follow them. It is not a question as to what has been the practice, but what will the law authorize.

Mr. SPENCER. If I may interject there, I may say that I think any power given to any tribunal to name the maximum rate for the railways, the carriers of the United States, or to carry with it the right to name a maximum, would have no equity in it.

Mr. MANN. I call your attention to the specific proposition that is in the Cooper-Quarles Act. It is not the power to fix a maximum

rate at all.

Mr. SPENCER, No; it is not.

Mr. MANN. It is the power to fix a particular rate.

Mr. SPENCER. That was my recollection, as I stated it from memory. I thought it would convey it.

Mr. ESCH. Would not that carry with it the power to raise as well as to lower?

Mr. SPENCER. I should think so. But I repeat I did not read it with that view, because in all frankness I must say I do not think that would arise as a practical question under it.

Mr. SHACKLEFORD. And in giving this power to fix rates it also gives the power to raise rates as well as to lower rates. Would not the ultimate tendency of it be to raise the rates on water transportation where they make it impossible for railroads to live in competition with water transportation?

Mr. SPENCER. At present the law does not apply to water transportation.

Mr. SHACKLEFORD. The Commission is seeking to have it do so.

Mr. SPENCER. I should say interstate commerce transportation by water ought to be covered, but you will find some of it that could not be covered.

Again, while undertaking to protect the shipper, under this bill there is no provision for the protection of the carrier at all. The Interstate Commerce Commission has stated in one of its reports that the rates in this country were in many cases too low. Now, if that be true, ought not a bill which undertakes to regulate against rates that are too high make some practical provision for regulating against rates that are unreasonably and improperly low? It may be said, doubtless will be-that has been the practice, at all events--that that is a subject on which the carriers would be expected to take care of themselves; and, of course, the burden of it must fall upon them. They can not call to their aid with any justice or fairness the arm of the Government to support their tariffs and their management. In the first place they would not receive it, and in the next place it would be impractical. I do not think that protection in the way of their raising a rate in order to equalize and regulate would be feasible. I do not think it would be successful in practice, and the only form that it can be given which I could suggest would be that the carriers should be relieved of the disability which they are now under of not being able to make reasonable agreements among themselves. The fact is that in order to maintain the rates as provided for in the interstate commerce law such agreements must be made. It can not be otherwise. Rates to be uniform and stable, as is intended by the law, to be public under all the circumstances, must be made with one carrier knowing what the other is doing with precisely the same traffic at the same time.

The interpretation which has been placed upon the antitrust law is

that they can not make an agreement among themselves in respect to traffic of any kind, whether reasonable or unreasonable. And I merely submit for your consideration in that connection that if any legislation is to take place in any form-I hope it will not be in this particular form, if it does-that it should include something that will insure that sort of stability of rates upon the one hand which is required by the law and upon the other that reasonable protection of the carriers in making charges that are at least reasonably high, in order to remunerate them for the service which they perform.

If you will look through the Interstate Commerce Commission's report, you will see three or four or five utterances to the effect that the rates are in many cases in this country entirely too low. Surprise is expressed in one case that the service can be performed at some of the rates that pertain upon the railroads.

If there is to be legislation, I merely throw out that suggestion that the carriers be relieved of that entirely anomalous prohibition which is put upon them of making reasonable agreement among themselves. They ought not to be entitled to make unreasonable ones. They ought not to be entitled to make any, possibly, that are not subject to public scrutiny.

Mr. RICHARDSON. Is not that "pooling," what you mean?

Mr. SPENCER. Oh, no. You can extend it until it is pooling, but it is not necessarily pooling.

Mr. SHACKLEFORD. It is a joint contract for through rates?

Mr. SPENCER. A joint contract for through rates. They are in existence all around. You put out a rate from Atlanta or from New York to-day for the several carriers, and despite the law that I have referred to, it is necessarily the case that these carriers have got to exchange their views. You can say they make no agreement, but they do exchange views, and issue the same rate on the same day. Nothing can stop it, you know.

Mr. ADAMSON. Would the advantage to the carriers from this opportunity to make an agreement be that they could recoup in other places for their losses where they are compelled to maintain these low rates, abnormally low, as you say?

Mr. SPENCER. Well, I do not think so, to any extent. I think it would have to be reasonable in itself. That is, if I understand your question, if they were taking a very unreasonable rate here, which they could not get out of in any way

Mr. ADAMSON. I take it for granted that wherever these rates are abnormally low, as you said, it is for some reason of necessity, where you find that you have it to do?

