ttestimony taken Miller; Lawrence

Prophets of regulation: Charles Francis Adams, Louis D. Brandeis, James M ... By Thomas K. McCraw

     "The content of the rate recommendations revealed Adams preoccupation with aggregate economic growth.  He emphasized, for example, a form of what economists later called the multiplier effect:

In making any reduction, whether in freight or fares, we would therefore suggest to you [Massachusetts railroad presidents] the propriety of strongly favoring certain commodities in general use along the line of the road, and, by so doing, strongly stimulate development, rather than neutralize the whole effect of any concessions you may make by dividing it among too many objects.  Take for instance coal . . . a primary raw material in all manufacturing industry.  Cheap coal is cheap power; and cheap power is cheap manufacturing.  A reduction of five per cent. throughout the charges of tariff would scarcely produce an appreciable effect on the consumption of anything; a tariff, unchanged in numerous other respects, which gave a reduction of fifty per cent. on the cost of carrying coal, would at once communicate an impetus to every branch of industry dependent on power.
V. 5 pp. 3233

The CHAIRMAN. 'Whom will you call next?
Mr. BRANDEIS. I will call Guy T. Miller, of Bridgeport, Conn.
Guy T. MILLER, called as a witness on behalf of the shipping inter-
ests, being first duly sworn, testified as follows:
Direct examination by Mr. Louis D. BRANDEIS:
Mr. BRANDEIS. Mr. Miller, you are treasurer of the Bridgeport
Brass Co.?
Mr. MILLER. Yes, sir.
Mr. BRANDEIS. And your business or the general character of your
business is what?
Mr. MILLER. We are manufacturers of brass and copper-sheet,
rod, wire, and tubing, and we manufacture such goods as lanterns,
pumps, and articles of that kind in great variety.
Mr. BRANDEIS. And, roughly speaking, the aggregate of your sales?
Mr. MILLER. About $4,000,000.
Mr. BRANDEIS. You do business in the territory especially affected
by the proposed increases in rates?
Mr. MILLER. Yes, sir.
Mr. BRANDEIS. Do you do business in those territories in competi-
tion with any other companies?
Mr. MILLER. We do. Our principal competition in the West is
from Detroit and Kenosha, Wis.
Mr. BRANDEIS. Will you state to the commission in what way, in
your opinion, the proposed increases in rates will affect seriously the
business of yourself and of others similarly situated on the Atlantic
Mr. MILLER. The most serious part of our position is the restric-
tion of the territory in which we can ship. The percentage of profit
is so small on that class of material which I have spoken of, which we
call raw material-sheet, rod, wire, and tubing-that we are now re-
stricted to a very considerable extent, and we refuse business every
day on the basis that the distance is too far or the freight rate is too
great, and we only take business with the maximum freight rate when
we have not enough other business to run our establishment at full
capacity. The increasing of these freight rates will narrow very
materially the limits of the shipments of our products.
Mr. BRANDEIS. How large, on that class of products to which you
refer now, is the difference between the cost of the raw material to you
and the selling prices at which you sell the brass sheeting, and so
forth, made from that material?
Mr. MILLER. The cost of raw material is over 80 per cent. For
instance, on sheet brass, No. 1, the price to-day is 13 or 14 cents per
pound, and the mixture cost is 2A cents less than that; so that out of
that 2j cents the manufacturer has to pay the freight, and he has to
pay the boxing and all his other overhead expenses and manufac-
turing expenses.
Mr. BRANDEIS. That is, all the manufacturing expenses and labor
and the incidental expenses, the transportation expenses, and every-
Mr. MILLER. Yes sir.
Mr. BRANDEIS. They all have to be borne out of that 2j cents
Mr. MILLER. Yes, sir.
Mr. BRANDEIS. Of that 2A cents, at the present time what does the
freight consume?
Mr. MILLER. We paid last year in freights $472000, which is an
average of something over 30 cents per hundredweight on our prod-
ucts. That is simply on outgoing shipments. That does not include
any freight on incoming shipments whatever.
Mir. BRANDEIS. That covers the freight over all territory, near as
well as distant?
AMI. BRANDEIS. W1rhat is the freight on this outgoing product-this
particularly affected territory-that is, west of Buffalo, Buffalo to
Chicago and St. Louis territory? What is the freight rate per
pound? How does it run per pound?
Mr. MIrLER. The percentage of our business west of Pittsburg and
Buffalo is in the neighborhood of 15 per cent.
Mr. BRANDEIS. What part of the 2j cents would be taken up to pay
the freight oii that class of business?
AIr. MILLER. I do not know that I can tell you exactly what the
average ' would be, but it would be probably in the neighborhood of
four-tenths of a cent. per pound.

Mr'. BRANDEIS. What would be the effect of this increase of 20 per
cent, for it is a 20 per cent increase is it not?
AIr. BRANDEIS. You sell in less than carload lots?
Mr. AMILLER. All of oUr raw material is shipped under the third
class and our manufactured goods go first class.
Mlr. BANDETS. You mean bY raw material " what? It is not
really raw material?
Mlr. MILLER. I nean sheet, rods, and wire.
AMr. BR31NI)EIS. You distinguish between the two classes of manu-
factur ed goods?
AMr. MILLER. Yes; we distinguish between the two classes of manu-
factured goods.
Mr. BRANDEIS. That is, such as are manufactured into articles in
the latter process and such as are in the earlier process manufactured
like sheets and rods and wires?
Air. MIlrLER. Yes, sir.
Mr. BRANDEIS. That is shipped under third class and the other
under first class?
Mir. MIL.LER. Yes, sir.
Mr. BRANDEIS. Those are subject to the 20 per cent increase?
