railroads make in following the mandate of this proposed bill will mean higher freight rates for the interior. Giving up the coast traffic will also mean that the railroads will not have as many empty cars available to haul the products out of the interior. With the decreased movement of loaded cars westward will come the need of moving more cars empty into the western territory to carry out the products. The hauling of empty cars is an expense. This expense will have to be made up and it will tend toward higher freight rates. If it were possible to see where the Gooding bill would benefit the interior or the intermountain section this chamber could see that there would be some reason why it should be enacted into law, but we are utterly unable to comprehend how the Gooding bill, if it were enacted into law, could or would confer any benefit upon the interior or intermountain section. It can not bring lower freight rates, as we have endeavored to explain. If the railroads go out of the coast traffic, the lower rates via the steamship lines will still be in effect and traffic will be moving to San Francisco and Seattle and other ports via the boat lines at much lower rates than obtain by rail to Spokane and Salt Lake. The volume of traffic is going to move at the low rates via the boat lines; that being so, why should not the railroads be allowed to handle some of this traffic? It is upon the railroads that the vast interior of this continent depends for transportation. It is because of the railroads and the service which they render that the vast interior of this country has been opened up and is being farmed, and is being developed. Congress should not do anything unnecessarily to hurt or injure the railroads because with injury to the railroads comes injury to the vast interior of this country. With the safeguards that have been thrown around relief from the long and short haul law, that the relief must not jeopardize legitimate water competition, that the rates made to the farther distant points must be reasonably compensatory that the ability of the railroads to earn its reasonable return must not be jeopardized, that other traffic must not be burdened, it does seem that the welfare of the public and of this country, and water transportation, is fully protected. It is surely not the intent of Congress to confine traffic to and from the Pacific coast to the water lines via the Panama Canal. There has been developed in the middle western section in the past 20 years extensive manufacturing enterprises which want to reach the Pacific Coast at rates via rail in competition with rates which their competitors at the eastern seaboard enjoy via the Panama Canal. How can the manufacturer of this section expect to put bolts and nuts and other steel articles in San Francisco at -a 90 cent rate when the steel may move from Philadelphia to San Francisco via boat line for 40 cents? It surely is not the intent nor desire of Congress to confine traffic to and from the Pacific Coast entirely to the boat lines to the exclusion of the railroads. It is surely not the intent nor desire of Congress to create a situation whereby middle western manufacturers cannot sell their products at Pacific Coast cities in competition with their competitors at the eastern seaboard, and drive the business from the midwest to the eastern Seaboard. The railroads should be allowed some latitude in this regard, within reasonable limits, to obtain a fair share of this coast traffic. The Pacific Railway acts, which preceded the building of the Union Pacific Railroad, forming a line of railway from the Missouri River to the Pacific coast, we believe set out a policy that the railroads should be entitled to haul traffic to and from the Pacific coast. The transcontinental railroads were built primarily to reach the coast. That was the intent of the Pacific Railway Acts. If the railroads were only to be allowed to haul traffic to and from the interior certainly the transcontinental railroads would never have been built. We urge then upon Congress our views: (1) The Gooding bill will not accomplish the ends which its proponents seek. (2) The Gooding bill will destroy existing and much needed elasticity in the 'freight rate structure. (3) The Gooding bill will set by statute a rule concerning rates, and we contend that it would be much better to leave the rules on the subject as they are at the present time, allowing the Interstate Commerce Commission to adjudicate each case upon the facts and upon its merits. In conclusion, we direct your attention to the report of the Congressional Joint Commission of Agricultural Inquiry, part 3, page 405, where that Commission considered the long-and-short-haul rate rule. Their conclusion is set out below: "In a country where there is as wide a variation of local conditions of competition, both as between industries and as between different means of transpor tation, as in this, the application of a rigid prohibition against charging higher rates for short hauls than for long hauls under any circumstances would result in greater discrimination and more rigid restriction upon competition as between industries and means of transportation than would result from the exceptions which might be permitted under a more flexible provision." We believe that a broad view of all the facts and circumstances surrounding. this question will convince you that the Gooding bill is wrong in principle. We trust that the Congress will not enact the Gooding bill into law. Respectfully submitted. THE CHAMBER OF COMMERCE OF KANSAS CITY, Mo., J. M. GUILD, General Secretary. J. H. TEDROW, Transportation Commissioner. KANSAS CITY, Mo., January 20, 1925. The CHAIRMAN. Now, if you have one or two witnesses who are not too long, we might get them off the list, Mr. Beek. STATEMENT OF MR. GEORGE A: MACDONALD, GENERAL MANAGER SUN PORTLAND