Mr. SPENCER. Yes, sir.

Mr. ADAMSON. And therefore you think that if you had authority to make these agreements you could, in the general adjustment of the agreement, recoup those losses elsewhere?

Mr. SPENCER. No, sir. My idea was that the causes which lead to that unreasonable rate there might be removed with reference to that rate if a reasonable agreement could be made. I would propose for that authority and I think I stated it accurately

Mr. ADAMSON. Then you could raise those rates?

Mr. SPENCER. We could then raise that rate. The remedy is to allow the railroads to make a reasonable agreement for the maintenance of reasonable rates. If we found that we could not touch the

H. Doc. 422, 58-3-8

particular rate at all, and we wanted to recoup, as you suggest, by making it up somewhere else, with the law in the form I suggested, we would have to submit to some public authority that agreement which we proposed as a reasonable one. So that we could not establish an unreasonably high rate here in order to recoup for an unreasonably low one elsewhere.

Mr. RICHARDSON. To whom would you submit that agreement for supervision?

Mr. SPENCER. To the Interstate Commerce Commission.

Mr. RICHARDSON. Would you give them authority to say that it is unjust or unfair?

Mr. SPENCER. If it was not just we could not do it.

Mr. RICHARDSON. And if it is unjuit, they would have the power to designate what the contract should be?"

Mr. SPENCER. No. I would not suggest that they make the contracts between us.

Mr. RICHARDSON. But simply to pass on your contracts?

Mr. SPENCER. To have the power to annul it, or that it can not go into effect without their consent. That is better still.

Mr. RICHARDSON. I just wanted to understand that.

Mr. SPENCER. Again, the granting of that authority to name a rate, under the circumstances described in this bill, would inflict an irreparable injury upon the carrier in a case where the matter was appealed to the courts. The rate having already taken effect, if the courts should decide that the original rate of the railway company was reasonable and just, there would be no possible means for the railway company to recoup that loss. Now, the process is that the Interstate Commerce Commission has the power, and it is one of its duties, that having found what it regards to be an unreasonable rate, either by its own motion or after hearing, it shall condemn that rate. We have seen that in the great majority of cases, something over 90 per cent, where they have done that thing, the railway companies have acquiesced, and stated: "All right; we accept your judgment." But where it has gone into court, the Commission has not established one single case of an unreasonable rate per se, and they have only established two cases of discriminatory rates as between localities, that being less than 10 per cent of the total of the cases which have gone to the courts. If that is the case, is it not fair to the railroad companies that before a rate, on a record like that, is put into effect, the courts should pass upon it, if the railroad company is going to suffer irreparable loss if they finally gain the case?

Mr. ADAMSON. Right there, take the converse of that contingency: Say that they declare a rate to be reasonable and just, and you carry it up, and after years of litigation the courts hold that the adjudication of the Interstate Commerce Commission was correct, and that the rate they declared was the proper one, and allowed it to stand; is not the loss of the shipper irreparable?

Mr. SPENCER. Yes, sir; and that point harks right back to the one question: If I have been guilty of a crime, at what date after judgment should my punishment begin?

Now, you can cover that, if there is any doubt about it, and the court feels that it is a very doubtful case on presentation by letting the court require bond.

Mr. TOWNSEND. That could all be obviated by injunction, anyway, could it not?

Mr. SPENCER. No; the only thing subject to injunction under the Elkins Act, as I understand it, is a departure from established tariff rates, which are a violation of law. It is not a question of enjoining a rate which has not been adjudged unreasonable.

Mr. TOWNSEND. I mean during the time. If the railroad took an appeal in the case, they can enjoin during that proceeding?

Mr. SPENCER. Oh, yes. Now you have a case in point at once. The Interstate Commerce Commission has under consideration the lumber rates from the Southern States, Georgia, Alabama, and Mississippi particularly, to points north of the Ohio River, attacked as unreasonable. That case is now pending in court.

Mr. LOVERING. How long has it been pending?

Mr. SPENCER. It is in the form of a bill for an injunction now. The bond that is what I was coming to--the bond has been given by the railroad companies to refund to shippers if the case goes against them. Mr. LOVERING. How long is it likely to continue, if the case is not pressed?

Mr. SPENCER. Well, the Commission is holding the case, so our counsel tells me. The details I have not in mind.