Mr. MILLER. Yes, sir.
Ml. BRANDEIS. What is the specific effect of that in your business?
Mr. MILLER. The effect would be to limit the distance to which we
could Ship) at a prIofit.
Mr. BRANDETS. And eliminate you from a portion of that territory?
Alr. MILLER. F'roiii certain territory; yes.
Mr. BRANDEIS. Would or would not, so far as that territory is con-
cerned, the imposition of this rate reduce the gross revenue of the
railroads on your class of business?
Mr. MILLER. That is rather a hard thing to say. I think, as
nearly as I can tell, the result to the railroad would be a less amount
of money paid to then by our company for freight than we pay now.
It would have the result of increasing the competition very ma-
terially in the territory in which we could do business, as the facili-
ties in our line of business, or a large part of the facilities in our
neighborhood what is known as Northcutt Valley, in Connecticut,
would be too large an amount of facilities for a period of time for
the territory in which shipments could be made profitably, which
would result in disastrous competition.
Mr. BRANDEIS. Welre You consulted by the railroads as to the ef-
fect that this proposed increase would have upon your business?
Mr. MILLER. No, sir.
Mr. BRANDEIS. Do you know whether any of the other manu-
facturers in your line, similarly situated, were consulted by the rail-
roads before they asked for this advance?
M'r. MILLER. No, sir; not to my knowledge.
Mr. BRA'NDEIS. As to the effect this Would have on their business?
Mr. MILLER. Not to nmy knowledge.
Mr. BRANDEIs. That is all.
Cross-examination by Mr. FitANK LYON:
Mr. LYON. How is the price of your manufactured product? Has
that advanced in recent years?
Mr. MILLER. No, sir; the margin is less in the last two years on the
flat class of material than formerly. W11hen I speak of margin, I
mean the difference between the cost of the raw materia-l, of the cop-
per and spelter in the brass, and the selling price of the article. That
is due to extreme competition.
Mr. LYON. Regardless of the question of whether the margin is
less, has the price to the consumer from you been reduced?
Mr. MuLtER. The prices in comparison with cost of raw material
are less.
Commissioner COOKRIELL. What was the cost of the raw material?
Mr. MIrLEIn. For instance, copper to-day is selling at 13 cents a
pound, and in 1907 it sold at 25 and 26 cents a pound, so that to-day
the cost to the consumer is less than it was then-very materially,
But that is the principal factor in the selling price of those articles
the market price of copper.
MIr. LYON. You mean, by that, where your raw material has de-
creased in price, the consumer has reaped the benefit of that by a
reduction in price?
Mr. MILLER. Yes.
Mr. LYON. And also the margin that you say would come to you
has been decreased?
Mr. MILLER. Yes.
Mr. LYON. In other words, your manufacturing cost has decreased
in the last two years?
Mr. MILLER. Yes, sir.
Mr. LYON. I suppose there has been the usual advance in wages
in your business, as in other manufacturing concerns?
70932-S. I)oc. 725, 61-3, vol 5--18
MIr. MILLER. Yes, sir.
Mr. LYON. That is all.
Redirect examination by Mr. BRANDEIS:
Mr. BRANDEIS. You said in your judgment. the total revenue of the
railroads from your business would be less as a result of this increase,
by curtailing the market. That is due in part, is it not, to the fact
that your material-the original raw material-all comes from long
distances to you?
MIr. MILTER. That would
1 affect it; yes, sit'.
AMr. BRANDEIS. And if your business had curtailed, they lose not
onlv in the business which you send west, but they lose also in the
business that does not come east to you?
Air. MILLER. Yes, sir; that would be true.
'Mr. BRANDEIS. How important is that business that you are doing?
How large is the volume? How large is the traffic in that general
line of business which is done in your valley?
Mr. MILLER.loow much is the entire business?
Mr. BRANDEIS. Ynes; what is the amount of it altogether?
MILI.:1r. I sIiould say the business in our line in our valley was
at least $60,000,000.
Mr. BRANDEIS. $60,000,000?
Mr. MILLER. Yes.
Mr. BRANDEIS. And, of course, being a metal business, the amount
carried pCer car is very large?
Mr. MILLER. Our shipments are mostly less than carload lots.
Mr. BRANDEIS. HOw is it about shipments you receive?
AIr. MILLER. Thev are nearly, all in carload lots.
AIr. BRANDEIS. What is the number of employees in your business?
Mfr. MILTLER. The total busines'?
Mr. BRANDEIS. Yes; that represented by the $60,000,000 of which
you spoke.
Mr. MILLER. I could not tell you.
Air. BRANDErs. How many employees has your company?
Mr. MILLER. W\Te have 1,500.
Mr. BRANDnEIs. And you estimate your business represents about
one-fifth, perhaps, of the whole?
Mr. MILLER. It is a small part of the total.
Mr. LYON. MIr. Miller, you spoke about the margin being less be-
tween raw material and selling price. Is that due to the fact. that
your concern is satisfied with less profit, or due to the fact that you
have reduced the cost of manufacture, or both?
Mr. MILLER. It is due really to neither. It is due to extreme com-
petition. It is due to the fact that we haVe to keep our facilities
occupied, and we are obliged to take some business at cost rather than
to have the facilities unoccupied.
AIr. LYON. You mean that the cost of manufacture of that product
has not decreased?
Mr. MILLER. The cost of some lines has increased on account of in-
creases in the cost of labor, but in other lines of product there have
been advances made in cost reductions which have offset that.
Mr. LYON. Some of then have been cost advances and others cost
Mr. LYON. Due sometimes to wages? The reductions were not due
to reductions of wages?
Mr. LYON. Were they due( to more efficient machinery?
