ERC Ives
Vol. 5  p. 3144

Mr. Brandeis.  Something has been said here about the increase in class rates [rates on commercial products as opposed to commodities such as coal], and particularly the higher class rates, affecting only luxuries.  What is the fact?

Mr. Ives.  I must admit that I received the impression that the traffic officers of the reailroads, or some of those who testified, had the impression that the majority of artiles moving in the classification were either luxuries or very high-priced necessities in which the freight was so small a moment that itcould be ignored.  Such is not the case, as an examintion of the freight received at an medium-sized station on the roads of any of these carriers or an examination of the billings will show.  It  includes all the commonest necessities of life, boots and shoes--not only meaning shoes that are sold for $3.50, $4.00, and $5.00 a pair, but those that sell for $1.00 and $1.50 a pair.  Als dry gOods--it does not mean simply ribbons and laces.  We should be glad to see ribbons and laces bear their proper share of the burden of trnsportation.  But it means the commonest kinds of cheap prints, cheap underclothing, overalls, all clothing, and all those articles of commerc that are among the barest necessities of life.6
DAVID 0. IVES was called as a witness on behalf of the shippers
and, being first duly sworn, testified as follows:

Direct examination:
Mr. BRANDEIS. Mr. Ives, you are the chairman of the traffic com-
mittee of the seaboard organizations?
Mr. IVES. Yes, sir.
Mr. BRANDEIS. What cities and States are represented by these
seaboard organizations in the traffic committee?
Mr. IVES. New England States, the seaboard part of New York,
Pennsylvania, New Jersey Maryland, and Virginia.
Air. FISHER. You are the manager of the transportation depart-
ment of the Boston Chamber of Commerce?
Mr. IvEs. I am.
Mr. BRANDEIS. And have you been since 1909?
Mr. IVES. Yes.
Mr. BRANDEIS. What was your occupation immediately prior to
that time?
Mlr. IVES. I was chairman of the official classification committee
for nine months.
Mr. BRANDEIS. Before that time you were traffic manager of the
Wabash?
MIr. IVES. Yes.
Mr. BRANDEIS. For how long?
Mr. IVES. For three years.
Mr. BRANDEIS. What was your occupation before that time?
Mr. IVES. I had been in the railroad business in various capacities,
almost entirely in the employ of the C., B. & Q. For a year or two
I was in the Atchison, in the accounting, operating, and traffic depart-
ments.
Mr. BRANDEIS. How long a period did that cover?
Mr. IVES. About 17 years.
Mr. BRANDEIS. Then you had 20 years' railroad experience before
becoming chairman of the official classification committee?
Mr. IVEs. Abouit 22 years.
Mr. BRANDEIS. Did you, while you were traffic manager of the
Wabash, have occasion to consider the question of the increase of
class rates ?
Mr. IvES. Yes.
Mr. BRANDEIS. Will you state what conclusion you then reached,
and whether you afterwards changed that conclusion, and if so, why?
Mr. IVEs. While I was traffic manager of the Wabash, in common
with other western railway men and men in the railroad business
west of Buffalo and Pittsburg, I was anxious to increase the class
rates from seaboard territory to our territory in Illinois and the
WVest, because I wanted to make the spread larger between the rates
from New York, Boston, Philadelphia, and BaItimnore, and the rates
from Buffalo, Detroit, Toledo, and our own shipping points as great
as I could, in our own selfish interest. When I came to the classifica-
tion committee I was called upon to look at the matter more judicially
and more carefully. I changed my view entirely, and made up my
mind that until the classification could be completely revised it
would not be fair, just, or feasible to make any general advance in
class rates throughout the territory.
Mr. BRANDEIS. While you were in the official classification com-
mittee and chairman of that committee you were in the employ of
the railroads jointly?
Mr. IVES. I was in the employ of all the railroads in that terri-
tory between St. Louis and Chicago and the seaboard territory.
Mr. BRANDEIS. You say you came to the conclusion that no general
raise would be proper?
Mr. IVES. Yes.
Mr. BRANDEiS. Did you consider the question of individual in-
creases?
Mr. IVES. We were constantly considering them.
Mr. BRANDEIS. In what way?
Mr. IVES. We had our regular hearing days, and a good many
intermediate ones on special occasions with special shippers. I came
to the conclusion that no general advance should be made in class
rates because I considered that the classification was entirely illogical
and discriminative in its method and make up, which I always stated
to the railroad men while I was there in their employ. I told them
that it ought to be changed, before any general change in class rates
could possibly be fairly made. For exarmiple, if it were decided to
make a change in class rates, a few commodities were considered and
it was found that those commodities could be advanced without ap-
parently casting upon them the burden of more than their share;
but automatically, and at the same time, hundreds of others would
be raised, which could not be investigated, and which, upon investiga-
tion, after the advances were made, proved to be unable to bear the
burden put upon them by such blanket advances.
Mr. BRANDEIS. In those changes which were made in official classi-
fication territory, what was done with respect to consultation with
the shippers and advising with the shippers and giving them an op-
portunity to be heard before a change was made?
Mr. IVES. The practice was to advise them by a printed ticket of
any proposed change. These changes might be proposed by a ship-
per or by a carrier or by an individual or group of individuals, or
by a community. They were always listed, and periodically those
lists were published and sent out throughout the territory. They
were given as broad a distribution as was practicable. A small
charge was made for them, so that only those who were anxious
enough to get them to pay a small amount for them would get them.
Mr. FISHER. How long a period was allowed, ordinarily, between  
the notification of the intention to consider a change in the classifica-
tion and the time when it was actually acted upon?
Mr. IVES. We published the classifications twice a year and we
published the tickets, as I recall it now-and these gentlemen here
can correct me if I am wrong-I think just two and a half months
before the proposed date of the classification, and we had the meet-
ing between those two dates.
Mr. BRANDEIS. There was, at all events, an appreciable and ap-
parently an ample period for the consideration of the effect of the
change in the classification proposed?
Mr. IVES. Yes; a maximum amount of time was given, consistent
with not causing too great a delay in putting it into effect.
Mr. BRANDEIs. 'Were there any other classes you considered in
connection with the proposed increases? I refer specifically to the
different raises in different classifications.
Mr. IVES. There are, throughout the United States, three general
classifications called " official, " " western," and " southern." These
are not only each imperfect in itself, but. it differs from each of the
others in such a way as to make it almost hopeless to make com-
parisons.
Mr. BRANDEIS. What is the reason why comparison should be made
between them?
Mr. IVES. Because shippers from New York, Philadelphia, Chi-
cago, and St. Louis, in competing with one another in Illinois, use
two different classifications.
Mr. BRANDEIS. Does that apply only to eastern communities and
seaboard communities, or would it apply equally to any other?
Mr. IVEs. It would apply to any shipper in official classification
territory doing business in Illinois or Wisconsin or along the Mis-
sissippi River or in St. Louis or beyond affected by rates to the Mis-
sissippi River.
