has a right to decide what proportions of that joint rate shall be taken by the parties to it, I would like to point out that the defect of that provision as it stands-I mean in the Cooper-Quarles bill and other billsis that you do not provide any hearing for the carrier on that part of the proceeding, and that is just as much a matter on which the carrier is entitled to a hearing in court as any other, and if that is the exclusive method of determining that fact, then your bill is defective, and if it is not the exclusive method of determining the fact, then you are not accomplishing what you are after. So that there is not any existing measure which provides a practical way to do that.

My suggestion as to the only way to handle a through rate in that case is to enact right from the shoulder that the new rate shall be divided on the same basis as the old one. Then you have a rule, anyway, and if any carrier can say that that rule is not fair, then you have the exceptional case to take care of, whereas if you leave it purely as a matter of agreement, and then leave the Commission to decide in the absence of an agreement, you have not any rule established and the whole thing is in the air.

The CHAIRMAN. That scheme of yours would recognize and legalize the wrongs complained of in the Harvester case, where the switch 300 feet long connecting with another road received 25 per cent of the rate? Mr. BOND. How was that?

The CHAIRMAN. If you simply legalized that division or recognized that division you would simply perpetuate that form of contract, would you not?

Mr. BOND. It is the question in the Harvester case whether it is a division in fact at all, or whether it is a mere device to give a discriminating rate. If it is a division at all, then there is not any provision of the law, nor is there any provision that you can enact, that will enable you, without providing a hearing, to say what that division shall be. Now, there is a great deal of misunderstanding about those terminal-road cases. If the committee would like to hear anything about them I should like to give my views about them. There are terminal roads and terminal roads. The question is now as to such a case as the chairman presents, whether that is really a railroad at all with which there should be any prorate. That is a question that can be absolutely tested under the Elkins law, because if the sharing of the rate with that road is a mere device, if that road does not in fact perform a part of the transportation which entitles it to a share of the rate, then it is clearly within the provisions of the Elkins Act.

There are terminal roads that are entirely different from that. Let me cite an instance without naming any names. Suppose there is a road, say 40 miles long, and the stock of that railroad is owned by a manufacturing company, say engaged in the manufacture of steel, and under the charter of that manufacturing company that company is authorized to hold the stock of that railroad company and that railroad connects with three or four trunk lines. All the supplies of the manufacturing company must go over that railroad. The railroad is 40 miles long. The railroad company says, "We must have 70 cents on every ton of coke and coal. If you do not give us the 70 cents, you do not get the freight, because this railroad will not accept any less, and all the supplies going to this manufacturing plant must go over the railroad." Now, the officers of that railroad company take the position H. Doc. 422, 58-3- -15

that that is an advantage which, under the laws of the State, they are entitled to. Let me say that the 70 cents does not exceed the local charge per ton per mile which they are authorized to make under the State law; but it may be at least 20 cents a ton higher than would ordinarily be given a railroad as a prorate of the through rate. What are you going to do? That railroad says, "We have a position of commercial advantage. We can get our local rate, or very near it, and we are going to take it;" and they further politely remark, "If you three or four railroads get together and say that you will not give us that, we will have you indicted under the antitrust act."

That is a perfectly fair view for them to take. Are they not entitled to that, as a matter of law? How are you going to meet that situation? We can not meet that situation just because you gentlemen here have suspended the laws of trade, have suspended the law that makes the self-interest of one man keep the self-interest of another man from gobbling things up; and those railroads can not protect themselves against that proposition because you have suspended their right of agreement with one another, and that would be the only way to meet it. Congress can not meet it.

Mr. MANN. You have instanced the Illinois Steel Company's case as a suppositious case?

Mr. BOND. I do not say that, whether I have or not.

Mr. MANN. That is a case that is in my Congressional district, and I am perfectly familiar with it. Can not we meet that by giving the Interstate Commerce Commission the right to say what shall be the respective proportions of the through rate?

Mr. BOND. I do not think

you can.

Mr. MANN. Of course it is a delicate position for you to be in, because you carry most of the freight.

Mr. BOND. I wish we did.

Mr. MANN. I know you do.

Mr. BOND. But it is a very serious question; I mean from a railroad standpoint; because you once admit that that is a sound legal position that they have got, and it is a sound legal position

Mr. MANN. As the law now stands.

