also higher 
 then than now and way rates yet higher than through rates. 
 Through rate contests were therefore entered upon with less hesi- 
 tation than would be fe!t now. The speculative element is 
 now largely eliminated from management, rates are greatly lower 
 and railway necessities would more sustain them. Moreover and 
 principally, pools had not then the legal status we now seek. 
 
 Nevertheless, former pools were gradually restraining these 
 evils and removing their causes. Professor Hadley said to the 
 Commercial Club of Chicago last week, ** Pools were better ad- 
 ministered in '80 than in '77 and better in *86 than in '80. '* 
 
 To the charge that pool contracts advanced rates or restricted 
 business or rivalry, I answer: 
 
 When the westward Trunk Line pool from New York went 
 into effect (July 11, '77), the average of the westward and east- 
 ward class rates between Chicago and New York, was 71 cents 
 per 100 pounds. 
 
 Nine years aftar. when the pool was discontinued, the average 
 of the class rate was below 50 cents and is now about 46 cents, 
 but greatly lower as the average upon the tonnage carried. Not 
 only were rates thus reduced but tonnage increased. The west- 
 ward tonnage of New York City increased from 715,808 tons in 
 1877 to 1,414,736 tons in 1893 and mark that the growth was 
 greater per annum during the pooled years than since. 
 
 Although New York was pooled, Boston, Philadelphia and 
 Baltimore were not, yet the business of New York indicated the 
 larger increase. 
 
 In the last nine months of the pools eastwardly from Chicago, 
 Peoria, St. Louis, Cincinnati, Louisville and Indianapolis, the 
 
 33 
 
 amount paid per pooled ton did not exceed nine cents, and the 
 tonnage changed from its first routes in fifteen months was but 
 44,000 tons or 2.2 per cent, of the total, and without protests 
 from shippers. 
 
 In my open letter to Senator Cullom some years since I proved 
 these facts true of all the larger pools of the country. 
 
 The allegations of the opponents of pools were thereby dis- 
 proven, which demonstrated that the pools did not seek to in- 
 crease or even maintain former charges or else that they could 
 not do so. Whichever the conclusion, the public did not incur 
 the predicted dangers nor would they now if legal sanction were 
 given to the plan pending, inasmuch as it concedes the rates to 
 a statutory legal supervision which did not then exist. 
 
 It is erroneous and unintelligent to longer charge, as theorists 
 have done, that pools are desired in order to "render competition 
 impossU)le," "to establish monoply," "to preserve dividends on 
 wate^stock," to "cause the railroads to increase their efforts to 
 control the appointment of the Commission," and that they 
 should therefore, be denied. 
 
 * * * "so long as representatives of speculative interests have a 
 voice in their management and not until all fictitious valuations are 
 altogether banished from the equation and until the rates are brought 
 under government control." 
 
 I do not believe you will deny to those who have done the 
 most for the country, the last and the least consideration for 
 their actual present status. 
 
 If capitalization bears any relation to rates, recent receiver- 
 ships should have been avoided, notably in the cases of the 
 Atchison, the Union Pacific and Northern Pacific Companies, all 
 assisted by government, law, credit, lands, counsel and 
 commissions. The real fact is that if the bonds of the 
 New York Central, for illustration, were $500,000,000, 
 and its stock $500,000,000 more, it would not probably 
 change any tariff upon its line one cent per 100 lbs. nor 
 would or could any pool produce an increase of its tariffs to that 
 amount. Neither should its rates, being reasonable, be lessened 
 if its present capital was reduced one-half. The only question 
 is, is the service worth what is paid for it? No one is entitled to 
 a reduction from its due rate value without its assent, or from 
 any cause. Why should you buy transportation at less than its 
 
 Jk'L 
 

 liiiiiiiii" " 
 
 
 
 u 
 
 value, more than flour? The President of the Pennsylvania 
 Company has testified before the House that if his company 
 could obtain the average rates charged by the London and North- 
 western Company, his annual earnings would be increased 
 112,000,000. 
 
 The latest evidence thus compares our rates for '92 with those 
 of other nationa England is not shown because its accounts are 
 not so rendered, but American rates are currently estimated at 
 not more than 65 per cent, of the average of British charges. 
 
 For passengers 
 
 per mile. 
 
 $2.14 
 
 2.99 
 
 3.05 
 
 s.m 
 
 Z. Z.U 
 
 For freight 
 per ton per mile. 
 I .97 
 1.32 
 1.56 
 1.59 
 1.39 
 
 United States, 
 
 Prussia, 
 
 Austria, 
 
 France, 
 
 Belgium, 
 
 Had our railways collected the lowest of the European charges 
 for '92, we would have received $35e5, 000,000 upon freight, and 
 115,000,000 from pa8sengers--$370,000,000 in all— more than 
 we did receive. These facts seem clearly to establish both our 
 reasonable average of charge and the non-relation of capital to 
 rates and that we cannot ignore all these convincing compari. 
 sons. 
 
 Senator Camden. What is the average freight rate in the 
 United States? 
 
 Mr Blanchard. It was OT-lOOths of one cent per ton per mile 
 in '92 and it is worthy of mention that our country was never 
 more prosperous than under former higher railway charges. 
 
 It is further surmised by a recent theorist that:' 
 
 "Every pooling combination of railroad companies for the main- 
 tenance of rates is a violation of common law." 
 
 This dictum refers to the mere maintenance of announced 
 rates which the interstate law requires when it commands us to 
 charge neither more nor less, which the Cullom Committee stip- 
 ulated and which the Interstate Commission and all experts and 
 honest traders have said are essentials. The railroads owe it to 
 the public to make and maintain reasonable charges and the pub- 
 lic then owes those rates to the railroad companies if they use 
 their lines. 
 
 35 
 
 Kates being thus reasonable, a combination to maintain them 
 is a public and corporate requirement, is compliant with law, a 
 trade necessity, contributes to mercantile security, and is as 
 much a public duty as that the Government shall announce and 
 then maintain its tariffs. 
 
 This brings me to the parallels of governmental charges. 
 
 If, as claimed, transportation is a governmental function dele- 
 gated to corporations but subject to National control, we are 
 clearly entitled to the reasonable delegations of governmental 
 powers, its officers would require to maintain the same charges. 
 