Mr. MILLER. Yes; more efficient machinery and manufacture.
Cross-examination by Mr. 0. E. BUTTrrFIFIELD:
ArI. B3UTTrERFIELD. Do you know whether there has been any change
in classification of your output-in the last five years?
Mr. MILLER. Not that I know of, sir.
M r. BUTrERFIuLD. Would you know if there had been in the last
five years?
M~r. M11ILLER. It would probably have been brought to my attention.
Mlr. BUTrERFIELD. That is all.
Time CHAIRMAN. That seems to be all, Mr. Miller; you may be
(Witness excused.)3237

JOHN S. LAWRENCE, called as a witness on behalf of the shipping
interests, being first duly sworn, testified as follows:
Direct examination by Mr. Louis D. BRANDEIS:
Mr. BRANDEIS. What is your business?
Mr. LAWRENCE. Merchant; dry-goods merchant.
Mr. BRANDEIS. Your firm?
Mr.LAWRENCE. The firm of Lawrence & Co., with headquarters at
Boston and New York and west.
Mr. BRANDEIS. What is the general character of your business?
Alr. LAWRENCE. The general character of our business is the busi-
ness of commission merchants; in fact, the selling department of the
textile mills in New England.
AMr. BRANDIES. How many mills do you represent?
Mr. LAWRENCE. Five or six of the largest mills.
Mr. BRANDIES. What is the output, in dollars, of these mills?
Mr. JAWRENCE. Something over $25,000,000.
Mr. BRANDIES. What is the number of employees?
Air. LAWRENCE. I am sorry I have not got that, Mr. Brandeis.
Mr. BRANDI:rS. Can you state it approximately?
Mr. LAWRE.ICE. I should not care to guess at it. It is a matter of
record. I could get it and send it to you, if you want it.
Mr. BRANDEIS. Will you state in what respect and in what man-
ner the proposed increase of rates will effect the business that you
represent ?
Ir. LAWRENCE. Will you pardon me, if I wind myself up right
Mr. BRANDEIS, Go ahead.
Mr. LAWRENCE. Last summer, when this advance was put in effect
or was suggested, I, together. with a number of others, went to
New York and met the railroad people in an attempt to explain to
them the situation as these advances would affect us. Being closely
associated with the railroads and considering the size of the business
we were interested in, we felt we could explain to them how this
change would affect us and our business, and them, and that they
would take the matter under consideration and probably revise their
suggestions. Practically, the reply was, "Come to the Interstate
Commerce Commission and tell them." And that is why I am here.
First, I want to state that the textile industry is one of the three
greatest industries in this country; the iron and steel and the
food products being the others. I have no accurate data, but I
believe about one-half of that industry is located in New England,
and it has been operating there for over 100 years. I believe we are
the largest shippers of cotton goods. I am quite sure we are for
New England. Our tonnage amounts to about, as estimated,
26,000,000 tons, distributed over the affected area, or a cost of about
$350,000, and these proposed rate increases amount to about $70,000
in addition.
I want to call your attention to the changed conditions in the textile
industry. When the industry first began in this country it had a
monopoly of location. Some 25 odd years ago the industry developed
in the South, and the natural result was the movement of the lower
grades to the South, where they were made more economically on ac-
count of labor conditions. That has been practically the limit of
growth. of the industry so far as the section matter is concerned.
The industry has continued growing in New England.
Recently there has been a start to develop that industry in the
West. There have been hosiery mills of all kinds organized all over
the country. There is a bleachery in process of construction now in
St. Louis, and the conditions which originally governed our industry
in New England, which were to the effect that they could afford to
pay almost any rate because they had a monopoly of location, have
now changed, and we must get down to hard pan or lose the business
we are giving to the railroads and localize ourselves.
During the past 11 years, taking it from 1899, the freight rates
have advanced about 37 per cent, plus what rebates were given. I am
not aware of what the rebates were, and it is a matter that has not
been particularly interesting to me; but we all know there was a re-
bate in those days, and that the withdrawal of the rebates was prac-
tically at once. The increase was 37 per cent on the published rates.
If tile new increase, as suggested, goes into effect, it will make 73 per
cent advance in the last 12 years.
Commissioner PRoM. To what points?
Mr. LAwRENCE. I am taking as the basis of this the rate to Chi-
cago, and I think that is a fair criterion.
In taking these figures I have used the differential lake and rail
for the reason that 75 per cent of our merchandise goes west over the
differential lines in this territory.
That leads me to say that the actual advance figures 25 per cent
over this differential lake and rail route, where, as I said, 75 per cent
of our goods is used.
I tried to compute the value of the freight, the percentage of value
-of the freight to the commodity, in order that I might try to show
how it compared with the situation of the manufacturer in some other
section. Take, for instance, cheap hosiery that -sells for 10 or 12j
cents a pair, the percentage of the freight to the value of that com-
modity is 4.9 per cent. A 5 per cent profit on gross sales is a rea-
sonable profit. - Therefore the manufacturer mn Omaha or near
Omaha of that grade of hosiery would be able to manufacture goods
at a reasonable profit, while the mill in New England would not be
able to do so. There are 1,079 hosiery mills in the United States,
and they are distributed pretty generally over the country.
Take, for instance, the matter of printed goods that are principally
manufactured and converted in New England. It costs 16.9 or prac-
tically 17 per cent of the value received by the printer to get these
goods into Omaha from New England. A plant running on that
grade of goods ought to turn its sales over some 10 times a year.
To get the goods of a bleachery from New England to Omaha runs
as high as 41j per cent of the value that the bleacher gets out of his
merchandise. That is why this bleachery is being constructed in St.