Mr. BRANDEIS. How great is the divergence or difference between
these different classifications covering the same territory?
Mr. IVES. It is so great that it was generally admitted by the rail-
roads that it required sonlc unification, and over two years ago we
appointed a so-called uniform classification committee. There was
first a preliminary committee constituted to consider the feasibility of
a uniform classification. I was a member of that committee, and we
reported that we thought a permanent committee should be appointed
to work upon this proposition and make rules and descriptions ex-
actly uniform. That committee has been working for two years upon
that proposition, and I have been advised and understand that it is
undoubtedly true that they have no permission to work upon the
proposition of unifying and numbering the classes, and until they
have done that I consider that their work is merely expert and use-
ful as expert work. If the various classifications had been taken
hold of by them, there would be absolutely no use in making a uni-
form classification unless they got permission to unify and number.
Now, in the official classification there are 8 classes, 6 numbered
and 2 intermediate classes, based on percentage with the class above
them. In the western classification there are 5, numbered 1, 2, 3, 4,
5, and A, B, C, D. and E. In the southern classification there are
1, 2, 3, 4, 5, and 6 class, and then lettered classes based on an entirely
different method of classification from that in the western and cffi-
cial. Those I will not go into.
Mr. BRANDEIS. What would be the practical effect in dealing with
any particular article of commerce as to the effect of these varying
classifications, say, in the Illinois territory?
Mr. IVEs. In any particular commodity or in any particular article
of commerce you could investigate that particular article of com-
merce and find out exactly what the rate was from the seaboard ter-
ritory into this common neutral fighting ground of Illinois.
Mr. BRANDEIS. When you have found it out, would it be very differ-
ent; would there be any great difference when you had deciphered it?
Mr. IVES. In a large number of cases it might. I made a small, al
hasty, comparison yesterday of some articles that I think are rather
striking, giving the differences between the western classification and
the official classification, on certain articles.
Mr. BRANDEIS. WIill you give us an illustration of a situation show-
ing what that would be?
Mfr. IVES. I found that agricultural implements will take a differ-
ent classification in the West in less-than-carload quantities from
what they take in the East.
Mr. BRANDEIS. Hlow different is the classification?
Mr. IVES. It is one of percentage. One is second class and the
other is third. In carloadc quantities one is in the second class and
the other is in the fifth class. You can not make any comparison
between them, because they have no comparative position, no posi-
tion which you can compare in the classifications.
Then I found that coffee, both green and roasted, in less-than-car-
load quantities, sugar, canned fruits, and vegetables in less than car-
ioad, are all very important and very largely shipped. On vehicles
the methods of making the classification were so different that it is
impossible to make an intelligent comparison except by an exception.
I recall that while we were on this classification committee, our com-
mittee-one of which I was a member-made a comparison between
vehicles. After it was made, it practically was no comparison that
could be used; the descriptions were so utterly different that when
you put them beside one another, and then put the ratings of different
letters and figures together, they could not be compared, and you
had nothing but the two statements that could not be intelligently
compared or from which any deductions could be made.
The same condition applies as to furniture. We had a similar
comparison made of furniture, and I found yesterday in looking over
this that chairs, not otherwise specified, set up, second class, minimum
of 10,000, was the way it appeared in official classification. I think
even that is one of the reductions. That is my recollection, although
I am not sure; I may be mistaken.
In western classification it was fourth class, with a minimum of
12,000 pounds. There is also in the western classification a provision
for certain kinds of furniture, which, while it may take a minute or
two to read, I think I will read, because we had a great deal of trouble
with it when I was chairman of the official classification committee;
and I think it illustrates as well as anything could the absolute
absurdity and impossibility of trying to make any comparison of
class rates in themselves without picking out each individual item  
and making the comparison between that item from the official classi-
fication territory into this neutral zone, and from the western classifi-
cation. I will read it [reading]:
Bank, store, saloon, and office furniture, consisting of arm rails, back bar
mirrors, bottle cases, chairs, counters, counter fittings, desks, foot rails, metal
brackets for arm and foot rails, refrigerators, tables, and work boards. * * *
3. Min. wt. 12,000 lbs.; subject to Rule 6-B.
NOTL-Door, window, and bar screens, partitions, prescription cases, patent
medicine cases, show cases, wall cases, wainscoting, office railing, and wooden
mantels may be shipped with bank, store, saloon, or office furniture in mixed
c. ., at 3d class, min. wt. 12,000 lbs.
There is nothing of that kind in the official classification. I believe
there is not in the southern, but I am not sure. However, we are com-
paring western and official classification. There is no such provision
as that in the official classification. On the contrary, a shipment of
that kind can only be picked out by figuring the rate on the separate
items. Some of them take as high a rating as three times first class.
Show cases, set up, would be included in that and take third class.
In official classification, if a man is competing with a man in neutral
territory he has to pay three times the first-class rate. These mirrors
are 5 feet long, about; I think saloon mirrors are that length, and
they take double first class. A great many of these articles take
first and second class.
That illustrates not only the difficulty of comparison, but it illus-
trates also the viciousness of the old way of making classifications,
in which I bore my full share of the. fault-perhaps more than my
share-because that was undoubtedly done to help one large shipper.
That rating was made, in my opinion, to enable one very large con-
cern to do business and drive everybody else out. That was worked
through the classifications probably for that purpose. I am now
giving my opinion, perhaps as an expert, rather than speaking from
absolute knowledge; but I can not say positively that that was the
animlus in each man's mind when that was done; but that was the
result. That firm practically has a monopoly in that line of business
throughout that territory, and it is now proposed to advance the
rate on the man who is shipping-to put an extreme case-the show
case set up at three times first class, or $2.25, from New York to Dan-
ville, Ill., 20 per cent of 45 cents, making it $2.70. Whereas the
third-class rate from Chicago down there, if it were raised-my
recollection is it is about 20 cents a hundred-and if it were raised
20 per cent it would be raised 4 cents. As it happens, it is not going
to be raised at all.
Now I maintain therefore that with such glaring inconsistencies-_
and that is only one of hundreds that I could show-it is not fair
or defensible to make a blanket increase in the class rates, nor is it
in accordance with the law as I understand it, which specifically
states that each rate to which objection is made must be proved to be,
by the carriers, just and reasonable.
Mr. BRANDEIS. Now, what percentage of change would be affected
by these proposed rates if they were allowed to go into effect? Tak-
ing into consideration now not only the fixed percentage as stated,
20 per cent and 20, 15, 10, and 8; but what the average is when you
apjily it to these methods of transportation; for instance, lake and
rail, ocean and rail, as the case may be.

ADVANCES IN RATES BY CARRIERS. Vol. 5, p. 3140

Mr. IVES. Well, the lake and rail rate from Baltimore to Chicago,
as I recollect, is 57j cents first class, and it is proposed to raise that
15 cents a hundred, which is practically 30 per cent. That is perhaps
the maximum. That runs down to Philadelphia at 54 or 55. I have
not the exact figures in my head. That would be 27 or 28 per cent.
