from the fourth section along the Mississippi River were contributing, if not controlling factors, in the disappearance of boat traffic from the river. There is but one logical conclusion to be drawn from the facts and figures there submitted. The recurring depression in rail rates at the river points was accompanied or followed by a corresponding shrinkage in tonnage moved by water. After many years this water competition has been restored to the river by means of the Government subsidized barge line. Will the carriers be permitted to destroy this competition, as they have driven privately owned and operated water carriers from the river by depressing the rates at the water terminals below a level that they will observe at intermediate interior points?

Some objection, we believe, has been made to the bill on the ground that it will deny to the weak lines the relief from the provisions of the fourth section which is necessary to their existence. The southern territory is honeycombed with such railroads and we recognize the propriety and necessity of granting fourth-section relief in such cases. We believe relief should be granted where the route is composed of weak or short lines and is reasonably circuitous or where the granting of such relief would not place an undue burden on other traffic. We believe the Gooding bill is sufficiently elastic in its provisions to legalize fourth-section departures under such conditions.

In order to avoid duplication of testimony and to escape, as far as possible, unnecessary reiteration of facts which have been presented by preceding witnesses or will be presented by those following me, I have abridged my statement as far as I could consistently do so, compatible with a fairly comprehensive presentation of our views.

The Gooding bill is, in our opinion, a desirable and necessary piece of legislation. We of the lower Mississippi Valley have nothing to fear from its provisions. It very properly transfers to Congress the responsibility of stating in unmistakable terms to what extent and under what circumstances a carrier may or may not charge more for a shorter than for a longer haul.

Statement of tonnage moving by water between St. Louis and New Orleans

Mr. NEWTON. As I understand it, your position is that at the present time there are portions of the country suffering from discrimination due to existing departures from the fourth section?

Mr. HAYWARD. There are hundreds of them in the Southeast, Mr. Newton.

Mr. NEWTON. Yes; that is what I understood your position to be. Now, I also understand that you do not believe in a rigid long-andshort-haul clause?

Mr. HAYWARD. I do not believe there should be an absolute rigid kong-and-short-haul clause, but I think there should be some flexibility in the law. I think that, as stated in the Gooding bill, there should be an oppurtunity for circuitous routes for the weaker lines to meet the competition of the stronger and direct routes.

Mr. NEWTON. Yes. Under the Gooding bill it is possible to meet competition to a given point where it is all rail.

Mr. HAYWARD. Yes, sir.

Mr. NEWTON. But under the Gooding bill it is impossible to meet competition to a given point if one way is by rail and the other is by water?

Mr. HAYWARD. Yes. I believe the bill, as I understand it, will not permit the meeting of water competition.

Mr. NEWTON. Unless, of course, the new rates

Mr. HAYWARD (interrupting). Were revised.

Mr. NEWTON. Were reduced; yes. Now, I can not see the reason myself, the logical reason, the distinction in denying a carrier to meet competition from a water carrier and permitting him to meet competition from a rail carrier.

Mr. HAYWARD. I can not draw the distinction myself, where the competition is between private-operated agencies, such as rail and privately operated water carriers, but when you consider that the interior is being taxed and the money is taken from the pockets of each one of us of the interior to operate this Government subsidized agency on the Mississippi and Warrior Rivers, and if you permit the carriers to come before the commission and get fourth section relief, the old story I have referred to in my statement will recur again; it will be the same thing over again. You can not expect the barge line or any other carrier to compete with the rail lines when they are permitted to charge a noncompensatory or subnormal rate between the water termini and recoup their losses in the interior at excessive rates.

Mr. NEWTON. Then your objections are concerned with the Government setting up a water-line agency and taxing everybody for that and permitting that to be used in such a way as to cause a discrimination?

Mr. HAYWARD. Yes; one of the objections is that we think our geographical location entitled us to as relatively as much consideration as a city on the river 200 miles farther away or 150 miles farther away, where we are intermediate on a route to a common point to which they make a depressed rate to the more distant points; we can not see the justice of that position or the consistency of that position under present conditions. It might have been possible years ago.

Mr. NEWTON. Your main complaint, then, is in the application of the existing law rather than to the principle; is that it?

