better results for all of the people by having these two great bodies helping each other, and not have the same body that is to decide whether you have done right or wrong, also to decide what you ought to try to do.

Mг. THOм. Those figures that you gave about business did not include resale.

Mr. ELLIOTT. I would like to have my statement as to that corrected, that the total figures of commerce do not include resale.

Mr. WEBSTER. Mr. Elliott, I can readily understand how a large increase in freight rates might not hinder or retard the movement of traffic; particularly would that be true if the traffic should be the commodities of life, that must move, else men will go hungry and go naked. But it seems to me, too, still the particular article that is mentioned in the statistics you gave us is highly misleading. If the rate is increased, is it not unescapable that the cost of that commodity to the community will be increased in precisely the same proportion as the elements of transportation bears to the entire cost of the article? Mr. ELLIOTT. I said there would be an increase. I think it is magnified in the making of the final price, because in these figures that I gave it is shown there was an increase of 3 mills or something on shoes and the price of shoes went up several hundred mills. For instanceMr. WEBSTER. Say we took a suit of underwear manufactured on the Atlantic seaboard and shipped it to Spokane, Wash., the element of transportation in the cost of that suit of underwear would be comparatively small. So that increasing that rate would not prevent the shipment of the suit of underwear from the Atlantic seaboard to Spokane. At the same time, when that suit of underwear arrived at Spokane its cost would have increased precisely in the same proportion that the element of transportation bears to the aggregate cost of the suit of underwear.

Mr. ELLIOTT. That is right.

Mr. COOPER. But my line of questions was about how much would be expressed in the cost to the final purchaser.

Mr. WEBSTER. Just exactly the proportion that the element of transportation bears to the entire cost.

Mr. COOPER. We understand that, provided the middleman don't lie about it.

Mr. MONTAGUE. That relates to the question of profits. The judge is carrying him to the actual cost of the thing.

Mr. WINSLOW. Have you finished, Judge?

Mr. WEBSTER. Not quite.

If, now, for instance, it costs $7.50 to take out of the mine in the State of Washington a ton of magnesite, and the freight rate of magnesite from Washington to the Atlantic Seaboard is $7.50 a ton, that tone of magnesite can be laid down on the Atlantic seaboard at $15, plus a reasonable profit. If you increase the shipping rate on that mineral to $15 a ton, then when it is laid down at the Atlantic seaboard, it must be laid down at $22.50 a ton, plus a reasonable profit. So that the increase of cost is precisely in the proportion that the element of transportation bears to the actual cost of laying the article down at the point of consumption.

Mr. COOPER. That is my idea.

Mr. ELLIOTT. That is what I have said all along.

Mr. MERRITT. When you used possibly 10 per cent of your magnesite in something else, of course, you divide it by 10?

Mr. WEBSTER. The same principle is followed, exactly.

Mr. MERRITT. Then you will have to follow it to find out how the cost is affected by the rate?

Mr. WEBSTER. It is my contention that an increase in the rate of transportation necessarily increases the cost of the article in precisely the same proportion as the element of transportation bears to the entire cost of the thing itself to the consumer.

Mr. DENISON. And that is why I wanted those statistics translated into the actual articles sold.

Mr. ELLIOTT. We are at work on some of those, and we will try to get them to you. I do not want Judge Webster to think that I think freight rates do not have anything to do with prices; I think they do. Suppose you divide $1,000,000,000 among a hundred million people, and it is $10 a year.

Mr. MONTAGUE. You could apply the same figures to the labor cost? Mr. ELLIOTT. Just the same.

Mr. WEBSTER. I think if you would apply those figures to the necessities of life and some other articles it would show a very different result than is shown on the figures read by you.

Mr. ELLIOTT. Heavier commodities make a big difference right away; no doubt about that.

Mr. SIMS. Mr. Chairman, may I ask the gentleman a question? The CHAIRMAN. Yes.

Mr. SIMS. This 25 per cent increase in freight rates to enable the railroads to operate and do business without any payment from the Government, you did not mean a horizontal 25 per cent?

Mr. ELLIOTT. That would be worked out with a great deal of care. When you said 25 per cent, I suppose you mean approximately?

Mr. SIMS. Yes. That would be an amount in addition to the freight rates paid now, but some manufacturers and business men have claimed to us that when the Government puts up a rate 25 per cent, that they were not able to pass it on to their consumers. Mr. ELLIOTT. That may be the case.

Mr. SIMS. The amount was such that they had to absorb it all, and therefore it was a very great loss to them. Now, I did not know whether they were criticising the manner of dividing up the rates, or whether that was inherent in the business they were doing. Mr. ELLIOTT. I do not know. There no doubt would be cases where a freight rate could not be advanced to that extent.

Mr. SIMS. But there might be something where it could be advanced about 25 per cent, to go above 25.

Mr ELLIOTT. There might.

Mr. SIMS. Mr. Elliott, we of course now are, and hope to remain, a very great exporting country?

Mr. ELLIOTT. Yes, sir.

