railroad company, and Traffic Manager Patriarch testifies that he could not remember paying any claims on this traffic, nor did he know of any pending adjustment. It is claimed carriers can not afford to own refrigerator cars. The net earnings of all these fruit-carrying roads will not support such a statement. Further, the mileage of three-fourths cent per mile, according to the Seventeenth Annual Report of the Interstate Commerce Commission, reproduces the car in three years' time. Any solvent carrier may float a loan at 3 or 4 per cent and provide a fund with which to build cars, thereby saving such carrier the difference between the small amount of interest they would pay as compared with the excessive mileage charges they are paying car-line companies. Further, the excessive freight rate charged and collected on commodities transported under refrigeration over commodities transported in box or ventilated cars is sufficient to soon pay the entire cost of the car. I maintain that the refrigerator business is the most profitable part of the carrier's business, and they can well afford to own the cars. Mr. SHERMAN. How much is the average cost of a car? Mr. FERGUSON. The testimony is that it is about $1,000. Mr. SHERMAN. And your statement is that very soon the profits would pay for the car. What do you mean by "very soon?" Mr. FERGUSON. I mean that the commodities transported ordinarily in a refrigerator car are transported at so much higher rates of freight than charged for the commodities transported in a box car that the difference in the earning of the two cars would soon pay the cost of the car. Mr. SHERMAN. I understand that; but what do you mean by "soon?" Mr. FERGUSON. I will reach that by illustration, which I have here. For example, take a comparative rate, California to Duluth, fruit under refrigeration, railroad rate $1.25 per hundredweight, minimum 26,000 pounds. Refrigeration charge in addition to this from $75 to $107.50 per car. Rate on onions and potatoes, which is still higher than on grain and other commodities, 75 cents per hundredweight. Difference, 50 cents per hundredweight, a total difference on 26,000 pounds of $130 per car. This excess revenue would be still further increased with refrigerator charges added, but we will leave refrigerator charges to cover any or all costs of extra or special service that the carrier may claim is given, leaving the net difference not less than $130 year. Cars should easily make the round trip from California to Duluth or any like distance in thirty days, or make twelve trips per But make liberal allowances, and estimate eight trips per year, and you have a total net excess earning of $1,040 per year on each car. Mr. STEVENS. There are two factors in that that I would like to know about. First, does the car make the round trip loaded both ways? Mr. FERGUSON. Unless, as I understand it, the car-line companies insist on the prompt return of their car. It must be borne in mind that their mileage is the same whether the car is loaded or empty. Mr. STEVENS. That is, the car-line companies? Mr. FERGUSON. Yes, sir. The car-line companies; and when a car load of freight is shipped from California to New York under refrigeration, the same car may not be in demand for a car of refrigerated products back to California, but it may carry almost any other products. Mr. STEVENS. But so far as the car company is concerned, it get this compensation anyway? Mr. FERGUSON. But if a car was delayed to be loaded with other products, it would reduce the average earnings of the car-line companies. Hence it is claimed cars generally return empty by fast trains. Mr. STEVENS. Your computation was also based on the supposition that the car would be used all the time? Mr. FERGUSON. I think not. Their schedule time from California to Duluth is nine days. I have based my proposition on only eight trips per year, but if you wish you may still reduce that. Mr. SHERMAN. Your calculation is upon the basis of this car being loaded in both directions, both from California and back, is it not? Mr. FERGUSON. No, sir; in only one direction. Mr. SHERMAN. Your figures are on the basis of its being loaded one way only? Mr. FERGUSON. One way only. Mr. SHERMAN. Yes. Mr. FERGUSON. One way only. From Chicago to Duluth the rate on fruit under refrigeration is 44 cents per hundredweight. On vegetables (not green) shipped in ventilated or box cars it is 22 cents per hundredweight, refrigeration extra. Excess railroad rate on fruit over vegetables 100 per cent or 22 cents per hundredweight, based on 24,000 pounds, would yield excess earnings on a car of fruit of $52.80 as against a car of vegetables. A car will make the round trip, Chicago to Duluth, each week, the running schedule each way being thirty-six hours. But allow liberally, if you will, for delays and all sorts of things that the car lines will tell you about, and allow that a car makes the trip in two weeks time, making 26 trips per year, the excess revenue is easily calculated, and amounts to $1,362.80 per year. In the interest of brevity, I will make only these two comparisons. They are fair examples, and sufficient, in my judgment, to direct attention to the proper channels for investigation, believing that all that is necessary to establish our case is that the facts be known. Grain