Louis, and it is being constructed now because science has just made
it possible to use water from that section of the country to properly
absorb the dye liquors and get the desired results. The principal
reason for the existence of that plant to-day is the lower freight rates
that they will get by converting standard products, when they have
a large market out there, to be able to earn a profit with economy.
My claim is this: It is necessary to keep this tonnage moving from
New England out to the West for the sake of the railroad earnings.
There are empty cars going west, and it is this great tonnage that is
the greatest help in filling up those cars. Our raw materials come
to a great extent by tidewater, and the loss of this business going west
would simply mean the increase of the number of empty cars going
out to those sections.
I regard railroad rates as very similar to taxation. The' roblem
seems to be how to distribute the cost of operation among the users
of a railroad and have prosperity all around.
These railroads have suggested, as a means of getting more revenue,
a method of advancing certain rates 20 per cent, it being the easiest
way, apparently, to get that result.
When we have a line of merchandise that has to be advanced for
one reason or another, we first have to find what will happen to it
when it is advanced, and as usual with our class of business, an article
is made for a fixed retail price, and when it is advanced beyond that
it reduces its sales, and therefore some substitute has to be provided.
The tariff board found, in framing the tariff, that when they got
the rates beyond a certain point goods no longer came in the coun-
try, the Government no longer received revenue. It is the same way
with the railroads. It seems to me they have not considered that
beyond a certain point the revenue would decrease on account of
tonnage decreasing.
So 'far I have shown what could not be done. It seems to me
unfair not to show what can be done.
I believe that a reclassification, especially in our line of business, is
most necessary. It is inconceivable to me that in the last 15 odd
years, with all the changes that have come about through this country,
and changes affecting our business and other businesses, the using
of rebates as a method of adjustment-they have now been with-
drawn-that a classification and rearrangeirrnt could not be made with
profit. There are certain goods that have a monopoly of location
to-day. It makes every difference as to the ra, e that those merchants
can carry. I believe other grades of goods cvrmn-t0 w;iith theirs in
the country, and they should profitably carry lower rates. It should
require, in my opinion, a thorough reorganization of the whole fabric
of classification, anid I b)elieNxe it can be donie by sitting down and
workiing iout, if you have got to (lo it.
I believe, that tI e railroads and the public have exactly the same
common interests. The railroads want to keel) the tonnage moving,
and the shippers want to keep the tonnage movlilng also.
COmml~iSSIOner CLEMENTS. Without asking you to go into great
detail on that point, could YOu make an illustiration there as to how
the reclassification. would accomplish what you. think is right and
Mr. LAWIRENCE. I will take an instance. Take a jobber in Chicago
who is buying a high-grade stocking; lie is buying it there from
New Englhnd or Philadelphia, and he buys it in competition from
Germany. In either case those stockings have to cone. over the east-
cern seaboard, and the question of rate that he pays on that stocking
is merely a question of what value lie is going to give to the public.
Commissioner PRoUTr. Are you going to impose a different rate
on at high-grade stocking than on a low-grade stocking?
Mr. LAWVRENCE. I see no reason why you should not.
Commissioner PROUTY. How would you classify that-by value?
Mr. LAWRENCq.. It is a very long and big sllbject.
Commissioner PROUTY. 1D0 YOU make value the basis of your
suggested classification?
AMr. LAWRENCE. I should think more of the construction and gauge.
Commissioner PROUTY. The stocking woven in a certain way should
pay a different price?
Mr. LAWRENCE. It is manifestly unfair that a 50-cent stocking,
where the freight is a very small fraction of its value, should payl
practically the same to-day as a twelve and a half cent stocking,
wNhere the freight rate ruins to a very high percentage of the value.
Commissioner CLEME<NTS. After you got it, it would come nearer
to the fixing of the rate on the value of the article?
MIr. LAWRENCE. It would approach that.
AMr. BRANDEIS. But would you take into consideration the other
elements, namely, the commercial element as to what the b)ulsiness
could bear?
Mr. LAWFRIENCE. T}he samie as any other man does that has business
which is affected by comnl)etition.
Commissioner CLEMENTrS. What would he the thing thlat' has a
practical monopoly that, therefore you think could stand a higher
rate than the stocking that might conie from (Giorimany or other
Mlr. LAWNRN(E. The fact thlat the thing is a mionopoly is just a
qu.estiol. of what price to sell at. in volume.
Comnin-iisioner CLEMENTS. WhAlat would be your illustration of that
thing thd~t has the monopoly?
Mr. LAWRENCE. r said a monopoly of location.
Commissioner CLEMENTFNrs. How would you illustrate that?
Mir. LAWRENCE. I would illustrate that by the fact that. fine stock-
ings are only made in I'hiladelplhia, and apparently can only be
mande there on account of education of the individual.
Mr. BRANDEIS. YO11 Stated thlat you thought the question of a
change in rate ought to l)e the suI)jeCt of discussion and consideration
between the two )pai'ties interested or immediately interested, tihe rail-
road and the manufacturer. h1as there been such consideration be-
tween you and the railroads, or between your trade anld the railroads,
before this rate was (deCid(ed lp)on?
Mr. LAWRENcF,. That is a pointt I meant to bring out. About a
year ago this ilnatter was suggested by the New H-Iaveni Railroad, and
one of the officials canie to see mne an(l said, " W\e want to get more
money. Can't we get inore from your merchandise moving to Newt
York? " I explained the situation and how it would affect us, andl
lhe said: "I 3ee perfectly we ctan not get. more money from you,
although we have lowered your rates onl these matters in the last
thirCe years." They then lproceeded to procure it in other ways.
TIley )put some of it onl passengers that had been getting extremely
low rates.