Our rate from Boston is 62 cents. That is advanced 15 cents, which
is about 24 per cent.
All those rail and lake and ocean and rail, differential, and all-rail
rates are advanced in varying proportions 20 to 30 per cent. They
are used very largely by our shippers-very much more largely in
tonnage than is perhaps generally known. I do not know the per-
centage, but it must be a very large percentage of the traffic moving
from New England. From New York and from Philadelphia it
moves by these differential routes.
Mr. BRANDEIS. Then, it is an entire understatement to speak gen-
erally of the raise in first, second, and third class rates as a 20 per cent
raise. It is only a 20 per cent raise on the regular all-rail lines, and
when you come to differential or come to ocean and rail and lake
and rail you have a percentage that rises and varies from 20 to 30
per cent?
Mr. IVES. Yes, sir.
Mr. BRANDEIS. That the increase amounts to?
Mr. IVES. Yes, sir.
Mr. BRANDEIS. And as you understand it, that refers to a very
large movement?
Mr. IVES. Yes, sir.
Mr. BRANDEIS. Now, something has been said about these horizon-
tal increases distorting the existing trade relations. How does that
work out?
Mr. IVES. Well, 20 per cent of 75 cents is naturally more than 20
per cent of 30 cents.
Mr. BRANDEIS. How do you apply it?
Mr. IVES. The result is that on first class, in which the freight rate
has something to do with the sale of the goods, an advance or 20 per
cent, without taking in consideration all the terminal expenses which
the railway traffic officials while declining to express any view as to
the exact figures stated were a very material part of the expense, dis-
torts the relation, to my mind, entirely unreasonably of rates that
have been in effect for a number of years. The shipper in figuring
does not figure on percentage. TIle iPhiladelphia man in competing
with the St. Louis man in Springfield, Ill., does not compare the per-
centage of his rate. He compares the actual difference in cents per
hundredweight. Now, if a percentage is to be used and such a wrench
Reed dislocation is to be given to these rates as this 20 per cent and 25
per cent and 30 per ceiit advance means, at least a liberal allowance
should have been made for these terminal expenses which railway
inen themselves, and justly, have said were a very large proportion of
the rates.
I should like to illustrate the advance in rates that would actually
take place by referring to the rate on cotton piece goods. That was
one of the articles which Mr. Tittemore had in his list, one of the
articles in which an enormous amount of shipments take place of the
necessities of life for the poorest people in this country, common
prints and calicoes and even dry goods; also cheap knit goods, and
3141
ADVANCES IN RATES BY CARRIERS.
so on. But take the cotton piece goods. The rate in 1900 was ad-
vanced through the classification from 37 to 41 or 42 cents. It was
raised again slightly two years ago when there was an insurance
adjustment, until finally the rate, through the increase in the classi-
fication and the increase in the rail-ancd-lake rate, becomes 46 cents
instead of 37, which is 25 per cent increase.
It is now proposed to add 20 per cent to that, which makes it about
56 and a total increase of practically 50 per cent, over 50 per cent,
even after allowing for a slight difference due to the fact that the rate
was an insured rate.
That is true of a very large number of articles. The reclassifica-
tion has been advanced on a very much greater number of articles
than those on which it has been reduced, beginning with this advance
in 1900. There is no question about tb-at, although I have not made
a statement as Mr. Tittemore has and h1ve not the exact figures. I
think the commission themselves know, because they gave a hearing
on the subject, and the commodities are so important when you take
commodities like sugar, coffee, canned goods of all kind, cottonseed
goods, and so on, on which this advance is made. And I think it is
quite apparent that it is a very important and far-reaching advance.
Mr. BRANDEIS. FHas there been any special advance of the lake-and-
rail rates in this case?
Mr. IVES. Yes, sir; I just mentioned it. I applied it to the cotton
piece goods. It was on all the classes.
Mr. BRANDEIS. How much has that been?
Mr. IVES. First, class has been raised from 54 to 62 cents. Third
class, as I recall-no, it is only commodities that take third class,
that were advanced from 37 to 46. They were advanced from third
class to rule 45. Fourth class was advanced to 62 cents.
Mr. BRANDEIS. Is there any special objection to the proposed hori-
zontal increase Cay reason of the fact that it applies only to a portion
of the traffic?
Mr. IVES. It seems to me to be entirely unfair to attempt to get
enough out of 15 per cent of the traffic in revenue to support over
100 per cent, especially when it is done not by an investigation and
by picking out in accordance with the law commodities which can
stand it and which may be proved to be by the railroads just and
reasonable. A blanket advance is made which can not in the nature
of things be investigated and about which nothing can be ascer-
tained until the harm is done.
Mr. BRANDEIS. You used the word " commodity; " I suppose you
meant. article of commerce.
Mr. IVES. Article of commerce in the classification. I am not
speaking of the commodity rate.
Mr. BGiNDEIS. Now, wvhat in your opinion is the method which
must. be pursued or should properly be pursued if it were desirable
or if it was believed to be desirable and necessary to raise additional
revenue--what in your opinion is the method that should be pur-
sued by the carriers before making the increase?
Mr. IVES. I should select the special commodities.
Mr. BRANDEIs. The articles of commerce, you mean?
Mr. IviE. The special articles of commerce and change them to the
classification. My own idea would be to make a revision of the
classification and put some life into the uniform classification. Tell
3142
them that their work must be done by a certain time. The nature
of their work is such that if they are allowed to continue indefinitely
without a prod from some one--although I believe them to be men
of the highest character, concientiousness, and ability-they will
never finish. It ithem that their work must be done by a certain time. The nature
of their work is such that if they are allowed to continue indefinitely
without a prod from some one--although I believe them to be men
of the highest character, concientiousness, and ability-they will
never finish. It is a job that will last for a lifetime if they are
allowed to disagree. It is just the same as regards a jury. If a
jury is turned loose and allowed to walk the streets, I suppose that
in many cases they would never agree.
'l'his uniform classification, in my opinions will never complete its
dilties until it is told that there must be a time when this work, in-
cluding the uniform numbering of the classes, can be done. When
that is done, there could be scientific handling of this matter. There
are probably hundreds of commodities that are not bearing what
they ought to bear and could be advanced regardless of whether the
railroads need some revenue or not. That ought to bi done. But
it. can not be done under present conditions. It is impossible.
Therefore, to answer your question, from which perhaps I have
digressed, I should simply pick out commodities and articles of
commerce in and out of classification and try to get the necessary
revenue if I believed it was necessary to get a certain fixed amount of
revenue.
Air. BRANDEIS. What should be the method of procedure on the
)art of the railroads with respect to the shipping community before
anes increase was made?