rates, Duluth to Chicago, are still much lower than the vegetable rates. Therefore, in view of the onerous burden that the fruit shipments are bearing, I submit that fruit has paid well the price of commercial freedom and should be freed from this system that is throttling the industry. It is erroneously claimed that it is no part of a carrier's duty to furnish refrigerator cars or refrigeration. If that should be the case, by what right of law do they assume the authority to farm out that duty under exclusive contract to some favored car-line shipper, thereby preventing an independent shipper from providing himself with refrigerator cars on such better terms as may be obtained, and by these contracts bringing the independent dealer under the complete domination of his powerful merchant car-line competitor? If it is not the carrier's duty to furnish this service, it is clearly not their lawful right to provide for it by exclusive contract. These same carriers have engaged in the perishable traffic, and that traffic has now become enormous. Vast industry is dependent upon the use of the refrigerator car, which car has become as much a necessary instrumentality of carriage as any other car. It is therefore the carriers' common-law duty to furnish it. The general freight agent of the Michigan Central Railway testified before the Interstate Commerce Commission (June car-line hearing) that his company was operating under an Armour exclusive contract. Yet, prior to that hearing, the traffic manager of the Michigan Central Railway Company wrote to the Hon. J. D. Yeomans, Commissioner, as follows: Replying to your communication of the 14th instant, in the matter of informal complaint from the Knudsen-Ferguson Fruit Company, of Duluth, Minn. I find that the car rental of $45 per car (which I understand included refrigeration as well) I wonder if he didn't know it. Mr. STEVENS. It did not do it? Mr. FERGUSON. Yes, sir; it did. But he knew all about it and did not have to inquire. [Reading:] I find that the car rental of $45 per car (which I understand included refrigeration as well) on the two cars named was charged as stated; not by this company, however, but by the Armour Refrigerator Car Line, who arranged with the shipper for the use of the cars. The amount charged, I believe, is in accordance with the schedule published and filed by the Armour Car Line. B. B. MITCHELL, Traffic Manager. We were the purchasers of these goods f. o. b. Michigan. We entered into no arrangements for the Armour Car Line or any body else to furnish these cars, neither did we authorize anybody else to represent us in that capacity, neither did we know that any negotiations of any sort had even been talked of or submitted to the association loading and shipping these goods for us. There is a half tanking arrangement that some of them have signed under methods that may be termed coercive that I have referred to in my testimony before the Senate committee, so I think it will be unnecessary to go into the details of that contract here. Yet at the same time the Michigan Central was operating under an Armour exclusive contract, and the shipper had no option in the matter, and Mr. Mitchell knew it. Traffic Manager Patriarch testified (same hearing) that his company could not safely undertake to handle the fruit business originating at points on their line and consigned to points beyond their terminals with less than 2,500 to 3,000 refrigerator cars, all available at the opening of the season. Yet later it is shown by his own testimony that the previous year only 1,632 cars were moved under refrigeration to points beyond Pere Marquette terminals. The wildest sort of an estimate could not have made him sincerely believe that he wanted 2,500 or 3,000 cars in order to transport 1,632 carloads, that being the total number of carloads transported during the entire season under refrigeration. In 1901, in which year shipments to points beyond their terminals reached the maximum, only 1,937 cars were shipped. Allowing that cars will consume an average of thirty days in making the round trip to Atlantic coast points, and to nearby points a trip a week, the average time consumed by a car in making the round trip may be fairly estimated at two weeks. Now, allow that 1,000 of these 1,632 cars were shipped in six weeks' time, it could be safely figured that every available car would average two trips during the six weeks. On this extravagantly liberal basis 500 refrigerator cars would meet all require ments, and of this number it may be safely concluded that one-half or more would be gladly furnished by connecting lines that are anxious not only to get the haul, but also to keep their surplus cars in use, earning mileage. Mr. STEVENS. Do connecting lines furnish refrigerator cars in any number? Mr. FERGUSON. Yes, sir. Mr. SLEVENS. Of your own knowledge? Mr. FERGUSON. Yes, sir. Mr. STEVENS. Could you get a road like the Chicago, Milwaukee and St. Paul to make arrangements to have them use some of their cars in connection with the Michigan Central or any other road? Mr. FERGUSON. It was not necessary to go to them. The practice has been all through the history of the fruit business that the railroad companies keep advised when these commodities are ready to move, and those that have surplus refrigerator