1. In our judgment, all rates, both State and interstate, and the div such rates should be placed under the supervision of the Interstate Ce Commission.

2. We believe all rates, fares, charges, and practices affecting the trans tion of passengers or property at the time of the passage of this act are?, declared to be prima facie reasonable, just, and lawful, and no common shall be required to reduce or to modify any such rate, charge, classi regulation, or practice, except upon an order of the Interstate Commerce mission requiring such change, except as is otherwise provided in this at 3. We recommend an amendment, the last 10 lines of paragraph 2, 1 of the act to regulate commerce, to read as follows:

"It shall be the duty of every carrier subject to the provisions of th to provide and furnish such transportation upon reasonable request the all carriers subject to the provisions of this act shall be required so to unite lines that they will constitute a single national transportation system, a that end, to establish through routes and just and reasonable joint rat plicable thereto from and to all points reached by their respective lines be which through traffic is offered, or may reasonably be expected to be a for transportation, to provide reasonable facilities for operating such th routes, and to make reasonable rules and regulations with respect to change, interchange, and return of cars used therein, and for the ope of such through routes and for providing for reasonable compensation to entitled thereto.

"In establishing joint rates applicable to the transportation of traff the through routes herein required to be established no differences shall be in the amount or measure of such rates by reason of differences in the ship or control of any of the lines or portions of lines embraced with through routes, it being the intent and purpose hereof that like rates st maintained for like or substantially similar services of transportation spective of the number of common carriers participating therein and irresĮ of relationship of such common carriers: Provided, That the commission have the right whenever a through route is shown to be unreasonably l compared with another practicable and existing through route betwe same points, to grant relief from this requirement upon the application carrier or carriers, and to fix the conditions upon which such relief afforded."

The proposed amendment is suggested by decision of the Interstate Con Commission in Missouri & Illinois Coal Co. v. Illinois Central Railroad (22 I. C. C., 39; Case No. 3690). The purpose of this amendment is t vide a national system of railroads, for purposes of rates and services, shall be such in fact, and to prevent the imposition of disabilities upc traffic by reason of the accidents of railroad ownership.

This would, of course, necessitate an amendment to section 15 of the striking out the fourth paragraph, which eliminates the power of the com to prescribe through rates.

In our judgment the proposed amendment is of vital importance, as the sions set forth in the present act fail to accomplish the desired result and a way for discrimination. It is almost impossible, with the present bill short line to induce an industry to locate on their rails on account of rat crimination, and no relief can be offered until a complaint is filed and a de rendered by the Interstate Commerce Commission, while, at the same time. which would accomplish the desired results are blanketed to branch-line owned or controlled by trunk lines or their subsidiaries to a much g distance.

We fail to see where this proposed amendment would work a hardsh power for relief is invested with the commission.

We would greatly appreciate if you would give these suggestions your ea consideration and advise if there is any further evidence for the necessi such a change.

With kindest personal regards, I remain,

Yours, truly,

D. M. SWOBE, Preside

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

HOUSE OF REPRESENTATIVES,

Thursday, September 4, 1919.

ne CHAIRMAN. We will now hear Mr. Gardner.

TEMENT OF MR. WALTER E. GARDNER, REPRESENTING THE ATIONAL LUMBER MANUFACTURERS' ASSOCIATION, CHI

AGO, ILL.

he CHAIRMAN. Mr. Gardner, give your name and whom you repre

Ir. GARDNER. Walter E. Gardner, representing the National LumManufacturers' Association, with head offices at Chicago, Ill. am traffic manager of the Georgia-Florida Sawmill Association, of the affiliated associations of the national association. I have I nearly 20 years' experience in traffic and transportation problems. m giving you that explanation in case some of the committee would e to ask questions from that standpoint. I would be in a position, ssibly, to answer questions in connection with practical traffic and nsportation matters.

We have no plan to submit, nor do we expect to take any of your he discussing the details of legislation. We have, however, adopted tain principles which we believe are fundamental, and our assotion is unanimous in their views. I have written those views very ncisely and will read them to you.

The National Lumber Manufacturers' Association is an organiza›n of lumber manufacturers composed of 12 regional associations cated in different producing sections throughout the country, as llows:

California Redwood Association, San Francisco, Calif.