Mr. IvES. If I am the judge, I should say they should take these
matters up and confer with the shippers themselves or their repre-
senitatives.
Mr. BRANDEIS. 'What, if any, consultation and discussion was there
between the railroads and the shippers' organizations before this
tariff was settled, the one that is now proposed and under consid-
eration?
Mr. IVES. As far as I know, in our territory no effort was made to
obtain the views of any of the shippers prior to the time when the
rates and the adjustments were finally and positively agreed on by
the railroads. After that, at our request, a conference was held by
our committee with the railroads at which we were listened to with
great patience and courtesy, with-well, I do not know that I can
-add any other words-with great patience and courtesy. But noth-
iiig came of it. We afterwards had another meeting with then, with
the same result.
Mr. BRANDEIS. Those meetings I assume were before there was any
hearing before the Interstate Commerce Commission?
Mr. IvEs. Oh, yes; they were in June and August, as I recall it.
Air. BRANDEIS. And at those meetings the shippers were repre-
sented by the traffic committee in part?
Mir. IVES. Yes; and we had some of the actual shippers.
AMr. BRANDEIS. Individual shippers?
Mr. IVES. One or two.
Mr. BRANDErs. And did they present their objections to that pro-
posed increase in the tariffs?
Mr. IvEs. They did very fully. There were arguments pro and
con; but I maintained in what was intended to be a good-natured
way, that the railroad men were holding themselves up as infallible
when they stated that these changes which they had agreed upon

ADVANCES IN RATES BY CARRIERS.
themselves were such that they would not change them by the dot-
ting of an " i " or the crossing of a " t." We did not ask them to
cancel all reductions and make no advances. 'We assumed that they
might need the money. We had an open mind on that question.
But we said: " Do not make any advances on any of these articles
without giving us a chance to argue the matter with you." We claim
that it was impossible to argue, and they admitted it. They made the
same claim, I might say. It was impossible to investigate the 4,000
articles in the classification when an advance was proposed on the
class rates which automatically advanced or changed every single
article in the classification. We maintain that should be done at first
hand through the classifications.
Mr. BRANDEIS. And the attitude of the railroads was-
Mr. IVES (interposing). It was most agreeable and courteous, but
that was all.
Mr. BRANDEIS. An absolute refusal to consider any change?
Mr. IVES. A courteous and positive refusal to consider any change;
I use that word " courteous " because, the interviews were most
friendly and there was no ill feeling or anything but good feeling ex-
pressed, although a difference of opinion was reached.

KEY TESTIMONY RE KEYNESIAN THEORY  Vol 8 4818-20
originally in vol. 5, 3144

Mr. BRANDEIS. Something has been said here about the increases in
the class rates, and particularly the higher class rates, affecting only
luxuries. What is the fact?   
Mr. IVES. I must admit that I received the impression that the
traffic officers of the railroads, or some of those who testified, had the
impression that the majority of the articles moving in the classifica-
tion were either luxuries pr very high-priced necessities in which the
freight was of so small a moment that it could be ignored. Such is
not the case, as an examination of the freight received at any me-
dium-sized station on the roads of any of these carriers or an ex-
amination of the billing will show. It includes all of the commonest
necessities of life, boots and shoes--not only meaning shoes that are%
sold for $3.50, $4, and $5 a pair, but those that sell for $1 and $1.50
a pair. Also dry goods--it does not mean simply ribbons and laces.
We would be glad to see ribbons and laces bear their proper share of
the burden of transportation. But it means the commonest kinds
of cheap)prints, cheap underclothing, overalls, oil clothing, and a]l
those articles of commerce that are among the barest necessities of
life. It also includes such articles as the common metals which are
shipped in bars and rods at less-than-carload rates under classifica-
tion; not iron and steel. Well, I think they are also moving now
under classification, but brass and copper, all those articles on which
the margin is so small that an advance in the freight rate will often-
times prohibit the sale and stop the commerce, especially when there
is not a similar advance made anywhere else. The result of that can
only be one thing. It eliminates the competition of the Eastern ship-
per ultimately. It makes it at least more difficult for him to com-
pete and it makes it thus easier for his competitor; and in the end
the consumer is going to foot the bill.
Mr. BRANDEIS. How does this increase affect, if at all, the cost of
the food products?
Mr. IvEs. It is proposed to raise the rate on butter, eggs, cheese,
meats, and dressed poultry 20 per cent. The Chamber of Commerce
3144
ADVANCES IN RATES BY CARRIERS.
reports in Boston show-I think it is something like a million
pounds-I won't say exactly, but several hundred million potui'ls of
these articles on which I estimate the increase in rates to be between
$300,000 and $400,000, which can only come out of the consumer of
those articles, in my opinion.
Mr. BRANDEIS. And that translated into the individual family in
Boston would be how much?
Mr. IvEs. A family of five, I believe, is usually considered a normal
family.
Mr. BRANDEIS. Yes.
Mr. IvSs. Three or four hundred thousand dollars with 600,000
population would be $2.50 a head on the basis of a family of five.
Mr. BRANDEIS. Assuming the increase was no greater than the
exact amount represented by the freight increase?
Mr'. IVES. Yes; which is rarely the case.
Mr. BRANDEIS. Have you made any investigation with a view to
determining or any tests with a view to determining whether the
estimate presented by the railroads as the aggregate that the freight
increases would amount to in the official classification territory is
$27,000,000? That is correct, is it?
Mr. IvEm. I have had no facilities for making any exact calcula-
tions, of course. Only the railroads can do that, but I have picked
out a few items from some of the railroads which seem to me to
indicate that the commission itself ought to investigate and verify
these figures. In the first place they have beeh obtained by almost-
I should say half-as many different methods as there are railroads
making them. I found, for example, in the Lake Shore statement
the figure $277,000 as the increase on all their commodity move-
ment. That aroused by curiosity. In their annual report I looked
tip the movement of the fresh meat, packing-house products, and
live stock. Those three commodities alone I found amounted prac-
tically to 1,000,000 tons moving on the Lake Shore. As I say,
I have no way of making exact figures, but I assume that a very
large proportion of this came from Chicago, where their share of
the increase would be 40 or 50 cents per to'n. An increase of 28 cents
per ton applied to these three commodities alone would produce the
$277,000 without taking into account any of the other 40 or 50 com-
inodities in the list, which it is proposed to advance.
As I say, I only mention that as indicating the desirability and
the propriety of making an investigation somewhere into these rates
and seeing if the method of calculation and the actual calculations
are correct.
On the Boston & Maine I notice $10,167 as the figure for the in-
crease on second class. I found 142,000,000 of butter and eggs, both
of which take the second-class rate, were shipped into Boston alone.
An estimate was made me by various of the receivers of these com-
modities in Boston that the Boston & Maine received about half of
it and that about 75 per cent came from the affected territory.
