11 high one, and more than 25 per cent or sho existing rate was a relatively low one. That is my general recollection of Gener What other readjustments the Railroad admin:STS course of business I am not advised and cEL IT ST Senator POMERENE. I simply wanted to call vo notwithstanding the Congress had created the 117) E whose business it was to classify rates, the awer Supe own rate-making body to fix these rates, and muʻi • of the Interstate Commerce Commission now is cle committee. Mr. WOOD. Well, I think there is no doubt tha to the extent there is criticism, of the existing rates that were created during that period. IL the proposal of the carriers be entirely correct. original proposal of the carriers did not conten.;;** rates at all. When the award of the Labor Br ing the wages of the men, then the carriers pr quirements due to that award should be prov cent advance in standard fares and the imposte and the remainder of the raise should be pa mu that when you speak of the Ex parte 74 procHOTE proposals were as I have described them. proposals, they did not contemplate an advance I the bes The CHAIRMAN. It will be necessary for us to susel committee will take a recess until 9 o'clock to-morrow 2 factory to the committee. And all those who are per ni to condense just as much as it is possible, consistent v *. tation of the matter, what they have to say, because v ing to a close this week. Mr. THOм. Mr. Chairman. I hardly believe you wit the number of witnesses that are yet to come: I do r practicable. The CHAIRMAN. We are going to try to do it. I c succeed or not. (Whereupon, at 12 o'clock m., the committee adjon”, at 9 o'clock a. m.) Senator SMITH. And that being wholly within the jurisdiction of the State commissions would affect 50 per cent of the one-third, if the chairman is correct. The CHAIRMAN. That is my recollection. Mr. Wood. I think the Senator's estimate is a little high, but I will get the exact figures. Senator SMITH. That is very significant-to know what per cent of the total revenues of the roads are within the control of the State commissions. Mr. WOOD. I will try to have that in the record to-morrow. I think Senator Cummins's estimate is a little high. I do not think it reaches quite one-third. The CHAIRMAN. It may be a little high, but that is my recollection. It is somewhere along there. Mr. WOOD. Somewhere along there; yes, sir. Senator SMITH. You said the passenger revenue was 50 per cent and the freight 15 per cent within the control of the States? Mr. Wood. Yes, sir. Senator POMERENE. Let me ask you another question there before you go on: Senator POMERENE. In these several groups, as I understood it? Senator POMERENE. I think it has been pretty clearly demonstrated before this committee in our various hearings that one of the very serious causes of complaint made after the director general had raised the rates and had given out that there was a 25 per cent increase was that, as a matter of fact, the reclassification of traffic was veryl material, and as a result, while the public was advised there was a 25 per cent increase, there was, in fact, a 50 to 60 per cent increase, due to the reclassifications. Now, when the Interstate Commerce Commission made this horizontal increase of traffic rates was it based upon the reclassification of rates as made by the director general or was it on the classification as it had existed before? Mr. Wood. It was applied to the rates as they stood at the termination of Federal control. Whatever changes had been made by the director general and were reflected in rates as they stood were reflected with the horizontal raise. Senator POMERENE. So that whatever inequalities or inequities had been brought about by the director general were continued? Mr. WOOD. If there were inequities; yes. Of course, the Senator will bear in mind that all those questions are questions upon which many people differ. Now, I was going on to outline the attitude of the various parties before the Interstate Commerce Commission on this matter. Senator POMERENE. I wanted your view. You have answered my question in that hypothetical way, assuming I was correct. What is your statement as to whether or not that complaint was correct and the justification for it, if it is correct? Mr. WOOD. You mean whether the director general's traffic rates resulted in inequities? Senator POMERENE. Yes. Mr. WOOD. I think in many cases they did and in many cases they did not. I do not think, on the whole, the director general's advances can be properly criticized in the way in which they were spread over the traffic. Senator POMERENE. Let me give you a concrete case: It was stated, of course, that the increase was. 25 per cent, a horizontal increase, but when it came to the rough grains in the Middle West we were advised that the increase was 50 to 60 per cent. Mr. WOOD. I am not familiar with the grain situation. The Southern Pacific is not much of a grain-carrying line. I have some general information about it, but would not want to speak authoritatively. But my understanding of the situation and my recollection of the general situation and of General Order No. 28 is this: That it provided for a general advance of 25 per cent of all rates as they then stood, with the exception of certain commodities, on which and as to which the advances were to be made in specific cents per 100 pounds, irrespective of what the rates were before. Now, the effect of this substitution as to those excepted commodities-what effect that would have upon the percentage of advance depended generally upon whether you were talking about long-haul traffic or short-haul traffic. I think in every case the increases upon those excepted commodities were less than 25 per cent