with a most amazing argument; speaking of the transcontinental line's application at present before the Interstate Commerce Commission for long-and-short-haul rates, it says:

"There is at the present time an application for fourth section relief in the rates on a limited number of commodities from the East to the West pending before the commission, the granting of which is of vital interest to Portland as a regulator of water rates."

And in commenting on the effect of the Gooding bill the circular states: "It will compel Portland shippers to depend largely upon the slow water lines competition between the water lines and the rail lines is the best method of regulating the water rates and to keep freight rates down generally it will rob Portland of the advantages of its location, as the point where rail and ocean transportation meet. When it becomes impossible for the rail lines to meet the water competition, we can expect very material increases in the water rates as these lines free from competition will of course make as high rates as possible and still retain the traffic. A monopoly will have been established which will benefit only the water lines. A monopoly helped into existence by law whereas the general public policy is against monopoly. Its effect (the Gooding billy will be the first step toward arbitrary congressional rate making without public hearing in each instance as is now the practice."

Think of it gentlemen, this is a petition to your honorable body to continue a violation of the mandatory or declaratory part of section 4 and in lieu thereof to continue giving effect to the proviso of such section which when exercised as Portland would have it exercised carrys with it the vice of nullifying section 4 in toto, or nullifying section 2 of the interstate commerce act regarding discrimination; of nullifying section 3 preventing unreasonable preferences and advantages; of nullifying the minimum rate provision of section 15; of seriously disrupting the group plan of rate making and of very seriously interfering with a proper equilization of rates and the fair return provision of section 15-a (par. 2). It will also nullify section 500 of the transportation act. In our view only by the enactment of the long and short haul bill here under consideration into law, can said section be carried out effectively and which provides:

"It is hereby declared to be the policy of Congress to promote, encourage, and develop water transportation, service and facilities, in connection with the commerce of the United States, and to foster and preserve in full vigor both rail and water transportation."

PORTLAND, ME., COMPARED WITH PORTLAND, OREG.

Further answering Portland, it may be noted that there are no long and short haul rates on the opposite side of the country for the purpose of meeting water competition, say from Portland, Me., down the Atlantic coast to Norfolk, and intermediate points on said coast, and there is no more reason for such rates on the immediate Pacific coast line than there is on the Atlantic coast.

EXERCISE OF WISE NATIONAL POLICY

There is no merit in Portland's contention that the passage of the legislation herein under way is a step towards arbitrary congressional rate making. Incidentally the Railway Age in a recent issue treats the matter from the same standpoint. It goes on to state, "That Congress is not a fit body to directly regulate rates. That Congress created the Interstate Commerce Commission to deal with the subject.” This is placing an exaggerated construction on the legislation here under consideration. To the extent that it forbids discrimination in rates it is regulatory, but within recent years Congress enacted legislation making "rebating unlawful," and because Congress saw fit to pass that piece of remedial legislation I presume The Railway Age, if called upon for an opinion, would refer to it in an effort looking to the regulation of rates, and which in fact was the result of the legislation. But this went further than the mere matter of regulation and was an exercise of wise national policy just as will be the case when Congress has acted with a view to correcting for the future long and short haul abuses.

RAIL AND WATER TRAFFIC COMPARED

The railroad traffic managers figure that there will be annually 6,000,000 tons of traffic being transported by the intercoastal water lines through the Panama Canal between Atlantic and Pacific coast ports, and vice versa. Of this amount

possibly 32 million tons may be moving westward from the Atlantic coast to Pacific coast ports and the balance, or 21⁄2 million tons may be moving in the reverse direction from the Pacific coast to the Atlantic coast ports.

