erly interpret and enforce the act as it was amended five years ago, requesting and demanding the railroads to give us reasonable, fair, and nondiscriminatory rates, we have but little relief yet and the prospects are not very bright for the coming years under the present laws and methods of procedure.

This is the reason that we are here urging you to give us the Gooding bill as passed by the Senate, known as S. 2327.

The reason why such wickedly discriminating rate structure ever came into existence and why it requires so much energy, time, and expense to overthrow it is found only in the unmitigated selfishness of human nature together with the

INEXPERTNESS OF THE LAW AND THE EXPERTNESS OF LAWYERS

I am fully aware that I have now named a class to which nearly every member of this committee belongs and in which I plead guilty of being a member, being clearly convicted by the evidence of an aged and now yellow certificate, but this discussion must proceed even if we have to invoke the ever handy rule that present company is always excepted.

Those of us who are spending so much effort to throw off the discriminatory rates under which our clients are burdened believed that when the transportation act of 1920 amended the fourth section with a proviso that "the commission shall not permit the establishment of any charge to or from the more distant points that is not reasonably compensatory for the service performed," and the further amendment, "and no such authority shall be granted on account of merely potential water competition not actually in existence"; we then had a fourth section that would be construed as being so nearly absolute that the greater part of the fourth-section violations in our rates would be removed in a very short time, and that the carriers would not continue to harrass us by filing new applications for fourth-section relief except in "very special" cases.

I really believe that the members of this committee who considered and voted for these amendments believed that such would be the results, but expert lawyers soon found the inexpertness of the fourth section of the 1920 act, and have filed the records of cases before the Interstate Commerce Commission with the persistent argument that "reasonably compensatory" does not in fact mean compensatory at all. Indeed, the majority of the Interstate Commerce Commission seems to take this view, as indicated by the granting recently of certain application for fourth-section relief-carrying rates, that it seemed to us but little effort was made by the carriers to prove that they were reasonably compensatory, or that they were not in violation of other sections of the act.

In the hearing of the Gooding bill before the Interstate Commerce Committee of the Senate, Commissioner Hall was asked if the commission took the view of this question, stated by Mr. Justice Brewer in the Morgan grain case, that "Compensation implies three things: Payment of cost of service, interest on bonds, and then some dividends." Commissioner Hall answered: "Mr. Justice Brewer was not dealing with that kind of a phrase or that kind of a situation. It was a question of what was compensation, wasn't it, that he was discussing? We have here a phrase that a rate which may be more or less water-compelledis that reasonably compensatory or not? How is that to be interpreted? The common-sense interpretation would seem to be-I am speaking simply for myself now one that was reasonably compensatory under the circumstances, and one of those circumstances would be that the carrier could not get any more." (See p. 480, Senate hearing.)

I am forced to exclaim with Senator Pittman, "That would be very fine if the word 'compensation' did not have any meaning."

We of the interior have been thinking that common English words do have some meaning even when used in the laws passed by Congress, and that if a railroad in an application for fourth-section relief could prove to the satisfaction of a majority of the Interstate Commerce Commission that a rate on newspaper print from International Falls to New Orleans, a distance of 1,649 miles, of 53 cents per hundred pounds, would yield a reasonably compensatory revenue to the carriers, than a rate of that same 53 cents would be sufficiently compensatory to the carriers at a point on its main line some 200 miles north of New Orleans. The majority of the commission does not agree with us on this subject. Under fourth-section application 12278, submitted October 11, 1923, decided March 11, 1924, reported in 88 I. C. C., page 345, the commission granted the carriers fourth section relief on newspaper print and wrapping paper from International Falls and other northern mills to New Orleans without requiring them to observe 30420-25-9

the fourth section to points north of same for the purpose of enabling these mills to meet the competition in rates from eastern mills to New Orleans, by way of the Morgan lines.

I am filing with my testimony a copy, marked "Exhibit A," of the decision of the commission in that case and request that it be made a part of the record, but ask the privilege of here reading the dissenting opinion of Commissioner Eastman, in which Commissioners Campbell and McManany concur. Eastman, Commissioner, dissenting:

"Fourth section relief is granted in this case so that newspaper publishers and jobbers in New Orleans, who 'prefer American newsprint paper and who are 'moved by patriotic motives to patronize home industry', may have opportunity to buy American instead of Scandinavian paper. It appears, however, that the 'proposed rates, if permitted to become effective, would place the Fox River group and International Falls on a substantial parity with corresponding eastern groups on newsprint paper.' In other words, the freight rates from the northwestern mills are to be equalized, not with the rates from Scandinavia, but with the rates from eastern United States.