 Further, if it be proper that government proceed agamst 
 infractions of its own tariffs, why should it be illegal for a rail- 
 way to proceed against those who violate reasonable carrying 
 tariffs similarly established for public justice. 
 
 We desire effective and not mere statutory conditions and law 
 and joint organizations thereunder are necessary to good re- 
 sults. Organized stock exchanges are indispensable to uniform 
 methods, fiscal regulations and values; produce exchanges and 
 boards of trade to mercantile prices and standard methods, to 
 sustain probity and prevent and defeat fraud. Maripe enter- 
 prises require maritime exchanges. Chambers of commerce 
 unite them all. 
 
 The New York Clearing House Association is a voluntary and 
 non incorporated federation of about sixty banks, organized in 
 1853, whose annual clearances are fifty times the gross receipts 
 of our railways. It has proven a national bulwark. 
 
 Some concentrated authority must exist in every calling that 
 is respected, definite and disciplinary, in order to reconcile di- 
 verse elements and announce just governing methods. They 
 become needful public instrumentalities. The same principle 
 requires the congress of states. That such bodies sometimes do 
 wrong is no argument against them. When, however, railways 
 adopt these tried and sound public principles and methods,, 
 legislation has not hesitated to denounce or prohibit them. If 
 the government purchased the railways, their receipts would go 
 into one general purse, and competition, so-called, would end. 
 
 Discriminations would cease as in the collection of import 
 duties, postage and internal taxes. Government requires the 
 railway companies to make uniform charges for the like carriage 
 of mails, and does not ask that they be secretly rebated. Why 
 
 ■■■iiii 
 
•Mil 
 
 mMi 
 
 '^y^ 
 
 l'I 
 
 I I 
 
 I! i 
 
 I 
 
 ou 
 
 should it not aid iis to similarly maintain our other rates, or, if 
 such h© competition, why should it not procure secret reductions 
 in our mail charges? If government owned the railways and no 
 
 adequate powew existed to compel the collections of uniform, just 
 rates, Congress would promptly enact them. These are the con- 
 ditions w© find, the reasons we prove and the authority we seek, 
 because it cannot b© mad© an easier task to us who possess less 
 anthorit V. 
 
 « 
 
 I!\ per coiilra, our strifes areto continue unhelped by govern- 
 ment to the extent it would assist its own co-ordinate branches 
 under like conditions, and lower freight rates may continue to 
 b© given upon train loads of imported goods than to occasional 
 shippers of on© box, why should your customs laws longer deny 
 th© same large merchant corresponding preferential charges at 
 on© and th© same port of entry ? 
 
 If it be proper to stimulate undue strifes of communities and 
 railways at New York, Boston and Baltimore, should not gov- 
 ernment vary its import charges at the same cities, if undue and 
 unequal yi©lding is justifiable competition? 
 
 If gov©rnm©nt should justly charg© to the moonshiner as much 
 tax for Kis occasional gallon of whiskey as to the distiller's 
 trust, and the buyer of ten thousand dollars' worth of postage 
 Btamps not less per stamp than to the occasional sender of a 
 letter, should it not assist us to maintain like equalities of 
 reasonable and non-preferential transportation charges ? 
 
 Our railways collected in *92 seven and one- third times as 
 much as our custom houses and three and one quarter times 
 more than our combined custom, postage and internal tax rev- 
 enues. If governmental collections are justly uniform, is it not 
 equally desirable to trade and essential to justice that the larger 
 railway collections be also uniform with only legalized excep- 
 tions f 
 
 I quote some of the support which these unrefuted consid- 
 erations have ©licit©d from former opponents of pools. 
 
 Hon© will doubt the devotion of Hon. John H. Reagan to his 
 views of the public interest, as he, mainly, caused the pooling 
 provision of the first interstate bill stricken out. 
 
 The following, written since he became a Texan Railway 
 Commissioner, is, therefore, of exceptional interest : 
 
 37 
 
 "Further study has caused me to believe that the section may be 
 amended so as to benefit, both the railroads and the people by allow- 
 ing railroads to enter into traffic arrangements with one another." 
 
 Simon Stern, the able counsel of the New York Board of 
 Transportation, entered upon their study with hostility, but af- 
 terwards said: 
 
 " They (pools) have brought about a change for the better from 
 that which prevailed before the pooling arrangements were made." 
 
 Hon. Chas. S. Smith, then Chairman of the Transportation 
 Committee of the New York Chamber of Commerce and now 
 its President, at first opposed them but afterward said: 
 
 " Pooling certainly has some good points for shareholders and the 
 public. It does prevent, to some extent, unjust discriminations. It 
 aims to treat all alike." 
 
 The Boston Associated Board of Trade has recently endorsed 
 pooling, for reasons ably set forth. 
 
 Senator Cullom. 1 received a letter from a gentleman from 
 Boston stating that the Board of Trade had endorsed the Pat- 
 terson bill. 
 
 Mr. Blanchard. I am not now familiar with the resolution. 
 
 Senator Cullom. 1 have never seen the bill, and I do not 
 know what its provisions are; but I think I indicated a moment 
 ago, generally, what were its provisions. 
 
 Mr. Blanchard. (Resuming) Permit a quoted word or two 
 as to the legality of pool agreements. 
 
 Judge Deady, of Oregon, said before the law: 
 
 " It is not apparent how a division of the earnings of two roads 
 can concern or affent the public, so long as the rate of transporation 
 on them is reaionable." 
 
 Supreme Judge Blodgett, of New Hampshire, has decided 
 since the law that if such an agreement be a 
 
 '♦reasonable business arrangement which does not cause unreasona- 
 bly high charges or violate any duty which the companies owe to the 
 public, it should be sustained and enforced by the courts." 
 
 Nothing in law prevents forwarders from combining their traf- 
 fic to depress rates and incite railway strife, but railways are 
 denied like rights to protect their reasonable rates and stop un- 
 due strife, both between themselves and their shippers. Mr. 
 