Half of 142,000,000 is 71,000,000, and three-quarters of 72,000,000
is over 50,000,000. That increase would give the Boston & Maine
at least 2j cents a hundred, which would figure about $12,000. In
other words, as I figured it il. this rough and entirely estimated way,
the increase on second class in the Boston & Maine on butter and
313x5
ADVANCES IN RATES BY CARRIERS.
eggs over the Boston & Maine Road, to the one city of Boston alone,
would be more than the total they show as the estimated increase
from second class.
Now, their method of estimating was to take the first and second
(lays of September, 1909, and take the actual tonnage; multiply that
by the advanced rates. Then multiply that by 13, and then multiply
that again by the percentage that the business of September bore
to the business of the whole year. The Boston & Maine Road took
the whole month of September. I submit those two different
methods would be pretty apt to give different results. Those are
not the only instances.
Mr. BRANDEIS. Are there any other instances, striking instances,
that you have in mind?
Mr. IVES. Another was the Delaware, Lackawanna & Western. I
notice, for example, that their increase on one or two of the classes
only figures 10 per cent. The increase on nearly all of the roads in
the same territory runs from 20 to 21 and 22 per cent. Now, how
the Delaware, Lackawanna & Western increase on class rates could
be only 10 per cent, or 10 and a fraction per cent, I think is an inter-
esting problem. There are several solutions that might occur to one.
But it seems very strange that should be the case. The highest per-
centage, as I recall, on any of the Delaware, Lackawanna & Western
high classes was 16 and a fraction per cent. I do not think that they
got arbitraries to any great extent that would account for that slight
increase.
Mr. BRANDEIS. Your conclusion from that is that these figures,
from the slight tests you were able to make, are not reliable, and
that, for instance, the commission ought to make an inquiry into
these estimates by its own examiners, with a view to determining
whether or not they are correct.
Mr. ITVEs. I will say that if I was going to make an investment of
my own money on the basis of those statements, I should insist upon
some such further investigation before I would invest it in them,
although I am firmly of the belief that they were entirely honestly
made. But I do not believe that they should be accepted without
verification, when such immense results are dependent on their cor-
rectness.
Mr. B1RANDIEIS. There was a statement made by Mr. Thayer, as I
recall it, that the increases were not made within local territory;
that is, within 250 miles of the seaboard, because those rates were
considered already properly high and that the long-distance rates
were out of line with the local rates. Do you know anything as to
whether that was the motive, or the controlling nAotive; in regard
to the exclusion of the local rates from the proposed increase?
Mr. IvFy. I can not say that I know the motives of Mr. Thayer and
those gentlemen, of course. I am quite sure that wats the motive of
Mr. George F. Baer, of the Reading Road, who was the man who
really controlled that situation.
Mr. BRANDEIS. What was Mr. Baer's motive?
Mr. IVES. As I understand it, in fact as I know, he said his rates
were high enough and he would niot consider any advance in his local
rates, and he did not advance one of them. That affected the situa-
tion as far as his road went.
3 146
ADVANCES IN RATES BY CJ .RRTERS.
Mr. BRANDEIS. As you understand it, hie refused to raise the local
rates, and in consequence of Mr. Baer's refusal to increase the rates
on his road--
Mr. Ives (interposing). To be honest, I always thought the Penn-
svlvania Road had a good deal of sympathy with Mr. Baer's position.
Commissioner LANE. Are not there some local rates on the New
York Central this side of Buffalo that are not raised?
Mr. LYON. Yes; they stated that they raised all theirs. The Bal-
timore & Ohio and Pennsylvania did not raise their locals, but the
New York Central did.
Mr. BRANDEIS. These are the roads that serve the same territory as
the Jersey Central and Philadelphia & Reading?
Mr. CLYDE BROWN. That was a local situation. It may as well be
made clear. The Pennsylvania, Baltimore & Ohio, and Reading, in
the eastern territory, did not advance their local rates. I think the
New Haven did not advance their local rates. I am not entirely
certain about that. But all of the rates on all of our lines were ad-
vanced and all the rates, local and through, on the lines west of the
western termini of the trunk lines were advanced.
Commissioner LANE. So that the argument made by Mr. Thayer in
justifying this increase, on the ground that the local rates were out
of line with the long-distance rates, is not applicable to you?
Mr. C.-rDE BROWN. No. It was peculiar to the Pennsylvania Road
east of Pittsburg, and perhaps some others. It was really, as I un-
derstood Mr. Thayer, an incidental feature of that advance, so far as
the Peniisylvania was concerned.
Mr. BRANDEIS. Do you know how it applied to the Lehigh and the
Lackawanna?
Mr. CLYDE BROWN. I am informed they advanced the local rates.
Mr. LYON. I might state I think I asked Mr. I)aly, of the New
York Central, and he said his rates were on the same scale, as I re-
member, as the Pennsylvania. I do not know what the tariffs will
show.
Mr. CLYDE BROw\'N. I am quite sure no such statement as that was
made with reference to our local rates.
Mr. LYON. Some question was asked, and I brought out that very
point here as to whether the New York Central had not clone the
same as the Pennsylvania. I did not think there was any explana-
tion of it at the time.
Mr. IVES. The local rates on the New Haven, Mr. Brown, have been
raised to quite an extent in the method which, I think, is the correct
one, by picking out a rate here and there and raising it where they
could. They have also raised their passenger rate to a figure which
they estimate themselves in their annual report is likely to bring
them. in $800,000 a year. The Boston & Maine has attempted to
make the same kind of advances in their passenger rates in New
England.
Mr. CLYDE BROWN. The Boston & Maiue did advance their local
rates, their local freight rates.
Mr. IVES. They hrae made an effort to get them up where they
could, but they hLve not made any Very serious advances, and the
rates from Boston out into the New York Central territory of course
have been increased. I hnave heard no. objection from our shippers
to these increases, because the increases were low. They were per-
3147
ADVANCES IN RATES BY CARRIERS.
fectly willing to see them made where they did not threaten their
business.
Mr. BRANDEIS. Commissioner Prouty asked specifically a question
as to whether there was a difference in regard to the advance in in-
terstate rates and intrastate rates. Have you anything to say on that
subject?
Mr. IVES. You must refer to a different question from the one I
thought you were going to ask me.
Mr. BRANDEIs. What was the one you had in mind?
Mr. IvEs. I will answer the one you asked me. The discussion we
have just had shows very clearly that there was no distinction made
between State and interstate rates. This policy of the Pennsylvania
ito increase their rates from Philadelphia to points in Pennsylvania
means of course that the rates of the Reading and other Pennsylvania
roads within the State of Pennsylvania, and the Pennsylvania rates,
were very largely not increased. But on the other hand, a. lot of
interstate rates were not increased. So that as far as I know-the
railroad men could probably testify to that more expertly and cor-
rectly than I-they made no attempt to make a distinction between
interstate and intrastate rates. They took them where they caine,
where they could advance them, whether interstate or intrastate.