Compared with this relatively small tonnage carried through the Panama Canal, the all-rail tonnage handled by the transcontinental lines reaching the Pacific coast (of which there are nine (9) lines) aggregated over 248,000,000 tons for the year 1923, which was an increase of 25,600,000 tons over the previous year, and there was an increase of 70,000,000 tons in 1923 over 1921. Moreover, one system reaching Pacific coast ports, viz, the Southern Pacific Co. increased its tonnage in 1923 over 1922 by approximately 7,000,000 tons, or 1,000,000 tons in excess of the aforesaid canal traffic. The railway traffic managers contend that they are entitled to what they term a fair share of this canal traffic and that if permitted to establish long-and-short-haul rates their share will approximate 3,000,000 tons, per annum. In other words cut the business of the canal half in two. And, then it is said that by the acquisition of this amount of traffic it will enable the transcontinental carriers to add substantially to their earnings and thus make it possible to carry other traffic at lower rates, and which, if it can not be secured might have the effect of increasing rates on other traffic, but the traffic managers do not tell us to what extent there will be reduction in the earnings on the traffic that is already moving by rail to the Pacific coast terminals. Neither do they tell us how much or less of said Panama Canal traffic they will secure, because it can not be done. It is admitted by some of them in testimony that they will take it all, if they can get it. Others recognize that the reduction of their rail rates to Pacific coast terminals may precipitate a rate war between rail and intercoastal carriers, which would require very much lower rail rates if they are to get any considerable amount of traffic, in which event the intermediate States would bear the burden of this fight, the water carriers would be crippled, and the inexcusable fact remains that the carriers would be voluntarily throwing off a large amount of revenue, for the purpose of neutralizing the activity of the canal lines, or of destroying them if they can. Due to a rate war in 1922 among the canal lines, or commonly known as the conference lines operating between the Atlantic and Pacific ports, the water rates were reduced more than 50 per cent and while on August 1, 1923, they were increased 33 per cent, it is said they are still too low to afford a reasonable adequate return on the investment in property devoted to this service. Compared therewith westbound transcontinental railroad rates on heavy moving commodities were on April 17, 1923, reduced 25 per cent in addition to the decreased 10 per cent provided for in reduced rates 1922, effective July 1, 1922. And, now there is pending before the Interstate Commerce Commission a long-and-short-haul application on behalf of the transcontinental carriers by which the rates on 47 leading westbound commodities from Chicago territory to the Pacific coast terminals are proposed to be reduced a further amount averaging between 20 and 25 per cent. These rates should not be further reduced, because the traffic being of manufacturer articles is of that character which should carry its fair share of the transportation burden, or in other words, its share of the fair return provided for in section 15-a. THREE TRANSCONTINENTAL LINES CONSTRUCTED IN COMPETITION WITH OTHER RAIL LINES AND WITHOUT REGARD TO OUT-OF-POCKET COST RATES

There is another point that may be adverted to, the carriers intimate, not directly to be sure, but indirectly, that in the event that they are required to forego the practice of long-and-short-haul rating, there may be a possibility that rates will be increased in order to make good traffic which is being taken by the boat lines. I think I have already sufficiently analyzed this point by showing how meager the domestic water traffic through the Panama Canal is, in fact, when compared to the total tonnage of the transcontinental lines reaching Pacific coast terminals and especially when contrast is made with their increase in traffic of over 25,000,000 tons during the year 1923; and yet by the way of further suggestion, I feel I should again bring to your attention that in the face of the carriers' arguments that it is necessary to handle the business at out-ofpocket cost rates to Pacific coast terminals, and without anything approaching a fair proportion of the net earnings return required, and after listening to this argument for the past 20 years, I have found to my surprise, to be sure, that during this period the Los Angeles & Salt Lake Railroad, a part of the Union Pacific system, constructed its line from Salt Lake City to Los Angeles, a distance of 900 miles, to meet this out-of-pocket cost competitive traffic that moved by the ocean transportation lines; and I recall that the west end of the Missouri Pacific system, namely the Western Pacific Railroad extended its lines from

Salt Lake City to San Francisco, a distance of over 900 miles, for the same purpose; and likewise, I recall that up in the Northwest, the Chicago, Milwaukee, & St. Paul extended its lines from Mobridge, S. Dak., a distance of over 1,300 miles, on out to Seattle and Tacoma, right in the face of these ocean-going transportation lines and out-of-pocket cost rates. I cite this in support of the proposition that the traffic to and from the Pacific-coast terminals is highly desirable and compensatory from a railroad competitive standpoint and without regard to out-of-pocket cost rates and the comparatively meager amount of domestic traffic moving through the Panama Canal; otherwise these three lines would never have been built.

TONNAGE AND EARNINGS COMPARED

Reference is made to my testimony before the Senate committee in hearings on S. 2327 (March 5, 1924, pp. 331, 763) with particular reference to tables set up on pages 777 to 827, inclusive, wherein will be found a detailed analysis of the long-and-short-haul rates above referred to. There will be found on pages 783-787 statement of tonnage and earnings as follows:

This table shows that the transcontinental carriers reaching the Pacific coast terminals are prosperous and that through the medium of the transportation act they have been well and adequately taken care of, and they therefore should not be permitted to throw off a large amount of revenue at the Pacific-coast terminals, which are in the nature of rebates and have the three-fold effect of casting an unjust burden on southern, western, intermountain and interior Pacific coast State points by imposing double taxation for the construction of waterway facilities; of neutralizing and in time of destroying waterway transportation through the Panama Canal.