 I 
 
 Jil 
 
 -. Hh'twrn 
 
 mm 
 
 ■■■I 
 
ft 
 
 it 
 
 It 
 
 *, 
 
 m 
 
 Cliairman. this question also touches the country's credit next to 
 its own bonds. It is startling that twenty-three per cent of its 
 railway mileage and one sixth of its railway capital are now 
 under receifers. National legislation contributed to this condi- 
 tion and should help to correct it. Your current endeavors to 
 restore and secure business prosperity should reasonably include 
 the consideration of the railway interest as the largest of the 
 country and the most important permanent factor of national 
 development, credit and facility. 
 
 Senator CuUom. May I ask whether the Interstate Commis- 
 Bion has not made a report classifying the roads into districts 
 and showing that those classes, I believe all of them, made more 
 money in 18911 than before? Their earnings have increased, 
 while their current expenses have also increased a Utttle. 
 
 Mr. Blanrfmrd. If I had the time to go into the matter and 
 had my data I coiikl explain that idea. 
 
 The Finamial Chronicle showed its inaccuracies. I have a 
 letter from Hon. Stiiyvesant Fish, President of the Illinois Cen- 
 tral Company, referring to one part of that question, from which 
 I make extracts: 
 
 "The Interstate Commerce Commission in I heir last report * * 
 • * endeavor to show that railroad interests have DOt been injured 
 by the Act. mud that railway earnings were larger in the year ended 
 inne30, 1898, than in the preceding year. 
 
 I • » • ♦ would like to see tlie commission's reports, and es- 
 pecially those of their staiisiician, called to account seriously. The 
 fundamental fallacy of their figures arises from the practice (for 
 which railroad managers are rt-sponsible) of calling the gross sum 
 received from traffic, " Earnings." In Great Britain and other clvil- 
 iied countries, except only the United States, this sum is correctly 
 denominated ** Receipts. " It can no more be called " Earnings" 
 than could a merchant's gross sales of goods be called "Profits." The 
 Illinois Central some years since adopted the term "Receipts" in 
 their annual reports to stockholders, and have latterly substituted 
 that term for "Earnings " wherever it occurred in their report to 
 the Interstate Commerce Commission. This had not prevented the 
 statistician from usmg the misleading term " Earningf»," in his pre- 
 liminary report for l&m, for instance. 
 
 A great part of the feeling against railroads has arisen from these 
 grossly exaggerated statements of their earning capacity. 
 
 Another point more nearly affecting the good faith of tlie statisti- 
 cian's reports is his including 'Taxes" with "Fixed Charges," 
 under the general heading " Deductions from Gross Earnings other 
 than operating Expenses." As the Illinois Central paid, during the 
 
 39 
 
 year ended June 30, 1893, $1,024,896 in taxes. Professor Adam's 
 manipulation of our figures puts me in the unenviable light of hav- 
 ing an official government document, based on sworn reports, show 
 the company's fixed charges by so much greater than the amount 
 stated in our annual report to our stockholders. * * * * The 
 American Association of Railway Accounting OfRcers have all along 
 protested against the inclusion of taxes among fixed charges. When 
 you consider that with us taxes absorb over 5 per cent of our " Gross 
 Receipts," and more than one seventh of the excess of those receipts 
 over operation expenses (which excess constitutes the " Earnings of 
 the Railway"), and more than two-fifths of the dividend upon the 
 $50,000,000 of full paid slock (which dividends forms the "Earnings 
 of the Share Capital"), you can see why I feel strongly on the 
 subject." 
 
 Senator Cullom. I have not attempted to analyze the report. 
 
 Mr. Blanchard. It depends entirely upon the use which is 
 made of figures. It is in that and other respects that the report 
 is misleading. 
 
 At the dinner of the Commercial Club in Chicago last week, 
 Mr. H. H. Porter, Chairman of the Chicagro & Eastern Illinois 
 Ry. Co., ably illustrated this question substantially as follows: 
 
 Simultaneously with the construction of railways began that 
 of parallel telegraph lines, one system for the transportation of 
 persons and property, the other for thought and intelligence. 
 
 As telegraph companies formed alliances they led to expensive 
 managements and unnecessary offices as in the railways. The 
 telegraphs then entered into what was and is called competition. 
 They had contests in legislatures, in rates and in finance. 
 
 They increased their stock. They involved railway com- 
 panies in thir policies and wars. At last Mr. Gould's efforts 
 substantially consolidated them. The railroads could only 
 amalgamate continuous lines, the telegraphs could combine 
 parallel lines. You remember the hue and cry when Mr. Gould 
 obtained the power by purchase and proxies to do all this. I 
 well recall that the press and trades bodies stated that he could 
 thereby establish an espionage over every business he might de- 
 sire information about, and that he might make oombinations 
 and fortunes so gigantic as to threaten the republic. What was 
 the actual result ? He proceeded to desirable economics, thereby 
 helped to reduce rates and produce uniformity, and your own 
 body has had proofs of the inviolability of messages. 
 
 Does this harmonious telegraph policy unaided by law or the 
 
 
 
 
 a 
 

 ?i 
 
 I 
 
 *■ 
 
 4 
 
 I 
 
 < 
 
 b 
 
 r. 
 
 14 
 
 
 40 
 
 present railway situation under law, represent the best comnier- 
 uial conditions f 
 
 This strong parallel confirms our claims for the advantages of 
 putting competing roads under like comprehensive management, 
 «i far as pools will do it. There is no law preventing higher 
 telegraph charges than those which now prevail, yet they have 
 gone down instead until we send dispatches with unequalled 
 celerity and average cheapness. Aside from special charges 
 made to the press and to the government, and for night trans- 
 mission, the charges are uniform and public and users do not 
 complain of them or discriminations in them. Substantially, we 
 seek these conditions to the extent of a right of agreement with 
 parallel transporters in order to maintain just charges duly 
 guarded by those regulative powers which have proven wise in 
 other countries and, in the telegraph instance, in our own. 
 
 The ogre of a pool which appears so vividly to some persons 
 would then dwindle away, and we would so rapidly enter into 
 relative railway peace and non-discrimination that it would 
 create public astonishment that for seven years the prohibition 
 of pooling had been permitted to stand unrepealed. Finally, 
 there were over thirty measures pending in the last congress for 
 the restriction of railways and but one for their relief and that 
 one, now before you again, was then unhappily defeated. 
 
 There were also many state and municipal measures looking 
 to reduced passenger fares, freight rates, pro rata laws, bills of 
 lading, grade crossings, speed of trains, safety appliances, re- 
 sponsibility for accidents, better protection of labor, etc. , each 
 and all intended to decrease our net earnings or increase our 
 
 responsibilities. 
 