California White & Sugar Pine Association, San Francisco, Calif. Georgia-Florida Saw Mill Association, Jacksonville, Fla.

Michigan Hardwood Manufacturers' Association, Cadillac, Mich. North Carolina Pine Association, Norfolk, Va.

Northern Hemlock and Hardwood Manufacturers' Association, Oshkosh, Wis.

Northern Pine Manufacturers' Association, Minneapolis, Minn. Southern Cypress Manufacturers' Association, New Orleans, La. Southern Pine Association, New Orleans, La.

West Coast Lumbermen's Association, Seattle, Wash.

Western Forestry and Conservation Association, Portland, Oreg. Western Pine Manufacturers' Association, Portland, Oreg.

The statistics of the Interstate Commerce Commission indicate that lumber and forest products furnish nearly 11 per cent of the total tonnage of American railways, which is greater than the movement of all agricultural products, and is exceeded only by the tonnage of general manufactures and products of the mines. The total annual lumber freight bill is more than $200,000,000, so that it will be seen that this industry is deeply concerned with transportation costs and the enactment of legislation which will preserve the immense property rights involved and provide for the public that efficient transportation service which commerce demands.

At a meeting of the governmental relations committee of this organization held in Chicago on August 19, 1919, at which all of the regional associations were represented, the following resolutions were unanimously adopted and approved by the board of directors:

Resolved, That the National Lumber Manufacturers' Association is opposed to any form of Government ownership or operation of railroads, and urges that the railroads be returned to their corporate owners as early as Congress can safely do so.

Resolved further, That we are opposed to any form of subsidizing for services. Resolved further, That if Congress, in its wisdom, decides to permit combinations of roads after they are returned to their corporate owners, Congress should provide some means of safeguarding industries against the concentra. tion of purchasing power in the properties so combined.

Resolved further, That this association is opposed to any rigid long-and-short haul provisions in any legislation to be enacted which would eliminate the discretionary powers of the Interstate Commerce Commission.

Resolved further, That this committee, subject to the confirmation of the board of directors, shall present to Congress such details as may be necessary to support the fundamental principles herein outlined.

The importance of adequate and efficient transportation systems can not be magnified. They are the foundation upon which the structure of our present commercial life is erected and the basis for the future industrial development of the country, as well as the keynote to the welfare of the entire Nation. Intelligent shippers want the railroads to prosper so that they may give to the public that prompt and efficient service necessary to promote the industries on which the whole people depend; and to this end they are entirely willing to pay such reasonable rates and charges as may be required, subject to the influence of normal competition and the restrain of just public regulation. This proposition can not be questioned; the serious and difficult problem concerns the practical methods to be adopted to accomplish this result.

A multitude of plans have been submitted for your consideration, some of which are fanciful and impracticable, while others are socialistic and revolutionary; some of them contain the demands of capital for a guarantee of earnings and others contain the demands of labor to operate the railway systems.

The lumbermen are confident that there is enough courage in this Congress not to surrender to the demands of capital or become intimidated by the arrogant threats of labor and that you will deal with this great problem, with vast consequences dependent upon your action, calmly and uninfluenced and with the single thought of determining what is best for the shippers, the carriers, and the public as a whole and not for one class.

Some of the plans would completely destroy the existing system of Government regulation, under which there has been developed the best transportation machine in the world, making it necessary to frame an entirely new act to regulate commerce, based upon pet theories and untried experiments. The situation is too grave and the consequences too serious for radical departures or revolutionary changes in our present system of public control. The American railroads on the whole have been financially prosperous and have become physically strong and efficient under this system, although it is far from perfect; let us, therefore, hold fast to that which is good and eliminate that which is bad and strengthen the existing laws by

amendments or additions, thus giving us a more efficient regulation rather than tearing up by the roots our present system, which by no means has been a failure.

GOVERNMENT OWNERSHIP.

The general public, in no uncertain terms, has announced its opposition to Government ownership and operation of the railroads, and public opinion overwhelmingly favors private ownership and operation under Government regulation. The security owners and the railway executives want their property returned under varying plans, and we assume that Government ownership is not the subject of immediate consideration. It may be that Government ownership, safeguarded by proper legislation, is the ultimate solution of the railroad problem, but no one at such a time as this, when the business and industrial interests of the country are endeavoring to resume operations and production on a peace basis, should advocate national expenditures on so stupendous a scale.