RATES IN PRESENT LONG-AND-SHORT-HAUL APPLICATION

I submit for the record at this point a statement showing first, rates headed "At present" on various commodities from Chicago, Ill., to San Francisco, Calif., second, rates "Originally proposed" by carriers when the pending application was filed; and third, rates as "Subsequently proposed" by them at the Chicago hearing, before the Interstate Commerce Commission in 1923. The key to the statement is entirely simple, for the reason that under the rates as shown in the column "At present" in effect it is to be understood that at this time they apply uniformly to both the intermountain and to the Pacific coast terminal points, whereas, the rates shown in columns under headings “Originally" and "Subsequently" proposed are, if authority is granted, to apply to the Pacific-coast terminals, while the rates shown in the column "At present" in effect are to remain as the rates applicable at the far western and intermountain points. By noting the rates in this order the proposed long-and-short-haul discrimination against said western and the intermountain points is apparent at a glance.

Statement showing (1) present rates on various commodities from Chicago, Ill., tơ San Francisco, Calif., (2) rates originally proposed by carriers, and (3) rates as subsequently proposed by them at the Chicago hearing

A FEW LONG AND SHORT HAUL RATES IN SOUTHERN AND SOUTHWESTERN STATES IRON AND STEEL ARTICLES

For a haul of 912 miles from Chicago to New Orleans on the east side of the Mississippi River the present rate on iron and steel articles is $11.40 per ton, while to Meridian, Miss., for a haul of 712 miles, the rate is $10.60 per ton, or graduated in proportion to distance. During 1923 the railroads filed an application covering over 40 commodities, and as illustrative thereof they proposed to reverse the rates for iron and steel articles by maintaining said rate of $10.60 at Meridian for the short haul and to reduce the long-haul rate to $8.60 per ton at New Orleans, but after hearing the Interstate Commerce Commission denied this application during the summer of 1924. While these applications are pending they adversely affect the intermediate communities by destroying confidence.

Taking the west side of the Mississippi River, the long and short haul situation as affecting Louisiana may be illustrated by this table, showing the rates per ton:

Long and short haul, illustrated by first-class freight rates and mileage

Structural steel. The rate on structural steel from Pittsburgh to Galveston or Houston, Tex., is $17.50 per ton, whereas from Pittsburgh to Dallas, for a 350mile shorter haul, the rate is $20.40 per ton.

Molasses.-The rate on molasses from New Orleans to Memphis, for a haul of 400 miles, is $5 per ton, whereas for a 391-mile haul from New Orleans to Longview, Tex., the rate is $13.40 per ton. For a haul of but 183 miles from

New Orleans to Jackson, Miss., the rate is $5.90 per ton. From New Orleans to Norfolk, Va., a haul of approximately 1,100 miles, the rate is $9 per ton, whereas for shorter hauls of 688 and 737 miles to Spartansburg, S. C., and Asheville, N. C., the rates are $11.70 and $12.70 per toù, respectively.

Fertilizer. For a haul of 687 miles on fertilizer from Savannah to Memphis, Tenn., the rate is $5.29 per ton, whereas for a haul of 588 miles to Corinth, Miss. (directly intermediate), the rate is $6.64 per ton. For a haul of 632 miles from Savannah to Vicksburg, Miss., the rate is $4.95 per ton; whereas for a haul of 588 miles to Jackson, Miss. (directly intermediate), the rate is $5.63 per ton.

CONGRESSMAN CLEVELAND A. NEWTON

The effect of long and short haul rates is well illustrated by Congressman Cleveland A. Newton, of Missouri, testifying before the House Committee on Interstate and Foreign Commerce, February 26, 1924, on H. R. 6649 to create an Inland Waterway Corporation, and which passed at the first session of the Sixty-eighth Congress. He said:

"The Mississippi Barge Line rate (between St. Louis and New Orleans) is 80 per cent of the rail rates that parallel the river, but the rail rates that parallel the river are but 58 per cent of the average rail rates of the country, so that the barge rate is not more than 50 per cent of the average rail rates of the whole United States."

This is illustrative of the methods pursued by the railroads for the purpose of strangling water competition, and which builds up great cities that are given these preferential rates, and retards the development of large areas that are forced to bear the highly prejudicial rates.