"If protection against the competition of foreign paper manufactures is the issue here, it seems a matter which might more approximately be considered by the Tariff Commission and by Congress than by us. However, the general principle which underlies the report is what I wish more particularly to discuss, rather than its special application in this case.

"The relief here granted is based upon what is called market competition. There is no carrier competition between the northwestern mills and New Orleans which makes it necessary to depress the rate, but other producing sections can reach the New Orleans market at less cost, and therefore it is proposed to reduce the rates from the northwestern mills so that they, too, can sell in this market. These rates can now be reduced, provided no higher rates are charged to intermediate points, but this would sacrifice too much revenue to suit the lines which serve the northwestern mills. To limit the sacrifice they ask fourth section relief, so that they may vault over higher rates at the intermediate points and confine the reduction of New Orleans. We have discretion to grant or deny this relief and in my opinion it ought to be denied. Indeed, I think that we ought in all cases to deny relief where market competition is offered as the justification.

"The difficulty with market competition is its too pervasive character. It rarely is the case that a consuming market can be reached at equal cost from all points of production. Hence this excuse for fourth section relief may be invoked almost at will. Take these paper producing points as an illustration. If the carriers serving the northwestern mills are entitled to relief in order that those mills may sell to better advantage in New Orleans, other carriers are equally entitled to relief in order that the eastern mills may sell to better advantage at such points as Chicago, St. Louis, or Kansas City. Nor need the carriers serving the northwestern mills stop with New Orleans. Doubtless they can find similar "market competition" at Mobile, Atlanta, and Savannah, or in northern territory at such points as Cincinnati and Pittsburgh. So long as the customs tariff makes possible the entry of Scandinavian paper, even the importers at New Orleans might reasonably ask the carriers to seek fourth section relief in order that this paper may be sold at Memphis or St. Louis, and I question whether either the carriers or we could lawfully stand in the way of such a request so long as relief is granted in the opposite direction for the benefit of the competing northwestern mills. Certainly the rule must in all fairness work both ways if it is to work at all.

"There is one qualification to this line of thought, but it only serves to point the moral. Assume a point of consumption, which I shall call С, and two points of production, A and B, one 200 miles and the other 400 miles from Č. If the same carrier operates between A and C and between B and C, it certainly would not be granted fourth section relief for the purpose of equalizing the rates from A and B at C, and it probably would not be permitted to equalire them at all. If different carriers, however, serve A and B, the theory of market competition comes into play and relief would be granted. Obviously unequal marketing conditions will prevail at various points of consumption, dependent upon the extent to which the carriers that serve them have been consolidated.

Subject to this qualification, which results in discrimination, the theory of market competition, if followed consistently, will inevitably lead to all manner of cross-hauling and wasteful transportation for which the country must in the end pay. As a rule, in fourth section cases it is urged that relief will make

it possible to load cars which would otherwise move empty; but there are nowhere near enough empty car movements to support the relief to which the theory of market competition will lead, and I call attention to the fact that in this present case it is not alleged that there is here such a movement.

Moreover, it is the larger cities which will gain whatever marketing advantage will accrue from such relief. Market competition may, and undoubtedly does, exist at small towns as well as at large cities, but the carriers' interest in it only awakens when traffic in large volume is involved. The only thing that the smaller communities are likely to gain from this form of fourth section relief is the opportunity to bear a share of the burden of wasteful transportation. "It is natural that carriers should desire to further the interests of large producers or large consumers from whom they receive much traffic, but I am persuaded that fourth section relief on the ground of market competition will not in the long run be beneficial to the country and that we ought to deny such relief."

Commissioner Eastman is an expert lawyer who devotes his talents to the good of the whole people as against special privileges to the few. His arguments in this case are convincing, his conclusions correct, and I think should have been followed by the commission.

It seems that the majority of the commission followed the line of reasoning of one of its other expert lawyers, Commissioner Hall, and construed the fourth section of the 1920 act as meaning that when the railroads ask for fourth section relief the reasonably compensatory rate for the service performed means only such rate as the railroad is able to get in competition with water carriers, or in meeting market competition.

If this case is to be made a precedent by the commission, and no doubt it will be, then, unless this session of Congress passes the Gooding bill the whole southern territory will be flooded with applications for fourth-section relief in rates on all important commodities from Chicago, St. Louis, Louisville, Cincinnati, and all similar points to New Orleans, Mobile, and other coast points, and the interior people will be driven right back to where we were seven years ago and will be forced to merely exist under the iniquitous discriminatory system of rates which has cursed us so long, but which we are determined to throw off if America, God, and justice survive in the coming years. We demand that Congress help us to

do it now.