But when you get out into Illinois there was practically no ad-
vance made in the State of Illinois, because they are fixed by the com-
mission and the statute there. It was impossible to make an increase
in them.
The question that I understood Mr. Prouty to ask in connection
with that was-he said to Mr. Titternore, " You could not raise the
rates, could you, in all territories; you could not make this horizon-
tal rate unless you got every other railroad in the other territories
throughout the country to raise them? "
That is exactly what we are complaining about, principally, the
very fact that the rates are not to be raised in this great consuming
and producing territory with which we exchange so much traffic-
Illinois and that territory. The rates to a great extent are not to
be raised at all, and where they are raised it is to a very small pro-
portion, so that the railroads have not been deterred from advancing
rates because of the fact that other railroads have not advanced the
rates from a competing center into this common territory.
Mr. BRANDEIS. Mr. Titteinore was asked the question as to whether
the number, as I understood it, of commodity rates had been in-
creased since the practical abolition of rebates. Is that a subject
upon which you can testify?
Mr. IvFs. I do not think that anybody can say. I do not think
Mr. Titteiiiore knows, and I think he said he did not.. I would say
that I do not know. But I do know this I have attended a great
many hearings or meetings at which the eiort has been very strenu-
ously made to get back into the classification as many aiticles as
possible. The whole tendency of railroads is to get back into classi-
fication the articles that have been taken out, a very commendable
effort when it does not raise the rates too much.
Commissioner 1LANE. That is to say, if they have enough of scaled
or class rates it is a good thing to abolish commodity rates as far as
possible?
3148
ADVANCES IN RATES BY CARRIERS.
Mr. IvES. I think so. Of course, there are certain commodities.
I can not look far enough ahead in the future to think they would
ever be taken out of the commodity lists, but I should certainly advo-
cate reducing them very largely.
Commissioner LANE. Give me an instance of a commodity which,
in your imagination, would stand being put in the classification.
Mr. IVES. Take lumber. Conditions are such that lumber does
move in classification in some territory now. But in other territories
the classification of lumber would be so high it would not move. It
can move on class rates in some territories and it can not in other
territories.
Now, unless you could change your class rates to conform to that
adjustment, you can readily see that you could not put lumber into
the classification and cancel all the commodity rates without a
wrench either up or down.
Commissioner LANE. You can extend a number of your class rates
down and you could make the classification which would include
lumber, could you not?
Mr. IVES. Yc. But take lumber moving under the central traffic
territory, which is quite largely on the sixth-class rate. Suppose
they were eighth, tenth, twelfth, and fifteenth classes. It does not
make any difference. It would bear, presumably, the same relation
to other rates in that territory that it would in New England, where
to a great extent the class rate would prevent the movement of the
lumber, and on a. good many of the longer hauls.
Mr. BRANDEIS. Is there anything you care to say on the increases
in classification rates since 1900?
Mr. IvEs. I think nothing further than I have said.
Mr. BRANDEIS. Now, have you anything to Jay on the question of
possible economies in railroad operation, in addition to what has
been said ?
Mr. IVES. I think not.
Mr. BRANDETS. Is there any other point on which you feel you can
throw any light for the commission?
Mr. Iv:s. I think not.
Commissioner CLEMEN'rS. A good deal has been said about the
abolition of rebates. Is it your observation that they have in fact
been abolished, or are there some now?
Mr. IVES. That rebates have been abolished?
Commissioner CLEMENTS. Yes.
Mr. IVES. I firmly believe so; yes, sir. I do not. know of a single
case, and have no slIsl)icions of any cases where rebates are paid.
Commissioner CLARK. 1)o you agree with statements that have
been made as to the extent of the rebates when they did prevail?
Mr. IvEs. As to 35 and 40 per cent, and so on?
Commissioner CrARK~. Yes.
Mr. IvEs. les.
Commissioner COCKRELL. Did all the shippers get the benefit of
them?
Mr. IvEs. N!4o, sir-well, I am not omniscient; I could not tell
that, whether they did or not. They did not all on the roads I was
connected with. [Laughter.] I nam sorry to say, because I should
have liked to give them all the same. LLaughter.]
3149
ADVANCES IN RATES BY CARRERS.
Commissioner CoCKRELL. So that the percentage would not apply,
then, to all tranlsportation?
Mr. IVES. Certainly not.
The CHAIRMAN. Are you able to make any competent estimate of
the percentage to gross revenues to which rebates amount? In other
words, did the railroads collect 75 per cent of what they would have
received if full tariff rates had been charged in all cases, or 60 per
cent or 80 per cent or 90 per cent ?
AMr. IVES. I think that would differ very largely on different roads,
and I should not say I could make any competent estimate there of
all roads or of any one road.
The CHAIRMAN. Could you make any estimate of the roads with
which you were connected at the time?
MIr. IvEs. On the C., B. & Q. for the last three years I was with it,
as far as I was concerned, there was not a rebate paid on interstate
business. Passes were given to influence business and business was
influenced indirectly through concessions on State business to some
extent. Prior to that time they were paid very largely, and the
wary the C., B. & Q. was divided up into sections it would not be
possible for me to make any rough estimate, anything more than a
very rough estimate.
commissioner LANE. We had some testimony in the western case
by traffic managers that probably between 3& and 5 per cent of the
total revenues went for rebates. .[ think one of the witnesses testified
as low as 2 to the total amount. An estimate was given to me by the
director of one of the large railroad systems that it amounted to
about $60,000,000 a year, approximately. I figured on a 2 per cent
basis with $2,000,000,000 revenue. That would be $40,000,000. Per-
haps somewhere between $40,000,000 and $60,000,000 might be right.
Mir. IvEs. Is that a question.?
Commissioner LANE. Yes.
Mf r. IVES. I really have not any idea, Mr. Lane. I mean it would
be, a puire guess.
Commissioner LANE. You do not mean to say, when you say that
all rebating has stopped, that there is still no preference given out of
the rate?
Mr. IVES. I mean this: I have attended a great many meetings of
railway men, of the higher traffic officials, and up to the last year or
two, when I left the service, and if ever an impression was derived
of the sincerity of men in any walk of life in the intention to do a
certain thing it was the impression I received from the sincerity of
the railway men in their intention to absolutely discontinue all Ipref-
crences, either bv rebates or any other method. I do not mean to say
that some did not exist. There were a great many that did exist,
which were discussed, and they were anxious to get rid of. But,; I do
not think the railway men as a rule, in any except the rarest excep-
tions, are making any preferences which they can avoid.
Mr. BRANDEIS. To-day?
Mr. DIES. To-day.
The CHAIRMAN. That is, the preferences which exist to-day are in
the tariffs themselves?
Mr. IEs. Oh1, absolutely.