 # 
 
 I therefore plead for more commercial and legislative consider- 
 ation for our interests upon the following recapitulated grounds: 
 
 First. That charges upon the national tonnage average greatly 
 less than for similar rail transportation elsewhere, being about 
 7B per cent of the lowest foreign rates. 
 
 Second. That our present charges do not average one-half 
 those of fifteen years ago. 
 
 Third. That these results have been achieved without national 
 enactment as to rates beyond the section 5 of the law. 
 
 41 
 
 Fourth. That no interstate tariff has been reduced by judicial 
 decree. 
 
 Fifth. That with decrease of charges we give increased speed, 
 responsibility, security of transportation, absorption of lateral 
 charges, stoppage of transfers, etc. , unequalled elsewhere. 
 
 Sixth. That with the lower rates and quicker freight transit, 
 our railway labor is paid the highest railway wages of the world. 
 
 Seventh. That to call railway contests competition is a mis- 
 nomer. 
 
 Eighth. That railway taxation is being constantly increased. 
 
 Ninth. That to our railways have been due the unparalleled 
 development of the nation and the extension of its foreign com- 
 merce. 
 
 Tenth. That we only seek reasonable rates which we cannot 
 exceed if we would, and propose to submit them primarily to a 
 Governmental Commission. 
 
 Eleventh. That we can look only to law to restore the safe- 
 guards it took away; and in restoring them railway experience 
 is entitled to prior consideration when coupled with due public 
 protection. 
 
 Twelfth. That we are entitled to all this as the largest interest 
 of the country. 
 
 Thirteenth. Because the law has failed not only in business 
 but legal aspects, and disregard for it is increasing. 
 
 So far as national law seeks to cure conditions to which the 
 public may demur with equal reason, we should aid to correct 
 them also. If the law is to remain it should be strengthened 
 and made adequate by mutual and comprehensive railway, com- 
 mercial and legislative action. It should be made vital and not 
 void. 
 
 We should repeal injustice and adhere to mutual right. The 
 alternative is yet more railway consolidations. 
 
 Senator Wilson. A good many complaints come to me in cor- 
 respondence resulting from this state of facts: For instance, 
 take a road that is constructed through Iowa from the Missouri 
 to the Mississippi River. It is extended through Illinois to 
 Chicago. The road has been constructed by independent cor- 
 porations because the companies are in different states and have 
 
 « 
 
.- .«-».c:fS" 
 
 iiUft"* 
 
 !*' 
 
 
 TtinJi 
 
 their charfcerd from the two states. I frequently hear from the 
 people of eases of this character. There is a town in Iowa— it 
 may be well towards the western part of the state or it may be 
 m the central part— some of the inhabitants of which are busi 
 ness men who ship freight to Chicago and receive freight from 
 Chicago. There are duplicate bills of lading, one over the Iowa 
 part of the line to its eastern terminus on the Mississippi River and 
 another from there to Chicago over the Illinois part of the line 
 There is no obedience to any principle involved in the pooling 
 system observed in that shipment. A much higher rate is 
 charged on the Iowa part of the line, and then the local rate is 
 charged on the Illinois part of the line, which makes a very un 
 jiist discrimination, it is alleged, as to those points in the inte- 
 rior of the state which are not pooling centers, or points where 
 the pooling system applies. Has that feature of the case ever 
 been brought to your attention ? 
 
 Mr. Blanchard, The roads I represent run east from Chicago 
 Peoria and St. Louis. The lines of which you have spoken are not 
 nmong them nor am I familiar with their usage in the respects 
 you cite. In our territory we have nothing of that kind that I 
 «iii recall. Indeed, we have gone to the opposite. 
 
 If a man ships to a given point and wishes to re-ship we re- 
 duce the first and second local rates so that he may forward at 
 the cheaper through rate instead of higher charges made up of 
 two loaal rate.. My general observation as to the cases you 
 mention, is that the charges from Iowa points to the Mississippi 
 Biver are those authorized by Iowa law. They may be higher 
 
 Z}'''',^'jr' """^ ^^'^^ ^^^'^ ^^^^ ^^ ^^^'^^ "^«^' fi^«d by the 
 Illinois Commission, or higher than the proportion of through 
 rates. This does not pre-suppose wrong. The shipments you 
 refer to are presumably first made to the Mississippi River with 
 a view to deciding there whether the freight shall be there deliv 
 ered or re-shipped therefrom. Grain may there reach the first 
 elevator and owners may then determine whether they will ship 
 to St. Louis, farther south by river or to Chicago, New York or 
 elsewhere. Therefore, much property is sent to the river at local 
 rates. I have never heard, when a shipper elected in Iowa to 
 ehip direct to Chicago or the farther east, that procedure you 
 €it© prevails. ^ 
 
 43 
 
 'Senator Wilson. 1 have had a number of instances of that 
 kind brought to my attention, and in going about Iowa I hear 
 parties make the same complaint. 
 
 M7\ Blanchard. 1 wish I were better informed in my answer. 
 If a higher rate were charged from a point east of Des Moines 
 to Chicago than from Des Moines to Chicago, the right of enquiry 
 and reasonableness now exists and should be exercised by the 
 Iowa authorities or the National Commission. If a pool existed 
 at Des Moines it would correct such conditions, so that any local 
 shipper direct to Chicago would not be charged more for a 
 shorter haul than from Des Moines to the same point. 
 
 Senator Wilson. Still that is the fact. 
 
 Mr. Blanchard. I do not know. If it exists, it is probably in 
 so few instances that they constitute exceptions. 
 
 Senator Higgins. There are cases where a carload of steers, 
 cattle, going from Chicago to Wilmington, Delaware, are taken 
 at the regular through rates, then from Wilmiugton, Delaware, 
 say to Delaware City, or some other point, there would be a 
 local rate charged very much greater in its proportion than the 
 one from Chicago to Wilmington. 
 
 Mr. Blanchard. That is universal. 
 
 Senator Higgins. And that shipment would not be affected 
 by pooling? 
 