Mr. BRANDEIS. W1as there any such consideration in respect to these
tariffs as they now affect the situation?
Mlr. LAWRENC1E. No. The first time I knew of it was my going
(lown and asking, thjelm to talk it over, and thle result was, " Come to
the Interstate Commeirce Comnmissioni and tell them what you have
to say."
Mr. BRANDEIS. Then this interview which you had with them, when
you asked them to talk it over, was after the rates had been settled
Mr. LAWRENCE. After the rates had been settled upon.
Mr. BRANDEIS. After these tariffs had bwen settled upon?
Mr. LAWRENCE. Yes; after these tariffs had been settled upon, and
after they had been enjoined, I think, too, if I reinenember right.
Mr. BRANDEIS. How are thle shipment-s mnaide fromn your territory,
from your mills to the West?
Mr. LAWRENCE. A great inany of the shipments go over the Kana-
wha. Dispatch. Thleyr leave the mill ini Lawrence and go to Boston,
an(l are there put onl b)ard the team and hauled across the congested
portion of our city7 and there reloaded and then taken to Newvport
News alnd west over tile Chlesapeake & Ohlio-I think I anij correct in
that. rhese shipments which go over the Merchants' Dispatch, into
Boston, via the eastern division, are transferred by a forwvarding
agent oIn teams fromll one freightt house, to another, and there go out
over the Pittsburg divisionn west. It certainly is very discouraging to
see so mnuelh teaming in Boston -)f that kind.
AMr. IBRANDMos. It is niot the AMerclhants' Displatch, is it?
Mr. BRiANDEIS. You mentioned the Kanawha Despatch as going the
Other wva y ?
Mr. BRANDEIS. Is that teaming yotu. speak of froin one division of
the Boston & Mlaine to .another division of the Boston &k Mafline, or
from the Boston & Maine down to a steamshliip line-is that teaming
which is Covered by the charge of the railroad, or is it the tesaminig of
the shipper?
Mr. LAWRENCE. That is undertaken by the railroad aind absorbed
in tile through rates.
Mr. BRANDEIS. That is, there is at the present timne no immediate
shipment from one division of the railroad to another division of the
Mr. L1AW%'RENCE. No.
Mr. BRANDEIS. Or fromi railroad to steamship lines?
Mr. 13RANDE1S. D)o yOu think that is e i(lCnce of economy in man-
agemlent ?
We ouil(l not consider it so in our business.
T'he1 CHAIRAN. YOU 11im1de Some statement, which I understood,
recited to the freight rate as it, is presented in your product?
M1i. LAWRE-N-CE. Yes.
110 CHRAIRMAN. I Wanlt to See if I prol)erly followed you. WhN~sat
is t'
, selling price per
p1ould of the cheapest article you handle?
Alr. LAWRENCE. The selling price per pound?
Mr. LAWRENCE. I should say it would run somewhere around from
two to two and a half times the price of the cotton per pound, which
would be twenty-eiglht or thirty o1dd cents.
The CHAIRMAN. Thlirty odd cents?
Mr. LAWRENCE,. That is a guess on my part.
Thre CHAIRMAN. What would be the highest value per pound of
anN' article you sell ?
Mr. LAWRENCE. I nm afraid I could not tell you. It will run up-
I should say $5 a pound. I think I kno7 of One output that will
rin that. We (lo not make very much of that. The making of higli-
grade goods is always in small volume.
The CHA1I.RMAN. Is there a larger prolportionl of thue products you
handle sold at two and a half to three times the price of the raw
Cotton ?
Mr. LAWRENCE. Yes, I should say the majority of the imerchandise.
11he CHAIR1MAN. That would be on what.?
Mr. LAW'RENCE. I refer to prints. I think it, would run about two
to two nnd a. half times the vNalue of the cotton.
Trhe CHAIRMAN. At 90 cents a hund(ed p)ou11n(ls, the all-rail rate to
Chicago, of course, it 'would1)e 9 mills a p)O1und ; thlat would be the
freight ?
The CHAIRMAN. The increase would be about one and a half mills?
Mr. LAWRENCE. Twenty per cent would 1)e a mill and a half.
Thei CHAIR-MAN. Do you know of any other?
M1r. LAWRENCE. Paralon me; let me explain one thing. You are
taking a per cent of the total value. Now, where a girade of goods
may be made out of cotton, may be woven in one inill, it is con-
verted in another mill. The value of a case of )rints is, at an aver-
age, about $1.44. The converted goods $22.90.
The CrIImAiIAN. I had in mind to also ask you whvat the class of
cortnnodities is regarding the freight rate as a tax that pays a lower
percentage on its value or selling price to the consumer?
Mr. LAWRENCE. You mean what class of textiles?
The CHAIRMAN. Of any article.
Air. LAW'RENCE. I am not sufficiently versed in the freight rates on
other articles, and on the value per cubic foot or per square foot, to
answer that question.
The CHAIRMAN. I am only referring to your testimony that the
freight rate is in the nature of a tax-an idea with which I very
strongly sympathize.
MIr. LAWRENCE. I am glad you do.
The CHAIRMAN. You are complaining of the tax that is put on
textile fabrics?
Mr. LAWRENCE. On certain grades of textile fabrics.
The CirAIRMAN. I am asking you what other commodity moving
in any considerable volume, and entering into the ordinary needs of
the, household, pays a lower tax, if any?
Mr. LAWRENCE. I can not consider myself sufficient of an expert
on that subject, unless you refer, possibly, to food pr(xlllcts. Do you?
The CHAIRMAN. I assume they pay a very much higher tax.