Mr. HAYWARD. I want to make my position clear in that respect. I have the utmost confidence in the ability of the commission, its fairness and its integrity. I think if given time they would correct these deficiencies, as they see the situation; but I believe it is a matter of doubt in their minds as to just what Congress did intend, and I think it is the duty of Congress to state their position or what their intent is, so that there will be no doubt about the application of the

fourth section. In other words, to use a topical term, to make it foolproof.

The CHAIRMAN. Do you know any such thing anywhere?

Mr. HAYWARD. No, sir; I do not.

Mr. HUDDLESTON. There are several factors in competition in transporation among which are rates, safety, and speed. There can be no competition between a water carrier and a rail carrier in the elements of safety and speed?

Mr. HAYWARD. I do not think there can be; no.

Mr. HUDDLESTON. So that where a rail carrier makes a rate as low as the water carrier that destroys water competition, because they are able to offer factors of value which the water carrier can not offer. Now, is not that an answer to Mr. Newton's question?

Mr. HAYWARD. I think that is true; if the Congress would be permitted to extend that consideration to a water carrier.

Mr. HUDDLESTON. But rail carriers may compete with each other in every factor. Therefore there is justice in fixing equality in rates; but since a water carrier can never compete in safety and speed in transportation, to allow a rail carrier to make as low a rate inevitably drives the water carrier out of business.

Mr. HAYWARD. That is true. The only factor that will influence the movement of freight by water where there is equal competition is a lower rate, that is the only ground on which they could make a plea for business?

Mr. HUDDLESTON. So that the reason for applying a different rule to competition between rail carriers and water carriers to that which you would apply to rail carriers competing with other rail carriers is that the rail carriers have an advantage over the water carrier in certain factors, which would have to be considered.

Mr. HAYWARD. That is true, they would have to be considered if there was any distinction to be drawn.

Mr. HUDDLESTON. The rail carrier is entitled to a higher rate than the warer carrier because the rail carrier renders more service?

Mr. HAYWARD. I think that does not admit of any controversy. Mr. NEWTON. It is my understanding that the barge line which you referred to as being the primary objective carries traffic at a rate that is 20 per cent less than the rail rate; that is what they are permitted under the law. Is not that right, Mr. Denison?

Mr. DENISON. Yes.

Mr. HAYWARD. Yes; 20 per cent under the rail rate.

Mr. NEWTON. So the railroads do not make the same rates as the barge line. On the other hand, the barge line is 20 per cent less than the rail rate?

Mr. HAYWARD. That is very true, Mr. Newton; there is an established basis for making those barge rates; but if the carriers can get down to a water territory, to a noncompensatory level, they can bring it to a point where the water carrier can not make it 20 per cent under that, but still the water carrier can not recoup its losses at interior points, but the rail carrier can.

Mr. BURTNESS. Are there any departures to speak of from the general provisions of the fourth section?

Mr. HAYWARD. There are hundreds of them; there are innumerable fourth-section departures; I could not undertake to state them. Mr. BURTNESS. Have any such been granted since 1919?

Mr. HAYWARD. Oh, yes; if not actually granted, they have been permitted to continue.

Mr. BURTNESS. But have any new ones been granted that you know of?

Mr. HAYWARD. I can not cite any particular instance, but I am pretty sure they have. The paper case is suggested to me as one of the cases.

Mr. HAWES. If we followed this subject to a logical conclusion— a congressional act compelling railroads to maintain a high rate will result in a higher rate on steamboats; this will compel railroads to raise rates and make shippers pay for it.

Mr. HAYWARD. Oh, of course, if they are going to raise the rate the shipper will have to pay it; the consumer pays the rate in the end. But we disposed of that condition, or, rather, the commission did, by an equalizing process; the depressed rates at the river were brought up to a reasonable level, and those in the interior brought down to a reasonable level, and so you reached a norm to which the subnormal rates were raised and the abnormal rates were reduced.

Mr. HAWES. As a matter of adjustment were changes made from time to time in the old rates?

Mr. HAYWARD. I could not hear that question.

Mr. HAWES. The whole rate-making problem is a matter that must be adjusted from time to time; it can not be fixed originally?