 Mr. Blanchard. Not in any way. The conditions to and 
 from Wilmington would be unchanged. When a party ships 
 from Chicago he has the option of shipping to Wilmington or to 
 Delaware City. He presumably knows the rates to and from 
 that point and makes his choice. 
 
 Senator Higgins. If he asked for a through rate to Delaware 
 City, could he get it ? 
 
 Mr. Blanchard. Yes. 
 
 Senator Higgins. I thought it was refused. 
 
 Mr. Blanchard. There may have been no published tariff 
 from Chicago to Delaware City, because such universality 
 would mean countless thousands of tariffs, but we get such rates 
 for our shippers always. 
 
 Senator Higgins. Is such a rate given from a point like 
 
 
 A 
 
 l llli ill l »MW ^^^^^ 
 
1 ^ 
 
 
 44 
 
 Buffalo to Wilmington or Delaware City as weU as from Chicago f 
 
 Mr. Blanchard. I am not familiar with the facts. 
 
 Sevator Higgins. Your jurisdiction does not include Buffulof 
 
 Mr. Blanchard. Not from Buffalo east, but impracticable or 
 
 excessively circuitous routes would not be represented bv 
 
 through tariffs. ' 
 
 Senator Higgins. I do not mean circuitous. 
 
 I wish to understand your argument in respect to the figures 
 you used a while ago as to the difference of rates in England 
 and the continent of Europe as compared with those in. the 
 United States. I believe the rate here is ninety-seven hundreths 
 of one cent per ton per mile. 
 
 Mr. Blanchard. I shall be glad to make a copy of those 
 figures for yon. , 
 
 Senator Higgins. Is it your argument that if pooling were 
 allowed greater revenue raised would be for the railroads from 
 the traffic? 
 
 Mr Blanchard. No. except by the maintenance of tariffs. 
 Ihe tariffs would not be increased. 
 
 Senator Higgins. What was the point you undertook to 
 make in that respect ? 
 
 Mr. Blanchard. That those earnings represented a very low 
 standard and average of rates, and that being true, we simply 
 desire to preserve them without reductions. 
 
 Senator Higgir^. Why did you refer to the larger returna 
 received by European compaiyes ? 
 
 Mr Blanchard. To show first, that our rates average unreas- 
 ««ably low from national standpoints. Second, that the rates 
 do not bear the slightest relation to capitalization, and third, 
 that our rates are so low compared with other nations, that we 
 are entitled to government aid to help us to charge and main- 
 tain tnem impartially to all. 
 
 Smmtor Higgins. Is, or is not their present relative lowness 
 dae to the f act tliat the Interstate Commerce law prohibits 
 pooling? ^ 
 
 Mr. Blanchard. 1 have stated I think it is so in some 
 respects, because the rates, say from Kalamazoo and many 
 
 45 
 
 stations to New York at the passage of ihe Act might legally 
 have been more than from Chicago. 
 
 The law forbade that condition and therefore reduced our 
 average rate. All over the United States the railroad companies, 
 with exceptions of sparsely settled countries like the south, the 
 mountain region beyond Denver, etc., etc., reduced local rates to 
 meet the long and short haul clause of the law. When contests 
 formerly occurred by which the tariff was, say twelve and one- 
 half cents par hundred pouods on grain from Chicago to New 
 York, it included sending cars to elevators in Chicago and three 
 cents for lighterage in New York, leaving approximately, say 
 eight cents for carriage, interest, dividends, etc. That low 
 rate did not always extend to local stations. Now such open 
 reductions generally do and the law has reduced our average 
 freight rates accordingly. 
 
 Senator Higgins. Would the legalization of joint contracts, 
 as you designate them, interfere with the application of the 
 long and short haul clause ? 
 
 Mr. Blanchard. Not at all. It would strengthen it by better 
 maintaining rates at the larger initial points. 
 
 Senator Higgins. That clause would remain? 
 
 Mr. Blanchard. Yes. 
 
 Senator Higgins. You would not repeal it ? 
 
 Mr. Blanchard. I think these things ought to remain, viz.: 
 
 The prohibitions against discriminations, the injunctions as to 
 the reasonableness of rates, the long and short haul clause, and 
 the administrative powers of the Commission. That is all the 
 country requires. Then give us the pooling machinery to carry 
 them out and we will do it jointly. 
 
 Senator Wilson. 1 wish to suggest just there, and I think it is a 
 practical suggestion, that if the management of railroad affairs 
 in the country, including the pooling machinery and all that, 
 will give attention to the subject I have suggested and will 
 evolve a remedy for that complaint, they will do more to satisfy 
 the public than any other one thing that I know of. I suggest 
 that you give that particular feature of the case study and 
 examination and see if you can not evolve something in your 
 pooling arrangements, etc. , which will meet the complaint that 
 
 
I 
 
 '1 
 
 s 
 
 it 
 
 46 
 
 18 made, because if you can not, then there will be an insist ance 
 for further legislation in this regard. 
 
 Mr. Blanchard. I shall be glad to refer it to the proper par- 
 ties. There does not exist to my knowledge in the territory I 
 represent, an instance of the kind you have mentioned, except 
 under the conditions Senator Higgins before referred to. I am 
 not only Commissioner of the Central Traffic Association, but 
 Vice-Chairman of the combined association with the Trunk 
 Lines as well, and in this respect I may speak for both. 
 
 Mi\ John K. Coiven. May I ask Mr. Blanchard a question ? 
 
 The Chairman. Yes. 
 
 Mr. Cowen. In reference to Mr. Wilson's inquiry, I notice 
 that in the Osborne case the shipper from Scranton, Iowa, 
 shipped his goods first tq Chicago. He did not know that he 
 could get a through rate from Scranton to Boston or New York. 
 Now, I can conceive how that could give rise to complaints of 
 the exact kind the Senator from Iowa has been speaking of, yet 
 us a matter of fact the evidence shows that he could have gotten 
 a through rate. He shipped first to Chicago and then he had 
 the Chicago rate to add to it to Boston. 
 
 Sefiator Wilson. In the cases I have referred to there was a 
 refusal to give a through rate. 
 
 Mr. Cowen. There was not in the case to which I have 
 referred. 
 
 Senator Wilson. They insisted upon giving the two local 
 rates. That is a discrimination against all the interior points. 
 
 Senator Cullom. If Mr. Blanchard is through I will move 
 that the committee adjourn. 
 