The individual members of our organization, while differing somewhat regarding the details of legislation which should be enacted concerning the railroads, are unanimous in their opposition to Government ownership, and particularly to the plan advocated by the railroad brotherhoods, generally known as the Plumb plan. This is probably the most radical, revolutionary, and vicious legislation ever presented to an American Congress and if passed would spell ruin to our industrial, financial, and social life, and sound the death knell to those principles of government upon which our American institutions are founded.

It is not proposed by anyone that the Government should take over the vast business and industrial interests of the country other than the railroads, yet this would be the inevitable result if the Plumb plan should prevail; and why not, if this plan is sound economically and is for the interests of the people? But is any plan sound economically that ignores property rights and removes capital investment from our business enterprises?

There should always be an independent relationship between capital and labor, based upon fair play and good judgment, and the slogan of each should be a bigger and better industrial America, but there should be no coercion or exaction by either class that would ultimately mean disaster to both interests. If this is not done, it is only a matter of time when the wheels of industry will stop, the business of our country stagnate, and capital investment, which is the barometer of our national well-being, will sink into insignificance and then will come a period of strife, panic, and ruin too shocking and horrible to even contemplate. We therefore call upon Congress to meet this issue now squarely and firmly and not to be influenced into adopting such radical and revolutionary legislation as is contained in the Plumb plan.

FEDERAL REGULATION.

It has frequently been charged that our present system of regulating the railroads has proven a failure, and that much injustice has been done the carriers by unfriendly and inconsiderate regulatory

bodies. These charges have been so positively asserted and widely disseminated that a large part of the shipping public assume them to be true.

For more than 30 years the transportation lines of the country have been operating under a more or less effective system of Government control, but it was not until the Hepburn amendment in 1906 that the Interstate Commerce Commission was given the power to fix maximum rates, and not until 1910 did they have the authority to suspend rates or changes in rates by the carriers pending investigation into their reasonableness. If, therefore, the regulatory bodies have been unfriendly to the railroads, and denied them adequate rates, the result would be reflected in the earnings since 1910, and we would expect to find a decrease in the net operating revenues.

But just the reverse is true: Never in their history have the railroads been so prosperous as during the period of 1910 to 1917.

In a recently published statement the Interstate Commerce Commission shows that during the period from 1910 to 1917, inclusive, the dividend-paying railroads of the United States declared and paid dividends in excess of 7 per cent. That refers only to the dividendpaying railroads, which represent about 68 per cent of the railroads of the country. This dividend was greater than that for any preceding year except 1908, and the earnings per mile of road were greater for this period than any previous year. The three last years of private operation-1915, 1916, and 1917-show the highest earnings ever attained in the history of American railroads, so when they were taken over by the Government they were in a more prosperous condition than at any period in the past, and under Federal control they receive a standard return based upon the average earnings for these three years in which they reached the highest peak of prosperity.

In a recent statement made by Senator Cummins, chairman of the Senate Committee on Interstate and Foreign Commerce, he shows that an average net operating income for the three years mentioned represented 5.3 per cent, and the earnings for the year 1919 represented 5.9 per cent, upon the whole capitalization of the class 1 railroads in the United States, including both capital stock and funded and current indebtedness. He further says that three-fifths of this capitalization is represented by bonds which bear an average rate of interest of about 42 per cent, so that it can be seen the stock capitalization for the average of three years would pay more than 6 per cent and the year 1917 would pay more than 7 per cent.

It is very clear then that the railroads as a whole have not suffered under public regulation but have enjoyed a very substantial degree of prosperity. It is, therefore, not apparent wherein our system of public regulation has failed, nor where the necessity lies for radical and revolutionary changes in our present laws.

It has been further asserted that the transportation system of the country had broken down physically under public regulation, and that they were only saved by Federal control and operation. The evidence is equally clear and convincing that our railroads had not broken down physically, and you already have in your records sufficient evidence to support this fact. It is true that there was a serious. congestion of freight throughout the country just prior to the time