Mr. HAYWARD. I agree with you there; there has to be a certain amount of flexibility in rate making; you can not make a rigid rule that a rate shall be established indefinitely. There are controlling conditions that will influence the measure of the rate from time to time.

The CHAIRMAN. Are there any other questions? Thank you.

Mr. FRENCH. May Mr. Brown be permitted to make a statement that he wanted to conclude in his remarks?

The CHAIRMAN. Yes.

Mr. BROWN. I neglected to state that I have with me a copy of part of a resolution passed by the American Farm Bureau Federation, which is a federation of all farm bureaus in the United States, passed in 1921 on this matter of legislation, which has never been rescinded. I am sorry I did not state that before.

Mr. FRENCH. And at this time let me file a statement that has been handed me from the American Mining Congress, over the signature of McKinley W. Kreigh, commercial counsel of the American Mining Congress.

(The statement referred to is as follows:)

MUNSEY BUILDING, Washington, D. C., January 23, 1925. The metal-mining industries of the intermountain States are vitally affected by fourth section departures in the matter of transcontinental rail rates. Rates to the Pacific coast that are lower than rates to intermediate territory impose an undue burden upon industries in intermediate territory, which, in effect, are compelled to bear a portion of the cost of transportation of commodities to Pacific-coast points. If the railroads would put forth as great efforts to build up business in the intermountain territory as they exert in the endeavor to meet water competition through the Panama Canal, it is not unreasonable to assert that their increased business would more than offset any loss of traffic that might be attributable to that water competition.

MCKINLEY W. KRIEGH, Commerce Counsel the American Mining Congress.

Mr. FRENCH. I will now call on Mr. Amos A. Betts, a member of the Arizona Corporation Commission, and yield to him 15 minutes.

STATEMENT OF MR. AMOS A. BETTS, OF ARIZONA

Mr. BETTS, Mr. Chairman and gentlemen, the Arizona Corporation Commission, of which I am a member, is a constitutional body consisting of three members elected by a direct vote of the people. Mr. Loren Vaughn, one of my associates, is here with me, and he and I have prepared a statement setting forth our views on this bill, which I wish, as a matter of economy of time, to file, and have made a part of the record, and the balance of the few minutes I have I would like to devote to a brief discussion of a subject that has been discussed at considerable length here, and of which much more will be said, I doubt not, by the opponents to the bill before they finish their case, namely, the question of empty-car movement. I wish to place a copy of this in the hand of each member of the committee. This statement shows the percentage of empty to total freight car-miles for the years 1912, 1913, 1921, 1922, 1923 and for the first ten months of 1924, first showing the United States as a whole, and underneath that the western district, which comprises the intermountain Pacific coast territory. It will be noted that in every year except the year 1923 the empty-car movement was less in the western district than in the United States as a whole, and that for 1923 the western district exceeded the United States as a whole by only four one-hundredths.

Underneath that we have shown the principal transcontinental carriers in the western district.

Mr. BURTNESS. Can you give us roughly the difference between the movement east and the movement west on transcontinental roads?

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Mr. BETTS. No; I have not the segregation east and west bound for these figures; but I will give you a little later the figures for the first 10 months of 1920 and 1923, or perhaps I can give them now. No; I see this is not east and west bound, it is eastern and western districts. I have not that segregation.

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Coming back to the transcontinental lines mentioned, it will be noted that in 1912 and 1913 the empty-car movement was less on those lines than in the western district. In 1921, the percentage was 77.26 as against 35.98 in the western district. That was only one line, the Atchison, Topeka & Santa Fe.

In 1922 the Santa Fe, the Great Northern, and the Chicago, Milwaukee & St. Paul exceeded by a fraction of 1 per cent the western district; and in 1923 only the Great Northern and the Chicago, Milwaukee & St. Paul exceeded by a fraction of 1 per cent the western district.

We find, then, that four of those roads-the Union Pacific, the Northern Pacific, the Great Northern, and the Milwaukee on those four roads the empty-car movement was less than on the six transcontinental lines except in 1923, when it was 34.5 per cent as against 4.35 per cent, or one-tenth of 1 per cent.

For the first 10 months of 1920 the movement in the United States as a whole was 42.6; and the eastern district 48.7; and in the western district it was 36.9 per cent."

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