Mr. LAWRENcE. I am not a traffic man sufficiently to answer that
The CHAIRMAN. I suppose the man who raises potatoes out in
Michigan pays 20 or 25 per cent of what they sell for to get them
to the market on an average. So, taking it on your own theory,
you are complaining of this tax on your products which you
The CHAIRMAN. That it is relatively too high?
The CHAIRMAN. I am asking you to name any other class of traffic
that pays a less tax?
Mr. LAWRENCE. I stated that I am not sufficiently versed on that,
except that I will say this: That we are contributing toward the
earnings of the railroads by sending a lot of freight. Certainly, if
that freight does not move, it would not be a contribution to those
The CHAIRMAN. I quite appreciate that.
Mir. LAwRENCE. And wh,11et1er it is high or low, whether it is the
lowest, or lower than any other, that same fact may be true.
Mr. BUTrMrFIE:11). In the illustration that the chairman of the com-
mission has used, he has referred to the rate being 75 cents now, and
90 cents proposed, from Boston to Chicago. That is not correct, is
it? That is not the correct rate, is it, on your cotton piece goods?
They do not move as first class, do they?
Mr. LAWRENCE. I believe that is the first class.
Air. BUTTERFIELD. Do cotton piece goods move first class?
Mr. LAWRENCE. Not to my knowledge; unless y
ou know better.
Air. BIUJ'rLEFIELD. You do not know under what class they do
move? i)o I understand yoin correctly?
Mr. LAWRENCE. No; I don't think you do.
Mr. BUTTERFIELD. Well, my question is this: W11hat is the rate at
present on cotton piece goods per 100 pounds from Boston to Chi-
cago, either the standard line or the differential?
Mr. LAWRENCE. The differential rate to-day is 421 cents.
Mr. BU'mETRFELD. That is not first class, is it?
Mr. LAWRENCE. NO, sir; nobody held it was.
Mr. BUTTERFIELD. I understood you to follow the chairman in the
illustration and he assumed that cotton piece goods moved first class
and he arrived at certain figures which I think are far above the
facts, are they not, when account is taken of the fact that they move
under rule 25, upon which the differential rate is now 46, and is only
proposed to be 57, by the Kanawha Dispatch?
Mr. LAWRENCE. I believe mny figures I lhave here, given me by our
traffic department, show that they go from 424 to Chlicago to 53k.
MIr. TlhJrrnfiEU).
That is rail a llll hce?
Mr. LAWRENCE. Tilhat is dispatch, in sunnier time.
Mr. l3UrFERFIE1.D. lre you suIreC of that?
Mr. LAWRENCE. I think so.
MI. B UiYiEiFiEni). It moves un(ler rule 25, instead of first class,
does it not.?
Mr. BUTrrERFIELD). So that would reduce very much, the tax which
results from the calculation suggested b) ihe chairman?
Mr. LAWRENCE. It increases the percentage, may I suggest?
Mr. BUr=ERFIELD). Not only the tax, but the percentage?
Mr. LAWRE NCE. It increases the percentage of increase.
Mr. BUTTIMFIEL.n Yes; but I speak of the percentage to the value
of the goods. Tlhalt is what I understood he was dealing with.
Mr. LAW'REN C.E. Yes.
Mr. Bu'RrinI IEu). Speaking of the cotton piece goods; is that the
great volume of the output of these mills that you handle?
AMr. ,AWRENCE. Cotton piece goods?
Mr. BurriTERFJELl). Does it come under that head of cotton piece
gools ?
Arf. LtAWRREN(E. Yes.
Mr. 13uarnwIETL.D. That is the great volume, both in tonnage and
Mr. BU'rrERF1E;Ln. YroYU, as I understand it, a-re not a manufacturer?
Mr. LAWRENcE. Not in Lawrence &-, Co., n1o.
Mri. Bua-rEltEuri). That is what I mean. You are representing,
here, a selling agency?
Ali. LAWRENCE. That is What I am.
Mr. BUTITERFIEJi). And, talkinlg cotton liece goods, the print goods
to which you hlave referred, in what. form does that come frolin the
Cotton mill?
Arl. LAwiRENCE. In bales, if that, is what you refer to.
Mr. Bu'rll'1IAD. Is it iii the form of rolls of fabric, woven and
unbleached ?
Mr. LAWVRENCE. Yes; as it comes froin the loom it is put in bales.
Mr. BUrY1ERFIFIJD. Aknd it is unbleached?
MIr. BurrEItrmlt). That moves to a l)leachery. does it ?
AMi. BUrrTEFIErD. Anid where is the bleacheryl located, with refer-
ence to the mill that weaves the cotton?
Mri. LAWRENCE. In various parts of the country; New England,
Mr. I3uiwRTzwIELD. Inv'olving, a freight transportation?
Mr. LAWRENCE-. zYes; usually.
Mr. Bua-rEI:IiEuL). And thenr, from the bleachery, -where does it
go? To the prinlter?
MIr. LwRENcE. No, sir; the printers all have the bleacheries in
their own printing estal)lislllnents.
Ar. BU'rERiFIELD. I see. Then, it comes out of the bleachers as a
Mr. BUITERFIED). Well, then, I inismi1d1elstoo(d you.
Mr. LAwRENCL.. No.
Mr. BU'iTERF.ELD. YOU1 see that I 11111 1 floviCe ill this l)ilSileSS. I
an trying to find out. lWlhele does it. go froim tlhe blea(-helry ?
Mr. LAWRENC1u. The nercliandlise is sent to the bleachery to be con-
verted as bleachling matter. When it is sent to the print works it
has to be bleached first. Th'lit is all one praocess
Air. BirirrmIw.IEIj,). F1romi the print works where losess it go? Does
it gro to your storeholse?