In fact, in December, 1922, a few months after the rates became effective under Docket 1303, such an application was filed by the Illinois Central Railroad and a favorable action by the fourth-section committee was secured. Then in February, 1924, it was renewed and in March, 1924, other applications were filed by other lines and these applications were set for hearing in Memphis on May 2, 1924. Fighting men from the interior were there ready for trial and anxious to do battle for their industrial existence, but the railroads asked permission to withdraw their applications in order that they might amend them to comply with the new order of the commission issued on March, 1924, and further plead not ready for trial because the great cities of Chicago and New Orleans had not furnished the testimony which they had promised and which it was alleged was necessary to win the cases. We insisted that they should be forced to a show-down and not be allowed to withdraw these applications unless they would pledge not to file others, because it was detrimental to the business interests of the interior to be always threatened and bulldozed by the railroads and big cities, while they played hot and cold with the commission.

The examiner took notes of the pleas of both sides and passed the matter up to the commission for settlement. We have heard nothing from these applications since, but soon afterwards the Senate passed the Gooding bill and they are only waiting to see if they can not kill that bill in this committee and if they do new applications will be filed and the commission has already bound itself to grant the relief by its position taken in the above case.

I here file copies of two of these applications, marked "Exhibit B" and "Exhibit C" to my testimony.

The rates here proposed violate the fourth section at intermediate points back into the interior for some 300 miles and will enrage several million people against the railroads and thus revive all of the old ill feeling between the carriers and shippers which we had hoped was at an end. Can this committee afford to take any part of the blame on its own shoulders for the continuance of such conditions in the South by refusing to amend the present law in such manner as to prevent them?

The inexpertness of the present fourth section is clearly and painfully demonstrated by fourth section order No. 8900, issued by the commission on March 4,

1924, in which is set out the grounds on which the commission will grant relief from that section on application of the railroads.

First. The commission will grant relief from the aggregate-of-intermediates provision of the fourth section. I can not imagine any circumstances under which it would be right for a railroad to charge more as a through rate from one point to another than the aggregate of the intermediate rates, but the commission says it will allow the railroads to do so if they will apply for such relief. Second. Relief will be granted from the long-and-short-clause of the fourth section based on the following grounds:

Applications based on circuity; applications based on water competition; applications based on market competition; applications based on weak financial condition or high operating cost of petitioning line.

With the commission holding such views as to its authority under this section with the power and influence which the large cities hold over the railroads, with the greed for business, no matter at what compensation, evinced by the railroads, what chance for commercial and industrial existence, much less development, is left to the small interior communities? And yet they are human beings, citizens of the United States, who ought to have equal rights under the law and it is the duty of Congress to protect them whether they are organized to protect themselves or not.

Relief on the grounds of circuity, within reasonable bounds, may be of some benefit to one community and still not be fatal to the interests of the higher rated points, but that is a doubtful proposition that should not be left to discretion of the expert lawyers on the commission or that represent the railroads, but should be made specific in the law.

All other grounds of relief should be plainly prohibited by law in such decided manner that no expert lawyer could inject them into the discussion of rate structures for any part of this country.

Fourth-section relief to meet market competition was more ably discussed by Commissioner Eastman in the above dissenting opinion than I could do it or anyone else not having as broad experience with rate matters as he has had. He looked at the question from an unbiased standpoint, for the good of the whole people and all of the carriers and his vision was not in any way obscured by personal interest or the influence of big business. The very fact that 8 of the 11 members of the commission paid no attention to his arguments but rendered a decision directly opposed to them, is painful proof that this commission will have to be restrained by positive prohibition in the law from perpetuating in this country so disastrous practices on the part of the railroads and large cities.

Such a principle in rate making digs up and throws to the winds the very mudsills of the foundation for any rate structure that can be made that will be just, reasonable, nondiscriminatory, or in any other manner for the good of the whole country and in any sense in compliance with the intent and spirit of the act to regulate commerce. There is no idea of regulation in it. It throws down every bar that was intended to be placed by Congress between a wild scramble for business on the part of the big carriers and big cities and the commercial and industrial development of the country as a whole.