Mr. SIMS. In rates that are charged on properties shipped from some interior point to the seaboard would such rates affect very largely our ability to compete in foreign markets with our exports? In other words, would not export rates possibly have to be made, that would not be exactly what the rate would be from the interior to the seaboard for domestic commerce?

Mr. ELLIOTT. It might have to be if you wanted to engage in export business. That used to be the custom 10 or 15 years ago. We tried to take stuff from the manufacturing district of Pittsburgh

through to the Orient, via Seattle, and lower rates were made on that oriental business than the local rates to Seattle, but they were afterwards canceled, because the Interstate Commerce Commission thought that was not the right way to make rates.

Mr. SIMS. Before the great war which has just ended, was it not to some extent practiced in Germany to put the property of the manufacturer back in the interior on the seaboard, at a rate that he could compete with the manufacturer in England and France, whose manufacturing plant was located on the seaboard?

Mr. ELLIOTT. In Germany?

Mr. SIMS. Yes.

Mr. ELLIOTT. I do not know.

Mr. SIMS. I have understood that was the case, however. The Government owning the railroads managed it in some way that the interior manufacturer might put his goods on the seaboard just as though his manufacturing plant was on the seaboard, so as to compete with like manufactured goods in other countries, that did not have to pay any interior freight charge. It seems that with our great country, 3,000 miles wide and nearly 2,000 miles the other way, ought to enable manufacturers in the interior to compete in South America, or anywhere else, with other countries, and that we would not have to make a freight rate-that would have to be reflected in ocean rates; they would have to consider that.

Mr. ELLIOTT. They certainly would.

Mr. SIMS. Whether the roads were owned privately or by the public.

Mr. ELLIOTT. Whether owned privately or by the public, and that is one reason why we have felt that there should be some competition left in the roads, because energetic men would be trying to expand the markets.

Mr. SIMs. But an arbitrary increase generally would have to give way to these exceptional conditions?

Mr. ELLIOTT. Yes, sir; all of those are questions of detail, and have to be taken up with great care. In a very general way you have got to have more money if you want a good railroad, and you can only do it, it seems to me, by advancing rates for transporting freight or passengers, or out of the Treasury of the country.

NORTHERN PACIFIC RAILWAY CO.,

OFFICE OF THE PRESIDENT, New York City, September 3, 1919. MY DEAR MR. ESCH: When I was a witness before your committee a few days ago, a number of members asked some questions about the effect of freight rates on the cost of living. Of course, the total amount paid for transporting freight of various kinds enter into the price of articles consumed, just as the cost of rent, of wages, of fuel, of power, etc., does, but as I pointed out to you the total freight bill per year for an individual is not a large sum, and the effect of the freight rate on the final price of any given article is exaggerated. It is desirable, in a country with great distance like the United States, to transport commodities as cheaply as possible, and the railroads recognize this and for years have been working to this end, so that our freight rates are lower than in any other country and have risen much less than have the prices of commodities generally and to-day almost any article of commerce, at its going value, can be exchanged for a greater amount of transportation than ever before. For example, a bushel of wheat at $2, a ton of steel rails at $47, a dozen pair of shoes at $72, a dozen eggs at 60 cents, a barrel of flour at $10, can be exchanged for far more transportation to-day than was the case a few years ago.

It is the desire of railroad owners and managers to have rates as low as is consistent with good service, good wages, return on present property, and margin enough to

obtain new capital. If this new capital can be obtained the work of perfecting the American railroads can go on and this in itself will tend in the future to check any increase in the cost of living by permitting development and greater efficiency. One of the most potent elements in producing efficiency is the amount of energy and intelligent work contributed by the 2,250,000 men on the railroad.

As a result of the war, the changes in methods of supervision, the spirit of unrest all over the world, the desire to do less work, that efficiency is not what it used to be. It affects other forms of business as well as the railroads and has done far more to increase the cost of living than any increase in freight rates has or can.

What do people do in a crisis that reduces the number of working members of a family, a store, on the farm, in the office, in the factory? Those who are left turn in and work harder than ever before to overcome the difficulty.

Now the world has been and is in a crisis and is short of workers. For example, at least 10,000,000 men have been eliminated from the world's productive force by the war and the influenza-probably more, but call it 10,000,000. What work can that number of men do? At 10 hours a day it is 100,000,000 work hours, or $25,000,000,000 work hours for a work year of only 250 days; on an 8-hour basis it is 80,000,000 per day or 20,000,000,000 work hours for a 250-day year. That lost work must be done all or part by those of us who are here, or we must have less, and pay more for what we have, and progress toward better and cheaper methods will be checked.