Mr. BOND (continuing). As the law now stands.

Mr. MANN. I have no doubt of it.

Mr. BOND. And I have very serious doubts whether you can amend the law so as to meet it unless you discriminate against the railroad company whose stock is owned by a manufacturing company, and I do not believe that you can make any such discrimination in the law. You have the situation as it is, and it is a very serious one from the railroad standpoint.

What are we going to do with it? The same thing spreads all over the country, and if you are going to tie these railroads up and suspend their rights of contract and let any manufacturing plant that owns a railroad have that advantage over them the result will be that you will force all large manufacturing plants in this country into the railroad business. They have got to go into the railroad business. Mr. SHACKLEFORD. Would it not be better to force all of them out of it?

Mr. BOND. That is a very serious question whether you can. That is a question which I do not believe this committee is prepared to

handle under this law. I have not heard any discussion of anything or heard anything suggested in the way of a practical scheme of meeting it.

Mr. TOWNSEND. Suppose the Commission were allowed the fixing of rates?

Mr. BOND. How are you going to do that? Where is the bill that does that? None of the bills proposed now, or heretofore, meet the case at all. The powers conferred to fix rates and to divide joint rates will not enable the Commission to accomplish what they wish in this

case.

Mr. TOWNSEND. Suppose we make that. Suppose we give the Commission the power to fix the rate on that road, which it is to charge? Mr. BURKE. Suppose the rate is a reasonable rate, Mr. Townsend. Mr. TOWNSEND. I am supposing that it is not. He has shown that it is not.

Mr. BOND. I have not shown any such thing. I am only stating the position.

Mr. BURKE. Suppose it is shown by the railroad commission to be a reasonable rate?

Mr. BOND. They are within their legal rights, absolutely.

Mr. MANN. As a matter of fact, that little railroad-it is only 40 miles long, along the southern shore of Lake Michigan-is one of the most expensively constructed roads in the United States.

Mr. BOND. Absolutely. And I think their legal proposition is sound. And I have been up against it. [Laughter.]

I wanted simply to point out that this suggestion of mine, if it is a question here of saving time and getting a final decision in these matters, is practicable; that whereas under the Cooper-Quarles bill you must have forty days before the case can possibly stand for hearing, with the utmost possible dispatch, and whereas your order without any contest does not go into effect for thirty days, and in case of contest it does not go into effect for sixty days, even if the court does not suspend it and let me say that under your laws the court has got to suspend it, and you make the act unconstitutional if you say that it can not suspend it, and if it be suspended the whole effect of the act is destroyed whereas under the Cooper bill you can not have any order go into effect in the first place, even if the court does not suspend it, within less than sixty days. Under the section that I have suggested you will have an adjudicated rate within sixty days, because this court. can decide these cases a great deal faster than the Commission can send them to it. The Commission has to do all the preliminary work, and what is more, it has to investigate cases where it finds that there no unjust discrimination or unjust rate, and it is only the other class of cases, those in which there is an unjust rate or discrimination, which go into the court.

The reason you save time is because under all the pending bills there is a complete reversal of the positions of the parties. You start in practically with the Commission or the complainant before the Commission in the position of plaintiff, and then you reverse the whole situation and make the railroad the plaintiff. Now, that is lost motion, waste of time, and that method was only adopted to meet a view of the Commission that if they had to go into all the circuit courts they were not in a dignified position, if they had to go in as plaintiff to

enforce their own orders. Now, if you have a special court, that lost motion is done away with, and there is no use in reversing the situa tion of the parties, and you can go right into court, and then you have all your records in one place; and you are in the further situation that if you find in the future that this plan does not work fast enough, then you can dispense altogether with the preliminary trials before the Commission, and you can let the Commission go into court simply on their own examination to see if there is something wrong, and further expedite it in that way; and you have all your records as to what has been adjudicated in one place.

I have exceeded my time, Mr. Chairman, I am afraid. I thank you very much.

STATEMENT OF MR. DAVID WILCOX, PRESIDENT OF THE DELAWARE AND HUDSON RAILROAD COMPANY.