 Mr. Blanchard. Before you adjourn, I hope the gentlemen 
 of the committee will accept my acknowledgements for the 
 patience and courtesy with which they have received my remarks. 
 
 At 12:80 o'clock p. m. the committee adjourned. 
 
 47 
 
 53d congress, 
 2d Session. 
 
 S. 1534. 
 
 IN THE SENATE OF THE UNITED STATES. 
 
 January 31, 1894. 
 
 Mr. Gorman introduced the followiDg bill; which was read twice and 
 referred to the Committee on Interstate and Commerce. 
 
 A BILL 
 
 To amend an Act entitled " An Act to regulate commerce," ap- 
 proved February fourth, eighteen hundred and eighty -seven. 
 Be it enacted by the^ Senate and House of Representatives of 
 the United States of America in Congress assembled, That sec- 
 tion five of an Act entitled - An Act to regulate commerce," 
 approved February fourth, eighteen hundred and eighty-seven, 
 be amended so as to read as follows : 
 
 "Sec. 5. Except under the condition herein prescribed, it 
 shall be unlawful for different and competing common carriers, 
 subject to the provisions of this Act, to enter into any contract', 
 agreement, or arrangement, for the division or apportionment 
 among themselves of the whole or any portion of their traffic, or 
 any of their gross or net earnings; and each day of the con- 
 tinuance of any such contract, agreement, or arrangement, ex- 
 cept under the conditions hereinafter prescribed, shall be 
 deemed a separate offense: Provided, however, That under the 
 following conditions it shall be lawful for such common carriers 
 to enter into such contracts, agreements, or arrangements, en- 
 forceable between the parties thereto, that is to say: All such 
 contracts, agreements, or arrangements shall be in writing, and 
 shall be tiled with the Commission appointed under the pro- 
 visions of this Act and shall become lawful and forceable be- 
 tween the parties thereto only upon the approval thereof by said 
 Commission or upon an entry of an order of court, as herein 
 provided. All such contracts shall be deemed approved by the . 
 
 ■■11 
 
W'V 
 
 ..■rfl -=--•— -^ 
 
 
 
 I 
 
 
 Commission at the expiration of ten days from the filing thereof, 
 without the Commission entering any formal order of approval, 
 unless the Commission makes an order, formally withholding its 
 approval. Such approval shall be withheld whenever said Com- 
 mission shall find that the operation of any such contract will 
 result in unreasonable rates, unjust discrimination, inferior 
 service to the public, or is otherwise in contravention of any of 
 the provisions of this Act. Orders and findings of the Commis- 
 sion, giving or withholding its approval of any such contract, 
 shall be subject to review by any circuit court of the United 
 States sitting in equity in a judicial district, in which any party 
 to the contract has its principal office, upon petition filed by any 
 party to such contract, or by any person or organization affected 
 thereby and authorized to make complaint under section thir- 
 teen of this Act, stating the facts and the action of the Commis- 
 sion relative to such contract, and making the Interstate Com- 
 merce Commission, under that name, a party defendant ; said 
 court shall proceed to hear and determine the matter speedily, 
 as a court of equity, in the manner provided by section sixteen 
 of this Act, and shall make such order or decree as may be just 
 and equitable, determining whether the contract in question 
 shall be lawful and enforceable as neither operating to produce 
 the results aforesaid or being otherwise in contravention of the 
 provisions of this Act. From the decree or order of said 
 circuit court, an appeal shall lie to the Supreme Court of the 
 United States, and shall be advanced for hearing therein, as ap- 
 peals in which the United States are a party. It shall be the 
 duty of the Commission to observe the working, operation, and 
 effect of every such contract or agreement upon the transporta- 
 tion and business of the country and of the several contracting 
 parties, making such examinations and investigations in relation 
 thereto as the Commission may deem necessary, and if, and when- 
 ever the Commission shall be of the opinion that the operation of 
 any such contract results in unreasonable rates, unjust discrimi- 
 nation, or inferior service to the public, or is otherwise in contra- 
 vention of any of the provisions of this Act, the Commission 
 shall issue an order, directed to the several parties to such con- 
 tract, specifying the particulars in which the operation of such 
 contract produces such results or is otherwise in contravention of 
 any of the provisions of this Act, and requiring that such con- 
 
 49 
 
 tract or the practice under it be modified, changed, or corrected, 
 as therein specified. If the parties to such contract shall not 
 comply with the requirements of such order within such reason- 
 able time as may be fixed therein, then the Commission shall 
 proceed to enforce such order as herein provided for the enforce- 
 ment of the other findings and orders of the Commission. It 
 shall be the duty of the proper district attorney, under the 
 direction of the Attorney-General of the United States, when- 
 ever requested by the Commission, to appear in every such cause 
 for the Commission, and all coats and expenses so incurred shall 
 be paid out of the appropriation for the expenses of the courts 
 of the United States." 
 
 — ' ■ II — 
 

 50 
 
 i 
 
 ^. 
 
 58d congress, 
 
 IsT Session. 
 
 H; R. 3377 
 
 m THE HOUSE OF REPRESENTATIVES. 
 
 September 22, 1893. 
 
 Referred to. the Committee on Interstate and Foreign Commerce and 
 
 ordered to be printed. 
 
 Mb. Patterson introduced the following bill: 
 
 A BILL 
 
 To>mend an act entitled **An act to regulate commerce,'' ap- 
 proved February fourth, eighteen hundred and eighty seven. 
 Be it enacted by the Senate and House of Representatives of 
 ifw United States of America in Congress assembled. That sec- 
 tion four of an act entitled **An act to regulate commerce," ap- 
 proved February fourth, eighteen hundred and eighty-seven, be 
 •mended by adding thereto the following: 
 
 * 'The word 'line,' as used in this act, shall be construed to 
 mean a physical line, whether such line be oue railroad or two 
 or more connecting railroads, or part railroad and part water, 
 when both are used under a common control, management, oe 
 arrangement, express or implied, for a continuous shipment. 
 
 ' 'Each railroad and each waterway, and every part of each 
 railroad and each waterway composing any such line, shall be 
 deemed a part of such line, and transportation over the whole or 
 any part or parts of such line shall be deemed to be transporta- 
 tion over the same line, whether the transportation service be 
 rendered by a single carrier or by two or more carriers. 
 