Now the United States is the one Nation in the world that ought to turn in and do more work then ever before to help out humanity, the world, and our own people. Instead of doing less work every strong man ought to do more until the world crisis has passed. Most men in good health can work 10 hours a day from the age of 20 to 50. Where would the development of the great country west of the Allegheney Mountains be to-day if our forefathers worked 8 or 6 hours a day? They worked 10 and 12 and endured hardships that we knew little about in these days of increased comforts and even luxuries for nearly all. Let us see what this would mean in helping out the world in its present upset condition. Assume that there are about 30.000,000 producers in the United States. At 8 hours a day this means 240,000,000 work hours per day, and if they work 250 days the total hours of work in a year is 60.000.000,000. If they work 9 hours the result is 270.000,000 work hours per day, or 67,500,000,000 per year of 250 days; if 10 hours, 300.000.000 per day, or 75,000,000,000 work hours per year. A gain in work hours per year in the case of 9 hours as against 8 of 7.500,000 000; of 10 hours as against 8 of 15,000,000,000. In this latter case overcoming a substantial part of the loss of work hours per year due to the destruction of 10,000,000 men in the last few years.

Let us apply this same idea to the railroad with its 2,250,000 employees; at 8 hours a day there are 18,000,000 work hours, and for 300 days, in the case of the railroad, the annual work hours are 5,400,000.000; at 9 hours, 20,250,000 per day and 6,075,000.000 per year; at 10 hours, 22,500,000 per day and 6,750,000,000 per year.

If the railroads could be run on a 10-hour basis and the men would respond to the world call for help, the 5,400,000,000 hours of work now being done by 2.250,000 men could be done by 1,800,000; a saving of 450,000 men; if on a 9-hour basis there would be a saving of 250,000 men. At $1,000 per year this means in one case a saving of $450,000,000 per year, and in the other $250,000,000 per year.

Make the same calculation for the 30,000,000 producers in the United States-on a 10-hour basis, 6,000,000 men would be released for other work; on a 9-hour day 3,333,333 men would be released.

Think of the work to be done in the United States that will cheapen the cost of living and add to the comforts, and even luxuries of our children. Work that these men could begin to do: Draining of the swamps; increased irrigation; development of water power; development of gas engines for using low grade coals; greater application of electricity both from water power, and development of electric energy at the mines, and transmission for long distances; reforesting cut over areas; increased crop output due to improved methods of agriculture, a larger production of cattle and sheep for food and clothing, and other developments that can not be obtained without many men, hard work and lots of it. but all of which would increase the capacity of the country to serve all the citizens, rich and poor alike, and thus prevent the cost of living from rising further and bring about in time a reduction.

The poet says, "Men must work and women must weep." In this great crisis, if men would work more there would be less cause for women to weep.

While freight rates have some effect on the cost of living it is small compared with the savings and improvements that can be made if during the present serious world condition every man gives all that he can to increasing his output and his efficiency. To fail to give the railroads a living wage will not in the long run reduce the cost of living but will increase it, because development will be checked and it takes time

to catch up. As it is, we are several years behind in having our transportation machine adequate for the needs of the country.

The encouragement of a spirit of hard work, economy, and care will do far more to reduce the cost of living than can be accomplished by keeping our railroads close to the starvation line by refusing them a living wage.

Respectfully, yours,

Hon. JOHN J. ESCH,

HOWARD ELLIOTT.

Chairman House Committee on Interstate and Foreign Commerce, Washington,
D. C.

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

HOUSE OF REPRESENTATIVES,
Wednesday, August 27, 1919.

The CHAIRMAN. We will now hear Mr. Bledsoe.

Mr. Bledsoe, your testimony will be printed as following Mr. Thom's so there will not be any interruption in the testimony of the railroad executives.

Mr. BLEDSOE. I thank you.

STATEMENT OF MR. S. T. BLEDSOE, GENERAL COUNSEL OF THE ATCHISON, TOPEKA & SANTA FE RAILROAD CO., CHICAGO, ILL.

The CHAIRMAN. Please give your name, address, and whom you represent?

Mr. BLEDSOE. S. T. Bledsoe, general counsel of the Atchison, Topeka & Santa Fe Railroad Co.; residence, Chicago, Ill.

Mr. Chairman and gentlemen of the committee, a statement has been submitted to this committee in reference to land-grant aid to railway companies. The matter has been much in public discussion and, in my judgment, there is very grave misapprehension as to the facts in respect to this matter, and certainly a very strong implication, inconsistent with the facts, in the statement that Mr. Plumb made to this committee. Therefore, I want to make a brief statement on that subject before beginning with the consideration of the other matter.

Mr. Plumb stated to the committee that during the week ending August 12, 1919, there had come into the possession of the railroad brotherhoods a state of facts never spread before the American people, or submitted to the jury of public opinion and that he desired to submit these facts to the committee.

He then charged that the records disclosed that on an area of land exceeding 190,000,000 acres, or 296,875 square miles had been given by the United States to the various State governments and by them to the railroads or to the railroads directly, in aid of the construction of national highways; of which 113,000,000 acres had been patented and 35,000,000 acres forfeited up to June 30, 1910. He also charged that the Interstate Commerce Commission was not properly discharging the duty imposed upon it by the Federal valuation act in respect to reporting information with regard to landgrant aid.

I do not know that there is now available any method by which it can be definitely determined the acreage of land granted to States or