Mr. RICHARDSON. I understood you to say that in the event of the power being given the Commission to fix a rate, after the rate had been investigated and found to be unreasonable and unjust, if the law should give the Commission authority to fix the rate, and if the question should go up to the Supreme Court, the railroad would sustain irreparable damage if the Commission had made a mistake. Now, do you not think that there would be a very strong likelihood of decreasing the probability of those damages if, after the Commission had authority to fix the rate, and the appeal was taken by the railway company to the Federal circuit court, where the appeal had been taken, either party, the railroad or the complainant, should be given the right to summon witnesses and bring them up there and test the question as to whether the Interstate Commerce Commission had fixed a fair and just rate? Would it not lessen the probability of your damages and throw a strong safeguard around the interests of the railroad and the public? Mr. SPENCER. I do not see how.

Mr. RICHARDSON. You do not see how it would?

Mr. SPENCER. I do not think it would.

Mr. RICHARDSON. Would you not have a second trial on it? Would you not have a second opportunity in the presence of a Federal judge

Mr. SPENCER. Yes; but if the rate is running all the time, the loss is going on, and there is no way we can get it back.

Mr. RICHARDSON. Suppose authority was given to the court to suspend the rate until that investigation took place?

Mr. SPENCER. That is all I am asking.

Mr. RICHARDSON. And then, after the investigation took place, and the circuit judge, under the evidence that was given, after this Commission had fixed the rate, concluded that it was a reasonable rate, and then the rate went into effect, and you took an appeal to the Supreme Court on the same question, would not that lessen the probability of your damage, because it would not run so long-or the shippers' damage, either?

Mr. SPENCER. If I understand you, Judge, your suggestion is simply to expedite the litigation, whatever it may be?

Mr. RICHARDSON. That is right.

Mr. SPENCER. We are willing to have it expedited. If, under due process of law, the thing can be decided in twenty-four hours, we would rather have it decided in twenty-four hours than to have it decided in forty-eight hours. But, in the meantime, we do not want that rate, which we have regarded as just and reasonable and which we put in for what we regarded as good business reasons, set aside; because that involves the punishment for a wrong thing before you have been adjudged by a competent tribunal to have done a wrong thing.

Mr. RICHARDSON. I was glad to hear you say that if there was to be any legislation upon that subject you would like to give your views

Mr. SPENCER. That is all I am here presenting. Do not understand, gentlemen, that I am opposing all legislation with respect to the regulation of commerce. I am here arguing to the best of my ability why this particular legislation would not be effective on the one hand, and would be prejudicial against the interests of one important industry in this country, the carriers, on the other.

If, in the wisdom of Congress and of this country, legislation is necessary, all that the railway companies, so far as I have anything to say for them, ask is that this legislation shall be mature, carefully thought out, and shall protect both interests as well as one. I have no right to ask beyond that, and I do not intend to do so. I am merely trying to point out wherein this particular legislation would be harmful to us and not be effective in the direction in which it is aimed.

Mr. ADAMSON. You have no objection, if the law does not already provide for it, to an arrangement to prevent discrimination and secure the speedy termination of litigation?"

Mr. SPENCER. Not the slightest. Not the slightest.

Mr. MANN. When you speak of discrimination, what do you mean by that, in answer to Mr. Adamson's question?

Mr. SPENCER. Well, I mean discrimination that really discriminates. I mean unjust and unreasonable and "undue"-I believe the letter of the statute is "undue"-discrimination.

Mr. ADAMSON. "Giving an undue advantage to one person or locality over another" is part of it.

Mr. SPENCER. The man does not live, and the body of men does not live, that can frame any law, or adopt any policy in the management of the carriers of this country, whether owned as they are now, or owned by the Government, or owned by any power-nothing exists that will do away with the alleged discriminations between localities. You can get rid of the discriminations between individuals. It is almost done away with. If it exists it is a crime and can be reached by law. I do not want for a moment, however, to be understood as indicating that we will agree to the adoption of something as a means, or cooperate in putting something into effect as a means, that is going to quiet the question of whether one community is discrimi nated against in comparison with another. I do not know, as I said to you yesterday, any community of any size that does not feel in some way that it is discriminated against in favor of some other community engaged in similar enterprises or business. That is going to continue, and if a law like this passes, it will grow a thousandfold.

Mr. ADAMSON. If some railroad touches two towns of equal size and importance, equally distant from a distributing center, and in one of