 "The words *any common carriers,' as used in this act, shall 
 be construed to mean one or more than one common carrier as 
 the case may be and the context require." 
 
 Sec. 2. That section five of said act be amended so as to read 
 as follows: 
 
 "Sec. 5. Except under the conditions hereinafter prescribed, 
 it shall be unlawful for different and competing common carriers 
 
 51 
 
 subject to the provisions of this act to enter into any contract 
 agreement or arrangement for the division or apportionment 
 among themselves, or with others, of the whole or any portion 
 of their traffic or of their gross or net earnings. And each day 
 of the continuance of any such contract, agreement, or arrange- 
 ment, except under the conditions hereinafter prescribed, shall 
 be deemed a separate offense: Provided, That under the follow- 
 ing conditions it shall be lawful for such common carriers to 
 enter into such contracts, agreements, or arrangements enforce- 
 able between the parties thereto; that is to say: 
 
 "First. All such contracts, agreements, or arrangements shall 
 be in writing and shall be filed with the Commission appointed 
 under the provisions of this act. 
 
 "Second. Such contracts, agreements, or arrangements shall 
 become lawful only upon and after approval by said Commission 
 and shall remain lawful and enforceable between the parties 
 thereto only during such time and so long as the said Commis- 
 sion shall fail to withdraw their approval thereof and to notify 
 the parties thereto of a day upon which the same shall cease to 
 be lawful. And when the Commission shall withdraw their ap 
 proval of any such contract, agreement, or arrangement and 
 shall so notify the parties thereto the same shall become and be 
 unlawful and cease to be enforceable between the parties thereto 
 on and after the day specified in such notice. 
 
 "And Congress may at any time alter, amend, or repeal so 
 much of this section as makes such contracts, agreements, or 
 arrangements lawful under the above conditions." 
 
 Sec. 3. That section ten of said act as amended March second 
 eighteen hundred and eighty-nine, be further amended by add' 
 ing the following clauses thereto: 
 
 "Whenever any common carrier subject to the provisions of 
 this act IS a corporation, such corporation may be prosecuted as 
 for a misdemeanor under any of the foregoing provisions of this 
 section, and upon conviction shall be subject for each offense to 
 a fine not exceeding five thousand dollars." 
 
 ** Whenever an indictment shall be found under the provisions 
 of this act against a corporation, the service of any writ or other 
 process thereupon, or for the prosecution thereof, shall be suf 
 ficient if a copy of such writ or process be delivered to and left 
 

 i 
 
 J: 
 
 V ■ 
 
 J 
 
 r. 
 
 4 
 
 
 
 41 
 
 52 
 
 with any officer or agent of such corporation found in the judicial 
 district wherein such indictment may be found." 
 
 Sic. 4. That section thirteen of said act be amended by add- 
 ing thereto the following: 
 
 "Testimony given orally before the commission, or any one or 
 more members thereof, in the course of any investigation or in- 
 quiry made or instituted under the provisions of this section, 
 shall be taken down by stenography or otherwise as it is given, 
 and before the decision of the Commission is announced shall be 
 written out and £led with the papers relating to the complaint, 
 investigation, or inquiry." 
 
 Sec. 5. That section sixteen of said act as amended March 
 second, eighteen hundred and eighty-nine, be further amended 
 by adding the following: 
 
 **A copy of all the pleadings, papers, exhibits, and testimony 
 (whether documentary, or in the shape of depositions, or taken 
 down as orally given) tiled with or adduced before the Com- 
 mission in the course of any investigation of a complaint, or in 
 the course of any inquiry instituted by the Commission on its 
 own motion, shall, whenever application is made to a court, as 
 above provided, alleging violation or disobedience of the order 
 or requirement of the Commission, be certified by the secretary 
 of the Commission to such court. 
 
 "In hearing and determining, pursuant to the provisions of 
 this section, any matter not involving the right to a trial by 
 jury, neither the court nor any person appointed by the court to 
 prosecute iocj'n'rieB into such matter shall hear or consider any 
 miilter of fact offered in evidence before such court or person by 
 any party who, with knowledge of such fact, failed to offer it be- 
 fore the Commission, unless the court be satisfied that the 
 materiality of such fact and its bearing on the decision of the 
 Commission could not reasonably have been understood or fore- 
 wmn prior to such decision." 
 
 53 
 
 53d congress 
 
 2d session. 
 
 H. R, 5665. 
 
 IN THE HOUSE OF REPRESENTATIVES. 
 
 Februaey 8, 1894. 
 
 Referred to the Committee on Interstate and Foreign Commerce and 
 
 ordered to be printed. 
 
 Mr. Stoker introduced the following bill: 
 
 A BILL 
 
 To amend an Act entitled *'An Act to regulate commerce,*' 
 approved February fourth, eighteen hundred and eighty- 
 seven. 
 
 Be it enacted by the Senate and House of Representatives of 
 the United States of America in Congress assembled^ that the 
 word " line " as used in the Act entitled, " An Act to regulate 
 commerce," approved February fourth, eighteen hundred and 
 eighty-seven, and in acts amendatory thereof, shall be construed 
 to mean a physical line, whether such line be one railroad 
 or two or more connecting railroads, or part railroad 
 and part water. Each railroad and each waterway, and 
 every part of each railroad and each waterway composing any 
 such line, shall be deemed part of such line, and transportation 
 over the whole or any part or parts of any such line shall be 
 deemed to be transportation over the same line, whether the 
 transportation service be rendered by a single carrier or by two 
 or more carriers. . Any common carrier or carriers engaged in 
 the transportation of passengers or property over a line of railt^ 
 road, or a line which is part railroad and part water, between 
 points or places described in the first section of said " Act to 
 regulate commerce '* shall be deemed subject to the provisions 
 

 I 
 
 i: 
 
 i: 
 
 If 
 
 
 i 
 
 54 
 
 of said Act as amended. The words ** any common carrier,'* as 
 used in said Act as amended, shall be construed to mean one or 
 more than one common carrier as enforcement of the provisions 
 of said Act as amended may appear to require. 
 