CEMENT CO., PORTLAND, OREG. Mr. MACDONALD. Mr. Chairman and gentlemen, my name is George MacDonald. I am manager and part owner of the Portland cement manufacturing plant located at Lime, Oreg. I have reduced my statement to writing and I will read it: The cement manufacturing plant of the Sun Portland Cement Co. is situated at Lime in Oregon, 387 miles east of Portland on the main line of the Union Pacific system, and but a short distance from the Idaho State, line, and is distinctly an interior enterprise. The large market for cement in Oregon is at Portland and vicinity. Oregon cement competes with California cement in that market; also with cement brought in from Europe at ballast rates. These facts were known by the railroad and the investors at the time it was proposed to make the investment in the enterprise. It was understood that fourth-section relief should be applied for and, if possible, authority secured to charge a lower rate to Portland than at some intermediate points. A hearing was held by the Oregon Public Service Commission in Portland on March 13, 1923. At this hearing no objections were made by any to the establishment of a rate of 15 cents to Portland. On March 21, 1923, the Oregon Public Service Commission authorized the establishment of the rate with higher rates at some intermediate points. The attorney of the Union Pacific stated to the commission that a 15-cent rate to Portland, with a high minimum of 80,000 pounds, would be reasonably compensatory and provide the railroad with some net revenue from the handling of westbound cars which otherwise would be hauled empty. An analysis of our shipments during the year 1924 will prove that without access to the Portland market our factory could not continue to operate. The shipments, based on carloads of 212 barrels, or 80,000 pounds, each, were as follows: t 10 20 52 18. 100 From these figures, you will see that 70 per cent of our business was in Portland and at points south and west of Portland, and moved on fourth-section relief rate. The value of our factory to the intermediate territory can be appreciated by the following list of our expenditures in that district during 1924, viz: Pay roll.... Purchases in Eastern Oregon__. Total___. $167, 797. 71 44, 296. 81 957. 69 47, 982. 64 261, 034. 85 In November, 1924, our factory was converted from oil to coal for burning the raw materials. During 1925 our purchases of coal from the coal mines in the state of Utah, if we are permitted to operate, will be in excess of 24,000 tons, on which the Union Pacific will collect more than $130,000 in freight charges. In addition to the freight charges on coal, we pay large sums for freight on gypsum, sacks, supplies, etc. The anxiety of the individual coal producers of Utah to secure our business shows how helpful it is to them with the limited market for their output. Our factory is putting a raw material, of which there is vast quantities in that district, to a beneficial use; we are employing more than 80 men, many of whom had been without employment for a long period, owing to depression in eastern Oregon and Idaho. We are producing a useful commodity in a district where it previously had not been produced at all, and making of value natural resources which had been little more than waste. In addition, we have brought about a substantial reduction in the price of cement in our part of the intermediate territory. The East and Middle West are not without interest in our enterprise, as we make considerable purchases of supplies, machinery parts, etc., from there. That our water competition is actual and serious, can be appreciated by you when we point out that during the past month the following importations of European cement have been unloaded on the Portland docks: Barrels This cement is dumped at a low price on account of low labor costs and distress or ballast transportation rates. The imports of this foreign cement during this one month is about equal to the output of our factory for a month. We also have active competition from the large cement manufacturing plants in California who are able to send their cement north to Portland in steam schooners that carry lumber southbound and are without cargo northbound and who will gladly accept a cement cargo northbound at very low rates and thereby obtain some revenue from the northbound voyage. The Union Pacific is in exactly the same position as the owners of the water lumber carrying steam schooners, having a one-way light movement and the railroad must compete with the boats or be without this traffic. We have shown by quoted figures that during 1924 the railroad received from us 954 carloads of cement westbound to Portland, which would not have moved at all had the traffic not been created by fourth-section relief, and which has provided loads for cars that otherwise would have had to be hauled empty. To take from us at this time the freight rate that makes possible our continued operation, amounts to the destruction of our property, and means loss of work for our employees and general loss to the intermediate territory. We believe that rate making should be left to the Interstate Commerce Commission, who have the time and the organization to hear all the facts in the various cases and in whose judgment the shippers in general have every confidence. Respectfully submitted. SUN PORTLAND CEMENT Co., General Manager. I would just like to say that we are located on the main line of the Union Pacific Railway, and they haul past that point every month several thousand empty cars on the way to the coast to pick up loads, and that the traffic they obtain from us gives them just that much more money. There is one more company located similarly to us on the main line of the Southern Pacific Railway between San Francisco and Portland Mr. BURTNESS (interposing). May I ask you one or two questions