3150
ADVANCES IN RATES BY CARRIERS.     pp. 3151-3155


The CHAIRtMAN. And that the instances in which there is any se-
cret departure from tariff provisions are infrequent and unimportant
relatively? I
Mr. IvEs. W'hy, I should go further and say they must be acci-
dental. I can not imagine any man so reckless or careless of the
good opinion of his fellow-men as to do that to-day. I should like
to call attention, now that you have mentioned rebates, to one very
important effect that the rebate practice had which, in my opinion,
was much more far-reaching than anything else; that is, it ex-
tended itself into the future much more even than the discrimina.-
tions resulting from the praADVANCES IN RATES BY CARRIERS.
The CHAIRtMAN. And that the instances in which there is any se-
cret departure from tariff provisions are infrequent and unimportant
relatively? I
Mr. IvEs. W'hy, I should go further and say they must be acci-
dental. I can not imagine any man so reckless or careless of the
good opinion of his fellow-men as to do that to-day. I should like
to call attention, now that you have mentioned rebates, to one very
important effect that the rebate practice had which, in my opinion,
was much more far-reaching than anything else; that is, it ex-
tended itself into the future much more even than the discrimina.-
tions resulting from the practice while it was going on. That is
the fact, that it had a tendency to prevent the correction of freight-
rate adjustments as the necessity for them arose. Personally, myself,
and I have no doubt that other railroad men here will recall many in-
stances in the past when a proposition was made to make a general
advance in rates which was opposed by certain districts. It was
admittedly unfair to that district. It was taken care of by paying
rebates to that ship per and giving him the old basis and letting the
other fellows get the advance. In other words, an incorrect and
unfair adjustment was perpetuated, and in scnre cases increased,
because you could always relax it through these methods.
Commissioner LANE. That is to say, you used the rate as a soi't
of list price, with a percentage off ?
Mr. IvEs. That is not what I meant. I did not mean in that case
to refer to the general practice. That was very true in a great many
of the staple commodities, I will admit. But that was not what I
was trying to say at that minute. I was trying to say what I will
illustrate by taking an impossible case: The rates to Kansas City
and St. Joe are the same, and have always been. The rate to St.
Joe is made higher than Kansas City, and everybody admitted it
ought to be made the same as Kansas City, but all the railroad men
felt it might mean a disastrous rate war. So that the thing was
equalized for many years by paying rebates to about everybody in
St. Joe down to the Kansas City rate. That is an absolutely imagi-
nary case; it is not true, and I have mentioned it for that purpose,
to ive yOu an illustration of what I mean.
Commissioner LANE. There could not be a lighterage allowance
or anything of that kind to bring about an adjustment, could there?
Mr. IvEs. To-day, you mean?
Commissioner LANE; Yes.
Air. IVES. I do not think so, after the experience in New York and
Philadelphia.
Mr. BRANDEIS. Is it not a fact, then, that the abolition of rebates
really intensified the injustice and actual inequalities of the existing
cases, because it removed the ability to relieve a particular situation
by virtue of a rebate?
Mr. IvEs. Yes, to my mind.
Mr. LYON. That was the question I wanted to ask you. You speak
of the St. Joe situation as to what was done under the olden time-
Mr. Ivis (interposing). I specifically said that was an impossible
case.
Mr. LYON. I understand, using it as an illustrative case only.
You said that formerly they would equalize the situation to St. Joe
3151
ADVANCES IN RATES BY CARRIERS.
by rebates in order that St. Joe might get the benefit of the lower
rate. What is done now?
Mr. IVEs. That is not just what I said. I said Supposing the rate
to St. Joe is higher than to Kansas City, and it was admittd it ought
to be the same, and it was also felt by the railroad men that the
making of it the same might cause a disastrous rate war; that in
order to overcome that situation and protect St. Joe they did it by
paying rebates to about everybody in the. town for a while.
Mr. LYON. But what is done now in such a case as that? You can
not just correct it by giving a rebate to St. Joe now. What would be
done now?
Mr. IV'Es. I think a formal complaint should be made to the com-
mission.
Mr. LYON. That is, St. Joe would have to bring a formal com-
plaint?
Mr. IVES. Unless the railroads fixed it without. They often do.
Mr. LYON. Is it a result of the old-time practice compared with
the present time by which those adjustments were brought about, as
you said, by the rebate system, and now when they agree upon the ad-
vanced rates the carriers are in the position where they can not vio-
late their agreements except by publishing it in the tariffs. That is
true ?
MAr. IVES. If I understand your question, you ask me simply a
question that is a legal fact, do you not?
Mr. Lyom. It is not more a legal fact than it was formerly. It
was against the law in both cases. You say now they accompTish it
by publishing in the tariff, if at all?
Mr. IvEs. Yes; in my opinion.
Mr. LYON. In regard to your statement about the rebates, have the
rates been reduced openly--that is, through the published tariffs-to
special industries more under the new order of things than under
the old order, or have you any conclusion on that subject?
Mr. IVES. I should say not.
Mr. LYON. Then the specialized industries are not favored by an
open published commodity rate?
Mr. IVES. There has been a great deal of talk about the sugar rate,
for instance. Personally, if that is done to favor the large indus-
tries it must be done by higher officials than those I ever had ammy-
thing to do with, because I believe that those officials with whom I
conferred were honestly anxious to see the sugar rate restored and
advanced to a proper share of the burden. That is one example.
Mr. LYON. If those large industries are securing a lower published
rate-that is, taken out of the classification and given a commodity
rate--would that imply to your mind it was done with the same pur-
pose in view as the old rebate system?
Mr. IEms. It would not necessarily. I do not believe there is any
intention to violate the law.
Mr. LYON. Would such a case as that suggest itself to youi
Mr. IVES. If there is, it is above and beyond the men I know.
Mr. LYON. You made a. statement about the rates not being raised
,in this 250-mile territory on account of some statements made by
Mr. Baer. What was your information on that?
Mr. IVES. 1 think I stated in answer to a question of Mr. Brandeis
that I thought Mr. Baer did not allow the rates to be advanced on
3152
ADVANCES IN RATES BY CARRIERS.
the Reading road because he thought they were high enough. That
was his position as I understood him to take it.
Mr. LYON. From what source did you get your information? I
would like to know something definite about it, if you do not object
to disclosing it. Is it just a rumor?
Mr. IvEs. No, it was not a rumor; but I do not know that it is
proper for me to quote it.
Mr. LYON. You do not need to state it. I wanted to know if it
was definit.3 enough
Mr. IVES (interposing). It was very positive. I had no idea there
was any special significance attached to it when I said it.
Mr. LYON. That is a question to be determined later.
Mr. IVES. I mean I was not trying to make a sensation by saying it.
I had no idea of making it. I thought it was commonly understood.
Mr. LYON. We were of the impression here from the testimony of
Mr. Thayer it was based on the relation of rates.
Mr. IVES. I also stated I thought the Pennsylvania road was en-
tirely sympathetic with the Reading road in that position, and that
means it was on account of the relation of rates.
Mr. LYON. That the rates were high enough?