on long-haul traffic when the previously existing rate was a relatively high one, and more than 25 per cent on short-haul traffic when the previously existing rate was a relatively low one. That is my general recollection of General Order No. 28. What other readjustments the Railroad Administration made in the ordinary course of business I am not advised and can not say. Senator POMERENE. I simply wanted to call your attention to this fact: That notwithstanding the Congress had created the Interstate Commerce Commission, whose business it was to classify rates, the director general saw fit to get his own rate-making body to fix these rates, and much of the onus and the criticism of the Interstate Commerce Commission now is due to what was done by that committee. Mr. WOOD. Well, I think there is no doubt that a good deal of the criticism, to the extent there is criticism, of the existing rates goes right back to the rates that were created during that period. In order that my statement as to the proposal of the carriers be entirely correct, I should have said that the original proposal of the carriers did not contemplate any advance in passenger rates at all. When the award of the Labor Board was handed down increasing the wages of the men, then the carriers proposed that the increased requirements due to that award should be provided for by making this 20 per cent advance in standard fares and the imposition of a Pullman surcharge, and the remainder of the raise should be placed on the freight traffic. So that when you speak of the Ex parte 74 proceeding, its finality, the ultimate proposals were as I have described them. When you speak of the original proposals, they did not contemplate an advance in the passenger rates at all. The CHAIRMAN. It will be necessary for us to suspend at this point, and the committee will take a recess until 9 o'clock to-morrow morning, if it is satisfactory to the committee. And all those who are yet to appear, I want them to condense just as much as it is possible, consistent with an intelligent presentation of the matter, what they have to say, because we must bring this hearing to a close this week. Mr. THOM. Mr. Chairman, I hardly believe you will be able to do that, from the number of witnesses that are yet to come; I do not think that that will be practicable. The CHAIRMAN. We are going to try to do it. I do not know whether we will succeed or not. (Whereupon, at 12 o'clock m., the committee adjourned until November 15, at 9 o'clock a. m.) MODIFICATION OF TRANSPORTATION ACT, 1920. TUESDAY, NOVEMBER 15, 1921. UNITED STATES SENATE, COMMITTEE ON INTERSTATЕ СОММЕВСЕ, Washington, D. C. The committee met, pursuant to adjournment, at 9 o'clock a. m., in the committee room in the Capitol, Senator Albert B. Cummins (chairman) presiding. The CHAIRMAN. Gentlemen, we will go on with this hearing, at least for a limited time. Mr. Wood, you may take the stand again. STATEMENT OF MR. FREDERICK H. WOOD-Resumed. EX PARTE 74 SIGNIFICANCE OF STATE COMMISSIONERS' CONCURRENCE FURTHER REVIEWED. Mr. Wood. Just before the adjournment on yesterday I had read into the record, at a suggestion from Senator Poindexter, the report made by the three chosen representatives of the State railroad commissions who sat with the Interstate Commerce Commission in the determination of the advance rate case, commonly known as Ex parte 74. I was asked for the date of that letter. which is at the bottom of the letter, instead of the top, which accounted for my failure to find it at that particular moment. The report of those three State commissioners was dated at Washington, July 29, 1920, which is the same day on which the opinion of the Interstate Commerce Commission, in which those three State commissioners participated and expressed their opinion, was released. In connection with that letter I was undertaking to state certain conclusions which I will not restate, except to the extent that is necessary to pick up the thread of my discussion on yesterday. The first conclusion was that by their concurrence in the findings of the Interstate Commerce Commission, or rather in the findings of the joint tribunal of which they were a part, as to the extent of added revenue required by the railroads, it necessarily followed that their recommendations and conclusions could not be made effective unless the same advances were made in the State rates that were made in the interstate rates, because that finding, as to the additional amount of revenue required, was based upon a consideration of the traffic situation as a whole-the volume of the traffic as a whole-both State and interstate. As to the necessity for a general advance in rates, as a part of the history of the proceedings leading up to it, I probably should have said that the necessity for a general advance in rates was not only recognized by these State commissioners in this report of theirs, but it was recognized and advocated by all the shippers and shipping organizations which appeared before the Interstate Commerce Commission. As I remember it there was only one witness who appeared before the Interstate Commerce Commission who took the position that the exigency of the situation did not require a general advance in transportation charges, and that was Chairman Shaughnessy, of the Nevada Railroad Commission. With that exception, I think, although there may have been other exceptions that have escaped my memory for the moment, the universal opinion of all the witnesses who appeared was that such a general advance in transportation charges was required. Now, the second significance of this report of those three chosen representatives of the State commissions, in so far as it related to interstate rates, grows |