Mr. WILCOX. If I can have only the hour that remains, Mr. Chairman, I will endeavor to comply with the desires of the committee, of

course.

Mr. Chairman and gentlemen, the Delaware and Hudson Company, of which I have the honor to be president, was incorporated by the State of New York in 1823 for the purpose of bringing a supply of hard coal-as they called it in those days, "stone coal "-from Pennsylvania to New York. Its rights were confirmed by the legislature of Pennsylvania very shortly thereafter. I may say that it antedates the law to amend charters, and comes under the rules laid down in the Dartmouth College case, so that it has its interests.

The company has been carried on since that time continuously without a receiver or a reorganization, and as I have occupied my office but a very short period of time-being, in fact, like, I believe, most of the committee, a lawyer-I may say that its conservative management has led to its continued prosperity. During that time it has paid out in wages between, probably, four and five million dollars; in dividends, between sixty and seventy million dollars. It has now about 23,000 employees. The company and its leased companies have about 6,000 security holders. Therefore I may say that there are 29,000 people who are interested, and, with those who are dependent upon them, it is not too much to say that there are 100,000 people who are interested in the continued prosperity of this property. The stock of the Delaware and Hudson Company is very widely distributed. There are 3,800 stockholders, and the average holding of each one of them is $11,000 at par.

When I applied to the chairman of this committee for a hearing, I did not apply on behalf of the Delaware and Hudson Company, but on behalf of its employees and security holders and on behalf of those who are dependent upon them. My constituency, I may say, is perhaps 100,000; probably that. What has been the cause of the prosperity of this property and upon what depend its 100,000 people? Upon nothing else in the world but the income of the property. Without the income the property is of no value. Without the income there would be no incentive to operate it; and therefore, necessarily, any proposition which tends to place in the hands of the Government, however ably administered, the question as to whether or not this

substantial mass of property shall earn anything, which tends to qualify or limit its earning capacity, affects not the company, for these companies, gentlemen, are of very little real importance. They are artificial persons. They are the means by which the property of the owners is held together and is made productive. That is all there is of it.

If the American people so wish, the corporations may die. But what is to become of the people who are interested in them? What is to become of this enormous mass of property, upon which rests the prosperity not merely of the class whom I have named, but also of those who sell supplies to them, and of the communities through which they pass, and of the communities which will be built up by their extension? It seems to me that that is the serious question, What effect is what you may do here going to have upon the future welfare, productiveness, and value of the greatest single industrial interest of the country? It is a great responsibility, gentlemen. I do not come here as an extremist. If you can devise anything which will be to the benefit of the country as a whole, who will welcome it more than those who are interested in the railroad property? Why should they not? As I said a moment ago, it is the greatest single interest there is in the country. It has eight to ten thousand million dollars' worth of the country's accumulated wealth. As the Delaware and Hudson Company has grown to become a favorite object of investment with estates and institutions which have a more or less fiduciary character, so is it the case with the very large mass of this property generally.

Now, gentlemen, great as I feel my own responsibility with reference to the company with which I am connected, I realize that the responsibility of this committee is very, very much more serious. It may pass an act which shall put it in the power of those who, however well intentioned they are and I do not wish to join the superheated gentlemen who sometimes want to have the Interstate Commerce Commission abolished because they are not doing anything, and I will say that they are not railroad men, that I ever heard ofyet, having the power, may do great harm. I do not share in that feeling toward the Commission. But, as I say, gentlemen, you may pass an act that will so compromise the value of the property, and the prosperity of the communities of the country, that it will bring widespread disaster. On the other hand, you may pass an act which will fail of operation. Some people say that the present act has not accomplished what was hoped, although I do not agree with that exactly. But you may do the same thing, not intentionally but unintentionally, and the act which you may pass may become a gold brick in legislation. And there are those two great possibilities. You may pass an act which will so compromise the value of the greatest mass of accumulated resources of the country that its efficiency will in a measure cease, or at any rate become less, or you may pass an act which will fail of accomplishing the desired results, and this agitation may go on, stimulated and kept on foot in the methods which you gentlemen know so well, apparently ad infinitum.

What I say, gentlemen, is that it is a very, very serious moment when an Anglo-Saxon government undertakes the charge of people's money and says how much they shall earn by the exercise of their con