 Sec. 2. That section five of said Act be amended so as to 
 read as follows: 
 
 Sec. 5. That except under the conditions hereinafter pre- 
 wribed, it shall be nnlawfnl for different and competing 
 common carriers subject to the provisions of this Act to enter 
 into any contract, agreement, or arrangement for the division or 
 apportionment among themselves, or with others, of the whole 
 or any portion of their traffic or of their gross or net earnings. 
 And each day of the continuance of any such contract, agree- 
 ment, or arrangement, except under the conditions hereinafter 
 prescribed, shall be deemed a separate offense: Provided^ That 
 Mnder the following conditions it shall be lawful for such com- 
 mon carriers to enter into such contracts, agreements, or aiTange- 
 ments enforceable between the parties thereto; that is to say: 
 
 ** First. All such contracts, agreements, or arrangements 
 ■liall be in writing and shall be filed with the commission 
 appointed under the provisions of this Act. 
 
 ^* Second. Sncb contracts, agreements, or arrangements shall 
 become lawful only upon and after approval by said commission, 
 and shall remain lawful and enforceable between the parties 
 thereto only during such time and so long as the said commission 
 shall fail to withdraw their approval thereof and to notify the 
 parties thereto of a day upon which the same shall cease to be 
 lawful. And when the commission shall withdraw their approval 
 of any such contract, agreement, or arrangement and shall 
 BO notify the parties thereto the same shall become and be unlaw- 
 ful and cease to be enforceable between the parties thereto on 
 and after the day specified in such notice. 
 
 ** And Congress may at any time alter, amend, or repeal so 
 iniiisli of this section as makes such contracts, agreements, or 
 arrangements lawful under the above conditions. " 
 
 Sbc. S. That section 10 of said Act as amended March 
 aecoud, eighteen hundred and eighty-nine, be further amended 
 by adding the following clause thereto: 
 
 " Wbenever any common carrier subject to the provisions of 
 
 5a 
 
 this Act is a corporation, such corporation may be prosecuted 
 as for a misdemeanor under any of the foregoing provisions of 
 this section, and upon conviction shall be subject for each 
 offense to a fine not exceeding five thousand dollars. 
 
 *' Whenever an indictment shall be found under the pro- 
 visions of this Act against a corporation, the service of any writ 
 or other process thereupon, or for the prosecution thereof, shall 
 be sufficient if a copy of such writ or process be delivered to and 
 left with any officer or agent of such corporation found in the 
 judicial district wherein such indictment may be found." 
 
 That so much of section ten of said Act as provides for punish- 
 ment by imprisonment is hereby repealed. 
 
 Sec. 4. That section thirteen of this Act be amended by 
 adding thereto the following: 
 
 ** Testimony given orally before the commission, or any one or 
 more members thereof, in the course of any investigation or 
 inquiry made or instituted under the provisions of this section, 
 shall be taken down by stenography or otherwise as it is given,' 
 and before the decision of the commission is announced shall be 
 written out and tiled with the papers relating to the complaint, 
 investigation, or inquiry." 
 
 Sec. 5. That section sixteen of said Act as amended March 
 second, eighteen hundred and eighty-nine, be further amended 
 by adding the following: 
 
 ** A copy of all the pleadings, papers, exhibits, and testimony 
 (whether documentary or in the shape of depositions, or taken 
 down as orally given) tiled with or adduced before the commission 
 in the course of any investigation of a complaint, or in the course 
 of any inquiry instituted by the commission on its own motion, 
 shall, whenever application is made to a court, as above provided,* 
 alleging violation or disobedience of the order or requirement 
 of the commission, be certified by the secretary of the commis- 
 sion to such court. 
 
 "In hearing and determining, pursuant to the provisions 
 of this section, any matter not involving the right to a 
 trial by jury, neither the court nor any person appointed 
 by the court to prosecute inquiries into such matter shall hear 
 or consider any matter of fact offered in evidence before such 
 court or person by any party who, with knowledge of such 
 
 I 
 
 "•V 
 
56 
 
 fact failed to offer it before the commission, unless tlje court 
 he satisfied that the materiality of such fact and its bearing on 
 the decision of the commission could not reasonably have been 
 understood or foreseen prior to such decision." 
 
 .1 
 
 
COLUMBIA UNIVERSITY LIBRARIES 
 
 This book is dut on the date bidicated below, or at the 
 eacpiration of a definite period after the date of borrowing, as 
 provided by the library rules or by special arrangement with 
 the Librarian in charge. 
 
 DATE BOmiOWCO 
 
 DATC DUE 
 I I 
 
 DATE BOIIROWEO 
 
 DATE DUE 
 
 HOV 8 1 
 
 350 VX^ 
 
 r 
 
 
 
 ^ 
 
 
 
 w9 
 • . '■■ 
 
 HUf 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 CM.9 (747) M100 
 
 
 
 
 *^ 
 
 c9JkV.M,?'A [JKi'lSI? .VlSSftP'^s 
 
 PIIMII 
 
 0041 4081 44 
 
 ■■■■■■•■•I 
 
 D550.2 
 
 I Blaii chard, G.R. 
 
 B592 
 
 j 
 
 I Argxnient Before the Goraj.'ttee on 
 
 Inte r ^tt^ e C o'Trrc re© 
 
 ^'^"''"V- 
 
 
 
 _.S 
 
 fj*^f-^e^*^'-<.4j> 
 
 » 
 
*'l»Sa'|.'*ii 
 
 
 2. 
 
 \. f ,.'. 
 
 "i.J 
 
 .^.^- 
 
 4r V 
 
 »%' 
 
 V^' 
 
 **:>- 
 
 %*: 
 
 .ri %. 
 
 '^; 
 
 '^'^'^. 
 
 i* 
 
 4>i 
 
 i;^ 
 
 .'^-:».' 
 
 ,.^, 
 
 if 
 
 ■5^%'. c- 
 
 1 -fl 
 
 t/ * 
 
 •V 
 
 ■•>.• 
 
 id.: 
 
 ft- 4 
 
 If' 
 
 M 
 
 r .t. 
 
 1*< 
 
 
 !..•-■ V 
 
 'ir 
 
 *V: 
 
 'j;.T!k%'4, 
 
 ii^ 
 
 ^■^^^ 
 
 ir 
 
 ,*^i'"% 
 
 
 •,e>' 
 
 «f.; 
 
OF 
 
 TITL