cars authorize their traffic departments to put their cars in that territory. Mr. STEVENS. That is, the connecting lines like the Chicago, Milwaukee and St. Paul? Mr. FERGUSON. Yes, sir; and they do concentrate at the terminals of the initial roads their cars in large numbers; first, so that the cars may be earning mileage, and, second, so that they may be able to get some of the business over their own lines. I know this to be true of my own knowledge of the Chicago, Milwaukee and St. Paul, the Chicago, St. Paul and Omaha, the Wisconsin Central, and Northern Pacific railways, all of which carriers offered refrigerator cars to serve northwestern shippers from Michigan territory, but Michigan roads would not accept these cars. I am also told this. is true with respect to many other roads, particularly the Santa Fe Railway, who own and operate a large refrigerator system, but find it impossible to use their cars at most fruit-shipping points because the Armour system is in ahead of them with their exclusive contracts. It may therefore be safely concluded that if the Pere Marquette Railway were required to own 250 additional refrigerator cars, they would be equipped to meet all requirements, and because of the onerous transportation charges this traffic is bearing the Pere Marquette could well afford to provide these cars. With respect to the demand for refrigerator cars being limited to a few weeks or a few months, as was testified, Traffic Manager Patriarch admitted that about 15,000 cars of potatoes annually were shipped from points on his company's line and that 75 per cent of such shipments demanded a refrigerator car if it were to be had, but that his company would not undertake to furnish them, and the shipper had the privilege of buying lumber and lining box cars, at his own expense, to be used for potatoes. Further testimony developed that agents were instructed to say to shippers, "We will get you an Armour refrigerator car if you want to pay us $10." This, of course, without the use of ice or any of the fancy icing service, and notwithstanding that the testimony of one of the car-line representatives was that they did not collect car rental from both shipper and carrier and that the mileage of three-quarters of a cent per mile yielded a very satisfactory return. Traffic Manager Patriarch testified that their company's only reason for entering into these contracts was to provide the cars in the cheapest manner possible. Mr. ADAMSON. That gives that $10 to the car line or the agent of the railroad? Mr. FERGUSON. I have never been able to trace it. The testimony is that the agents have instructions to say to the shipper, "We will give you a car if you pay us $10." Mr. ADAMSON. And then in addition to that $10 you have to pay the railroad company and the car line both? Mr. FERGUSON. Not for potato shipments. Car-line service in other respects was in no wise superior or different to that which the railway company had previously been giving except that it provided a more adequate supply of cars. That may be verified by going over the testimony of the June car-line hearings. This was with respect to the refrigerators. That testimony was to the effect that the car-line service was in no way different, or the service rendered by the Armour car-line system was in no respect different, from the service on the Pere Marquette, and differed in no respect except that it furnished a more adequate supply of cars. Mr. SHERMAN. Would it not be profitable for the fruit growers to own some of those cars? Mr. FERGUSON. They can not. The railroads would not handle them. Mr. SHERMAN. Do you mean that the Pere Marquette would not handle those cars belonging to the fruit growers, or Mr. FERGUSON. No, sir; never. Mr. ADAMSON. Not under this contract. Mr. ADAMSON. Suppose that we conclude to vitalize the Interstate Commerce Commission by clothing it with power to make orders affecting rates; would it not settle all these matters by making all of these car lines amenable to the interstate-commerce law? Mr. FERGUSON. I think not, because it would be putting two common carriers upon the highways. Mr. ADAMSON. If both of them confess that the business can not be done without their cooperation, both ought to be amenable to the law, ought they not? Mr. FERGUSON. It is not so confessed, as a general proposition. It is asserted to be so by the lines under contract, but other lines do not take that position. Mr. SHERMAN. You said a moment ago that if the fruit growers secured private cars the railroads would not handle them. You mean because of their exclusive contract with the Armour people? Mr. FERGUSON. There may also be other reasons. The railroad companies have cars of their own, and they much prefer to keep their own cars in motion. It would be entirely optional with them whether they did or not, and where the exclusive contracts obtain they will not handle any other car, except it be an Armour car, unless that car is handled under the Armour arrangements and for the benefit of the Armour car-line system. Mr. ADAMSON. My question as to the fruit-growers' association was meant to refer to the railroads which profess that they could not furnish cars. Mr. FERGUSON. I catch your idea; but I think there is great danger in that, Mr. Congressman, in departing from the past way of doing |