as to the rates before you leave that? Your rate now is 15 cents, you said? Mr. MACDONALD. Yes; from our factory. Mr. BURTNESS. What was it before that? Mr. MACDONALD. That was the only rate we ever had. Mr. BURTNESs. What is the highest rate now between the point where you are situated and some point in the interior—that is, this side of Portland? Mr. MACDONALD. About 24 cents. But that is only at one or two points. Mr. BURTNESS. So the real relief you get is the difference between 15 and 24, approximately? Mr. MACDONALD. Yes. We would not have built our factory without this rate, because we could not hope to compete, and there is not any market anywhere else for our product in that particular district. Mr. BURTNESS. Well, the highest rate to a point between your factory and Portland is 24 cents? Mr. MACDONALD. Yes. Mr. BURTNESS. As compared with your through rate to Portland of 15 cents? Mr. MACDONALD. Yes. Mr. COOPER. While you are on that, may I ask just one question? I want to get this clear in my mind. Did I understand you to say that you shipped over the Union Pacific nine hundred and some cars to Portland? Mr. MACDONALD. Yes. Mr. COOPER. Which you could have not done if the railroad had not received relief under the fourth section? Mr. MACDONALD. Yes; we would not have built our factory and those 954 cars would have been hauled to Portland without traffic of any kind; and on the other hand they have received traffic from us through fourth-section relief-they received $128 for each carload. Mr. COOPER. In case that relief is taken away from you, would that destroy your market? Mr. MACDONALD. Yes, we could not operate. We would have, as I have shown by those percentage figures-only 38 per cent of our sales are in the East. This letter that I wish to file from this other cement company is from the Beaver Portland Cement Co. They are located midway between San Francisco and Portland, on the main line of the Southern Pacific Railway. Their situation is something similar in that the Southern Pacific haul thousands of empty box cars north from San Francisco into Oregon for lumber and other cargo, and they were given a 12-cent rate to Portland. They write as follows: Mr. G. A. MACDONALD, PORTLAND, OREG., January 17, 1925. Sun Portland Cement Co., Portland, Oreg. DEAR SIR: Referring to your telephone request this morning, would say that the original order of the Railroad Commission of Oregon under which our 12cent rate from Gold Hill to Portland is authorized, bears date June 16, 1913, No. F-252. As we understand you will be present at the committee hearings in Washington in connection with the consideration of the Gooding bill, we will be pleased to have you, on behalf of the Beaver Portland Cement Co., bring to the committee's attention the injustice to this company and the very great damage to be expected by us from the virtual confiscation of established property rights acquired in good faith under laws existing at the time of their acquirement. The justification for the establishment of this plant, as well as your own, was the agreement of the railroad company, confirmed by the commission's order, granting a rate which is an exception to the fourth section of the interstate commerce act. An act of Congress now to rescind the authority under which the order was made would be in its effect not only a confiscation of the company's property, but would also be in its effect retroactive, and, in our opinion, to that extent unconstitutional. It is certain that these plants would never have been put in, nor would there have been the resulting employment of both capital and labor, had the people who risked their money to make these developments felt any suspicion that the laws in existence, which made them possible, would at a later date be repealed, with the effect of confiscation, already noted. The railroad is amply justified in granting the special rate which we enjoy, as. it enables them to utilize a very heavy empty car movement northward, which without these rates it would not be possible to utilize. The competition which we experience at Portland, the only available market of any size, comes from the large capacity mills situated in California who ship from the San Francisco Bay territory by water to Portland, enjoying a freight rate even lower than that granted to our plants by the railroad. In addition to the California competition, it is also necessary for us to meet Portland competition of foreign cement shipped here on a dumping basis. It would seem evident that the enactment of the Gooding bill would result in the closing down of these two plants whose combined capital is in the neighborhood of $2,000,000, giving employment to probably 200 employees. We believe that the Interstate Commerce Commission, with the proper personnel, is better equipped to consider the problems of shippers than any body of men not having at hand the expert advice and data which is available to them. The fourth section of interstate commerce act, as it stands, protects the public against an abuse of the privilege sometimes granted the railroads of establishing rates in contravention thereof, and we trust you will use your best efforts to show the committee how serious a blow it would be to industry on this coast to put the Gooding law in force. Yours very truly, BEAVER PORTLAND CEMENT Co., The CHAIRMAN. Are there any questions of Mr. Macdonald? Are there any others who wish to make a short statement this afternoon? STATEMENT OF MR. J. M. ZACHARA, TRAFFIC MANAGER MAGOR CAR CORPORATION, NEW YORK CITY Mr. ZACHARA. Mr. Chairman, I represent the Magor Car Corporation, and I wish to say that we are opposed to the Gooding bill or to any change in the long-and-short-haul provisions. The CHAIRMAN. For what reason? r. ZACHARA. We feel that there is no need of any change in the pres: nt section of the transportation act. |