Mlr. BU7TTERFIELD. Yotu sell it in the store of tile p1rinlters?
MAIr. LAWRENCE. Wlle are the selling department of thie printers.
Mr. BUrrTERIELD. is your storehouse
Ar. LAWRENCE (interrupting). 'We have no storehouse.
Mr. BUTTERFIEDI). WhA'iatever storage takes place is in connection
with the printer?
AMr. BuTrERFIELD. And you offer for sale the product that is stored
ill the storehouse?
Mr. LAWRENCE. Yes, sir.
Mr. BUTTERFIELD. Wherliee do you find your market? I mean
among what class of people--retail traders or wholesalers?
MIr. LAWRENCE. Entirely through the jobbing trade.
Mr. BUITERFIE11). For example, you sell to a jobbing house on the
Missouri River?
Mr. BUTTERFIEJL. TIhlien, after you sell it it moves fromt this store-
houise to the jobbing house on the Missouri River?
AIr. LAWRENCE. We hope so.
Mir. BuTrER'11EIi). Then the jobbing Ilouse on the Missouri River
sells to the retailer, (loes ie, or to another jobber? How is that?
Mr. LAARENcE. To the retailer, I should pl)restllne.
Mr. BUTrERFIELD. And that retailer maily be ir any part. of the great
Air. Bu'.rrERnIELD. And then it moves frmoi the jobber to the
Mr. Bu'pE:RFIEILD. Thllen it is placed llpOll inspection where the
customer can buy it.?
AMr. LAWRENCE. I hope s0.
MIr. BUTITERFIELD. Yi ou lhtave spoken here of economy in manage-
inent of our business. Do you regard that as the highest state of
economy in the distribution of cotton piece goods?
Mr. LAWARENCE. I certainly do not. Our business is not perfect,
by any means.
Mr. BUTrERFIEE1D. I see. You think, then, it would be subject to
some improvements in order to reach the highest state of efficiency?
Mr. LAWRENCE. I have no doubt it would be. It is the sanie
problem as with the railroads. They must have time to improve. I
do not doubt their willingness to try to improve.
Mr. BUTERFIEILD. I SeVe. I tllought from that comment, which
was that you would notI regard this movement across the city of
Boston as ecuonomical in your )business, that you were not subject to
the Saime criticismn?
Arf. L.A WREN CE. IJn our manufacturing business.
Mr. BuirrEnmmIEri). Can you tell us the selling price per pound of
this cotton piece goods which finally reaches the consumer at 30
cents at pound? Could you tell us the price which is derived for that
goods by the weaver, by' the mi ill which makes the cotton piece goods?
Mr. LAWRENCE. I have not those figures.
Al i 3[1Irl rl.(o tXole l t3 .nl(>;i ate. it ?
Ir I31IEFIL.Could ~'oii (ven approximti?
Mr. LAW'RENCE. I should not care to be held accurately for approxi-
mating it, no.
Mr. BitJrTERFIELD. W11ould you tell us your best estimate of the per-
centage of the final 30 cents per pIoundl, which the consumer pays,
which goes into the pockets of these various jobbers and interme-
diate agencies?
Mr. LAWRENCE. XVhat percentage?
Mr. BUrTERFIELD. Yes; what percentage of the 30 cents?
Mr. LAWRENCE. If you wililask me the direct. question, I shall be
glad to answer it to the best of my ability.
AMr. BuI-ERFJELD. Could you tell us the price viwhich is paid to the
cotton mill which weaves the cotton for this quality of goods which
you say sells to the consumer at 30 cents a pound?
Mr. LAWRENCE. I may be able to answer that question in a little
different way, that will probably give the result you desire to obtain.
Take, for instance, a stocking that we hope to sell at 95, we will sell
to the consunier at $1.50.
Mr. LYON. Did lhe say the consumer paid 30 cents?
Mr. LAWRENCE. No; I did not say that.
Mr. BUYTERFIELD. I thought he said the selling price of this cot-
ton piece goods was 30 cents a pound.
The CHAIRMAN. He vefy likely understood me to mean the selling
price by the manufacturer.
Mr. LYON. Did you mean that, Mr. Lawrence?
Mr. LAWNRENCE,. Yes; thlat is a 1roughM" estimate that I put, of double
the price of cotton.
Mr. BUTTrERFIELD. What. would the same goods sell for to the con-
suiner per poind(i, as nearly as you could estimate it-to this consllmer
out. in the, West?
Alr. LAWRENCE. I think you might possibly add 10 or 15 cents per
pound to it.
Mr. BUTTERFIELD. So 45 cents a pound the consumer pays?
Mlr. BuTTEmRFMt). Did you answer my question about the price
per pound that is paid to the cotton mill? I am not sure that you
Mr. LAWRENcE. The price per pound paid to the cotton mill?
Pardon Ine. If you will ask me directly what you want to find out,
I will try to answer it.
Mr. BUIrERFIErL). What I wanted to get at is how mnuch of this
45 cents a pound which the consumer out in the West pays is ab-
sorbed by these intermediate agencies between the loom and the con-
MAr. LAWRENCE. Somewhere around 50 per cent.
Mr. BUIVEFIMELD. That is all.
Mr. BRANDEIS. You spoke about certain of these goods coming un-
der' rule 25. As a matter of fact some of the Foods, and quite a large
amount, are first class, are they not?
Mr. LAWRENCE. I did not mention that. I think that counsel men-
tioned that fact, that it was under rule 25. I did not mention it.
Mr. BRANDIES. Are any of your hosiery products first class?
Mr. LAWRENCE. Cross hosiery, that competes mostly with the
hosiery all over the country, is first-class merchandise, and is of the
cheapest grade of merchandise that is made.