If market competition is to be the law, then we had better wipe out all regulatory law and leave the carriers and people free to tussle for their own advantages in freight rates, because then it would be the fault of any community that did not get preferential rates, and not the fault of Congress, and those who did get them would be only "smart Alecs" and not violators of law as is now the case. The commission having granted fourth section relief to meet market competition to one community and to one set of shippers, can not deny it to any community or any set of shippers who can persuade the railroads to file their application for it. Thus the right and power to make preferential rates are taken entirely away from the commission and the railroads and are lodged solely in the traffic bureaus of large cities. Can honesty, fair dealing, and general prosperity for all the people survive in any country under such maladministration of its laws? And can any enlightened Congress refrain from calling a halt on such administration of its laws by amending them so that there can be no discussion or difference of opinion as to their meaning?

Never having been a Congressman, I can not speak from experience of the compelling forces that control their actions, but I am supposing that what he thinks is the best interest of his own district is his first duty, always provided that such interest is not in conflict with the rights of other people, but I also presume with confidence that, as members of this committee, each one of you has no other thought than that your first dus to act for the good of your country as a whole. You will, doubtless, alnd that transportation is a national proposi

tion, the cost of which is a tax that none can escape, hence, that just like any other tax it should be imposed on all the people alike. In fixing the laws which shall govern transportation there is no room for district, State, or territorial lines. The boundaries set by the trade and commerce of the country are the only lines that limit the rights of the people and every special privilege granted to any community and every discrimination imposed upon any community is a violent usurpage of governmental function.

There would be just as much common sense and justice in the Government maintaining a law under which the citizens of Chicago and New Orleans might buy United States bonds at 80 cents on the dollar, while the citizens of other communities were required to pay face value and a premium, as there is in maintaining any law under which the citizens of these or any cities can buy transportation between themselves at a less price than is charged other citizens, while other communities are charged not only face value of the transportation service, but a premium on it to make up for the favor bestowed on the favored few.

No sane man would think that this proposition applied to bonds could get through any Congress, but this same proposition as applied to transportation has been tolerated for 50 years by every Congress and is yet inflicted upon the people.

Surely, the public welfare demands that fourth-section relief to meet market competition should be stopped by law right now.

But let us look at this question from a personal interest standpoint for a moment. Would Mr. Huddleston, representing the ninth district of Alabama, and Mr. Parks, representing the seventh district of Arkansas, be willing for all of the cities in the Middle West and Ohio River to have rates to New Orleans, Mobile, and all southern coast points very much lower than to their own districts? This is exactly what will happen before Congress meets in December, 1925, unless you pass the Gooding bill before March 4, 1925. And that is not all. Many other members of this committee will find that their constituents will be imposed upon by discriminating rates and in consequence their business interests will be demoralized and their legitimate trade territories will be woefully contracted. But I am confining myself to the South, since my intermountain friends are here and are crackerjack fighters for their own territories.

Fourth-section relief to meet water competition is the deepest-dyed and blackest spot on the hands of the Government regulation of transportation and it is the duty of this committee in its report on this bill to cry, "Out, out, damned spot," and see that the Congress washes its hands of the foul practices that are imposed on the majority of the people of this country, for the special benefit of the few, who are strongly organized and have been made rich by special privilege in freight rates.

This spot is deep and black because it has been allowed to eat and fester into the body of rate structures ever since the railroads were built, without having the light of common sense and common justice turned upon it. Those who have suffered from it and those who have profited by it seem to have taken it as a necessary part of a rate structure, just like warts on a toad are attributed to the nature of the animal.

During all this time Congress continued to make appropriations for water transportation till more than $1,000,000,000 of the peoples' money was spent at random, without any definite end in view and without any assurance of any beneficial results at all commensurate with such expenditure. In 1920 the Comgress for the first time declared that its policy was to foster water transportation and directed certain preliminary investigation to be made with the view of making such transportation practical and since then has been making large appropriations to carry on the work. All of you are familiar with the history of this legislation and the Mississippi-Warrior Barge Line, which is now being operated by the Inland Waterways Corporation, with Gen. T. Q. Ashburn in command as the representative of the Secretary of War.

General Ashburn is capable, honest in purpose, energetic in his work, and will make the experiment in waterways transportation a success, if it can be made so by anyone. But what if he does make it a success? Unless Congress passes the Gooding bill amending the fourth section of the transportation act so as to prohibit fourth-section relief to meet water competition, the moment that water transportation falls into the hands of private ownership the railroads will seek and secure fourth-section relief to meet the rates of the water lines and thus kill all water transportation.

You gentlemen of this committee know and every Member of Congress who will give the matter one moment of serious thought knows, that it will be utterly