Mr. IVES. Yes, sir; high enough. That, however, is merely my
opinion.
Mr. LYON. You have given your opinion about rates, and I would
like to ask this question: In case some of the carriers here before the
commission should show reasonable returns, show their financial con-
dition is not at least one of distress, is there any way of remedying
this matter other than raising all of the through rates?
Mr. IvEs. You mean is there any other way of getting revenue
from freight and passenger business?
Mr. LYON. Suppose one road needs $2,000,000 and they really
need it for purposes of properly operating their road in the public
interest, and there is another road competing between the same points
that does not need it from a. financial standpoint so far as the record
will show. Is there any way of meeting that situation other than
raising the through rates?
Mr. IVES. Unless they could at the same time advance their local
rates if they were low.
Mr. LYON. Is it feasible to advance local rates on one line in that
situation ?
Mr. IVES. Oh, no; they would have to do it at the same time.
Mr. LYON. All-the roads in the State would have to advance?
Mr. IVES. Assuming the conditions are the same, I should say so.
You have a typical illustration of that in Illinois in the class rates.
Mr. LYON. Would it be impracticable to have one line raise the
rates on one article and another line the rates on another article
locally?
Mr. IVES. Not on the game commodity.
Mr. LYON. On the same commodity.
Mr. IvEs. I should say not. It depends on what the commodity
is and if the commodity moves in large quantities, I should say not.
Mr. LYON. What would be the effect of a higher rate on first class
on one road than another between a local point?
Mr. IVES. You means across country?
3158
ADVANCES IN RATES BY CAIRRIEBS.
Mr. LYON. Between
Mr. IvEs (interposing). Between Station A here and Station B
here?
Mr. LYON. Yes; stations local to the line.
Mr. IVES. A slight difference often does exist across country and it
depends largely on the topography of the country. My theory is
that if each station is equally accessible to the intermediate country,
the station with the lower rate will ultimately take away the busi-
ness from the station opposite. Of course I have had a great deal of
experience with that out in the far WVest where we lined our rates up.
Our rates were very high and a slight difference there might mean
5 cents a hundred. We always tried to line our rates up to places
3sonvtimes 40 miles away-to make the same rates and grade them
along just the same. That. was one of the reasons fir that "old row
of bricks " expression.
Mr. LYON. Is it lpractical to remedy this matter in any way except
by raising these through rates, if revenue is needed by a particular
line?
Mr. IvES. It is entirely practical to raise local rates.
Air. LYON. I thought you said that would be impracticable.
Mr. IVES. For one road to do it and not the other.
Mr. LYON. I say for one road to do it and not the other.
Mr. IvES. I should say it was impracticable to do it to any extent.
Mr. LYON. Where one road does not need the money-I mean its
financial condition does not show the need of increased rates-is it
impracticable for the other line, paralleling it, which does need the
money, to raise the revenue through its local rates?
Mri. IVES. I consider it so.
Mr. LYON. You consider it impracticable?
Mr. IVES. Yes. You are speaking of roads in open country?
Mr. LYON. Yes.
Mr. IvEs. I should consider it so.
Mr. BRANDEIS. 'Where they are all strictly competitive?
Mr. IVES. Yes. There might be a range of mountains between
them. That would make the situation different.
Commissioner CLARK. Do you agree with the statement that has
been iiiade as to class rates that were not affected, that on that traffic
they collected the tariff rates and adjusted the commodity rates on
the old settlement basis, to a large extent?
Mrl. IVES. That, I believe, was testified to by Mr. Thayer and re-
ferred particularly to the conditions on his road. I can not say of
my own knowledge that that was done to a very large extent. I
know it was done on some articles.
Commissioner LANE. When you made rates, to what extent were
those rates made out of consideration for the weaker road?
Mr. IVES. Well, they were very apt to be made not out of consid-
eration for the weaker road, but because the weaker road forced
them. The weaker road was very apt to be the road that made the
lowest rate.
Commissioner LANE. Then, the making of rates, so far as you
knew it, was in the cutting of rates and not in the raising of them?
Mr. IVES. Well, a rate could not be raised by one road, but a rate
could be reduced by one road.
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ADVANCES IN RATES BY CARRIERS.
Commissioner LANE. In your consultation and consideration of the
questions-the question of increasing rates-to what extent did rail-
road men feel that their sympathies should be allowed to control ill
the making of the rates, and because their sympathies were w'ith the
line that was not as well managed as the others raised the rate so
as to give him a chance to get in out of the wet?
Mr. IvES. As far as my recollection goes, I never heard that sub-
ject discussed while I was in the railroad business. [ laughterr]
Commissioner LANE. You represented a rather weak road, did you
not, for a good while?
Mr. IvES. The WVlabash? Why, rather; yes.
Commissioner LANE. Did you ever find in making rates and con-
sulting together with these traffic men that when you snaid, " We
have got to have more revenues and we would like to raise some of
these rates," that the railroad men representing other and stronger
roads agreed with you onl that and raised the rates so that you could
get more revenlle and become stronger?
Mr. IVES. I do not think I ever made that proposition to anyone.
I do not recall it. I recall making considerable effort myself to get
certain rates advanced and in some cases it so happened that tl~e
strongest roads opposed it. I do not think their object, however, wIS
to keep the Wrabash poor. I do not think that occurred to them. I
think they simply did not sympathize with the particular movement.
I do not think there is any question but that in the past the stronger
roads-in what might he called the cut-throat days-mnade low rates
andI forced them down the throats of the weaker ones-in the more
remote past.
Commissioner LANE. But the question is whether the strong roads
made high rates out of sympathy for the little fellow.
Mlr. IVES. Out of sympathy?
Commissioner LANE. Yes.
Mr. IVES. I never heard of it. [Laughter.] We were not con-
sidered a little fellow, or very weak, oni the Wl;abash. Wle, had a. long,
straight line, and a fairly good road.
Commissioner LANE. The last question did not have reference to
you.
All'. IVES. Oh, ves.
ComnlissiOner TLANE. I have been trying to find out how the rail-
roads were going to be assured of this advance(] revenue. There' is; no
agreement or guaranty that can be given that a road between New
York and Chicago which participates ill this increase will star with
the increase long enough to make up this deficit. How is thlart?
MTvr. IvXs. I should be willing to insure it if it is done, but I could
nlot tell youi hTow it is done. f 1Laughter.]
Commissioner LANE. You thillk it is something psychological I
suppose?
Mr. IVES. Yes; I think that is it; that is the best explanation.
The CHAIRMAN. I suppose counsel for the carriers will desire to
interrogate Mr. Ives, by way of cross-examination?
Mr. BUTERFIELD. I Will not care to.
Mr. CLYDE BROWN. Before you suspend, I would like to make a
suggestion with respect to the date of the argument in this case.
At the conclusion of testimony, at the hearing in October, it waS
70932-S. Doc. 725, 61-3, vol 5 13
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