Mr. BRANDEIS. And it was the cotton sheeting that you referred to
as not being first class?
Mr. LAWRENCE. It was; yes, sir.
Mr. BRANDEIS. And of course that cotton sheeting is not the form
inl which those goods go to the consumer, in the main?
Mr. LAWRENCE. The consumer usually wants his sheets bleached.
Mr. BRANDEIS. That is all.
Mr. LYON. To follow out this price of cotton at 30 cents, as a rough
Mr. LAWRENCE (interrupting). I rather dislike to take that as a
Mr. LYON. flow much raw cotton does it take to make that
Mr. LAW%,RENCE. There is usually a shrinkage of 15 per cent from
bale cotton to the cloth.
M{fr. LYON. Then, taking the raw cotton, plus 15 per cent, the
difference between that and 30 cents would be the manufacturing
cost and your profit.
Mr. LAWRENcE. The statement, I think, was this: That the fin-
ished cloth was about double the price of the cotton that went into it.
Mr. LYON. That is, raw cotton 15 cents, and the mill sold it for 30
Mr. LAWRENCE. Approximately.
Mr. LYON. How much raw cotton does it take to make that pound
of finished cotton?
Mr. LAWRENCE. There is a 15 per cent shrinkage between the
cloth and the cotton; 85 pounds of cotton out of a bale.
Mr. LYON. Just briefly state how many transportation charges
the cotton pays until it finally reaches the consumer. The cotton is
raised in the South, and has to be transported to New England?
Mr. LAWRENCE. It is raised in the South, and after being manu-
factured in the North or in the South, wherever it may be, it is
transferred to a bleachery, where it is converted into the character
desired, printed or converted, and from there shipped-
Mr. LYON (interrupting). Is there a transportation charge in
those different processes?
Mr. LAWRENCE. In some cases, yes, and in other cases there is not.
Mr. LYON. There is one, of course, from the South to the mill in
New England?
Mr. LAWRENCE. Some New England mills convert their own cloth.
They buy cotton and turn out finished goods.
Mr. LYON.- When the cloth is finished it is shipped?
Mr. LAVRENCE. IHe sells it to the jobber.
Mr. LYON. And then he sells it to the retailer?
Mr. LAWRENCE. He distributes it, and sells it to the retailer.
Mr. LYON. It is a fact that there are three or four transportation
charges that that consumer finally using it has paid?
AMl. LYON. You stated that somne railroad came to youi-
Mr. L,%WNRENCE interruptingng. The New Haven Railroad.
Mr. LYON (continuing). Anld said it needed more money?
Mr. LYON. I suppose they did not go into detail about that, as
to why they needed it?
Mr. LYON. They said that tley had to increase your rates because
they needed the money? That is what they said ?
Mr. LAWRENCE. I think they reasonably did need it.
Mr. LYON. They did not elaborate oIn that when they stated it to
Mr. LAWRENCE. Well, I knew pretty well.
Ml'. LYON. Did they?
Mr. LAWREKNCE. I knew pretty well.
Mr. LYON. Did they state it to you?
Mr. .AWRNCE. As to why they mICeded it?
Mr. LYON. Yes.
Mr. LAWNRENcE. It would have taken too long.
AMr. LYON. Do I understand you to say that the rates should be
fixed, or that it would he practicable to fix them upon valuation?
Mr. LAWRENCE. I intimated that in one of the replies, that at re-
classification was very essential.
Mr. LYON. I mean could a body like the Interstate Commerce
Commission, or the railroads, undertake to fix the rates, based upon
the value of the articles?
Mr. LAWRENCE. I do not know that the way adopted would be as
to value. I think T suggested, in the case of hosiery, that the con-
striiction of the article might. be considered as a basis. In thle tariff
it is fixed by certain construction, picks and counts, in the case of
cloth, and it works very well there.
AMi . LYON. What (10 you mean by "construction ;" explain it
M.r.. LAWRENCE. Some cloths have a. certain number of threads in
an inch, and others have. more, and others have less. A classification
of those threads has been the process through which the tariff has
been worked. I see no reason why it should riot be adopted, to a
certaimi extent, in transportation charges.
Alr. LYON. Do you mean, practically, that when you have a ship-
ment of goods of that kind that. they should be submitted to thle local
Mr. LxwnY;c. No: T mean) there should l)e a classific-itionn; that
people shot H ship in that classification. and mark it accordingly, and
that there should be certain penalties if the goods were wrongly
marked. They mnay be wrongly lmarked to-cay, if one wants to; but
they are open to be investigafted
Mr. L-(;N. I)o you think that would be feasible?
Mr. LAWVRENCE. Perfectly.
Mr. BIRANDIES. IS it not a matter of fact that that method is
adopted to a certain extent in the western classification?
Mr. LAWRENCE. I believe so; but I amI not sufficient of an expert to
say, definitely.
MIr. LYON. I did not understand you to say, Air. Lawrence, that
the railroad gave its reasons for wanting this ail(vance that you men-
tioned, did I?
MAr. LAWRRENCE. Did they give us the reasons, you mean?
AIr. LYON. Yes.
MIr. LAivRENcE. No. I said it was too big a subject. They came
and said they had to have more money to operate their railroad, and
asked what we could contribute toward it.
AIr. LYON. They did not elaborate to you the reasons?
Mr. LAwRRENCE. No; I think most people in New England knew
the way they were fixed. Anybody that was in large business affairs,
and following the financial statements, I think, would naturally not
ask that quest-ion.
Al. LyON. The commission is here for that purpose, and I thought
if you could advise them onl that subject -
AIr. LAWRENCE (interrupting). No; I should not be able to do