those previous years. The exercise of this power by the Interstate Commerce Commission borders on confiscation of property.

Speaking in behalf of our company, I cannot emphasize too strongly the fact that our management during and following our expansion program from 1897 had every reason to believe that there would be no radical change in the method of rate making, because for so many years prior to that time, the railroads had made rates that enabled the interior manufacturer to reach the Pacific coast, and certainly no one could conceive that with the construction of the Panama Canal some years later, designed as it was for national defense, that this artificial waterway constructed by public funds would result as it has by practically eliminating the ability of the interior manufacturer to market its products on the Pacific coast.

The irony of the situation is further emphasized in that the interior manufacturers bear their share of taxation to keep in force this instrumentality of transportation that under present legislation reacts to such disastrous effect on their operations.

After the withdrawal of fourth-section relief rates by the Commission in June 1917, there have been 2 applications filed, 1 in August of 1921 which was denied in October 1922, and 1 filed in 1924 which was also denied in October 1922, and 1 filed in 1924 which was also denied by the Commission in March of 1926.

Mr. MARTIN. You refer to the withdrawal of fourth-section relief rates by the Commission in June 1917?

Mr. WIRE. March 1918. They were ordered withdrawn in June 1917 and finally were canceled out in March 1918.

Mr. MARTIN. Does that statement mean that in order to maintain the then existing rates, you would have had materially to depress your rates to intermediate points? Is that the meaning of that statement?

Mr. WIRE. Let me get that question again, Congressman.

Mr. MARTIN. Does that statement mean that in order to maintain the rates in effect prior to the entry of that order, you would have had to depress your intermediate rates?

Mr. WIRE. Yes, sir.

Mr. MARTIN. That is what that statement means, stated in another way?

Mr. WIRE. That is what the carriers, under the order of the Commission, would have had to do. If they had maintained the rates, percent per hundred pounds, under fourth-section relief to Pacific coast terminals, they would have had to hold that factor as a maximum to the intermediate territory.

Mr. MARTIN. Were there complaints pending at that time before the Commission from interior shippers against the intermediate rate then in existence?

Mr. WIRE. None to my knowledge.

Mr. MARTIN. You may proceed.

Mr. WIRE. We have, however, remained in the Pacific coast market simply with the hope that the Commission would recognize the justice of the carriers' plea for equality of opportunity of doing business. Just why, under the existing safeguards of the act and even though the fourth section were removed entirely, any one should persist in an apparent desire to foster only water transportation to

the exclusion of the rail lines, is not clear to us. This position, with respect to meeting a competitive situation, would not be impaired in any respect by allowing the rail lines to participate in the haul of some of this Pacific coast traffic and even though some of this traffic found its way back into the interior by reshipment from the coast, the condition would be no different than exists today on exwater traffic.

We can come to one conclusion only and that is, any opposition is based entirely on abstract theory and not with reasoned regard to actual conditions. Relief from this intolerable situation should be found without delay, if the interior manufacturer and the transcontinental rail lines are to again approach a degree of normalcy. We, as an interior manufacturer, realize the value of an efficiently operated system of rail transportation. This efficiency can only be obtained by affording the rail lines an opportunity of hauling at least a fair portion of the traffic for which they were originally constructed.

The proposed legislation will be helpful as it will restore to the rail management the right to determine what rates would be necessary in order to meet competitive situations, subject, of course, to review, under existing law, by the Commission upon suspension of the tariffs before becoming effective or upon complaint filed with it.

It is obviously so unfair that competing forms of transportation are given a free hand in the matter of making rates and then surround the rail carriers with a multiplicity of laws, if not designed, then interpreted, it appears, to hamper their every endeavor.

Mr. REECE. You feel, then, that the fourth section is working to the disadvantage of the interior?

Mr. WIRE. Tremendously so, Mr. Congressman; not only working to the disadvantage of the interior, speaking of our part of the country, to the Pacific coast, but likewise to the Gulf.

Mr. REECE. Can you see where the repeal of the long-and-shorthaul clause would put any type of business located in the interior at any disadvantage?

Mr. WIRE. No, sir, Mr. Congressman. I cannot see how it would harm the interests of any producer in the intermountain territory or any receiver of goods in the intermountain territory. We would not encounter the competition of these goods that arrive on the Pacific coast by rail under a rate authorized by a change in this law or by permission of the Commission, because, to the extent that there is back-haul shipment from the Pacific ports now that move into those ports through the Panama Canal, the competition is there and just what difference does it make how they arrive there?

Mr. REECE. That appears to me to be a logical conclusion, and I am interested in hearing it stated by a man from the intermountain section who is in business there, and who has come in practical contact with the questions involved. There has been some intimation that there might be some objections to the repeal of the long-andshort-haul clause from the intermountain regions.

Mr. WIRE. Yes. I think it is very safe to predict that there would be opposition from some parts of the intermountain territory. Some of that opposition will be voiced by people, individuals, or representatives of communities that are not at all familiar with the situation.

Mr. REECE. You think it will be the case that any objection that comes from the intermountain business regions will be based upon a misapprehension of the effects of the repeal?

Mr. WIRE. That, I think, Mr. Congressman, will be one class that will oppose it, based entirely upon their lack of knowledge of the situation and the idea to oppose it has been sold to them by certain individuals who like to appear before Congress or the Commission in opposition to it.

Mr. O'BRIEN. Are they going to appear?

Mr. WIRE. I have heard they were. I do not know, they naturally do not talk to me, Mr. Congressman, about the opposition; or, to put it another way, there are certain people that have made this their business as far back as I can remember, to oppose any elasticity or any change in the law, or any relief under it.

Then there is another element that I imagine you are going to hear from. They are absolutely selfish. They labor under the impression that the transcontinental carriers will eventually meet this water competition by reducing their rates to the Pacific coast terminals, and apply them to intermediate territory. They have a vision that that is going to cut the rates in two. They are not well advised, because we know that is impossible-it is impossible for the carriers to do that.

Then I think you will have a third class of people who are absolutely honest in their statement; those are the individuals and representatives who are under the impression that if lower rates are applied to the long haul, to the terminals, it will result in advancing the intermediate rates. I cannot figure why they should feel that way, why they think there is any such hazard existing. But there are some people, and as far as we can, we have talked to those individuals. I think perhaps that thought on their part is because they have read or heard something that may have happened 40 years ago. I do not think they have any occasion seriously to consider that now.

Mr. O'BRIEN. In your experience, do you know of any case where there has been an increase in rates to intermediate points as a result of relief which has been granted under section 4?

Mr. WIRE. No, sir; I do not know a single case. Going back to the rate structure to the intermediate territory for the past 31 years, there has been a gradual decline in those rates up to June 1918 if I remember the date correctly, when the Director General made the advance all over the United States. Then they were advanced. The Interstate Commerce Commission at one time allowed a percentage advance, and then again a deduction. So the fact remains that the rates on iron and steel from eastern producing points, and from our plant, are on a lower level today than any time in history, that I can remember.

Mr. Congressman, you asked me about some figures with reference to the Panama Canal. They were just handed to me. They show that for the fiscal year ending June 30, 1929, 2,349,566 tons went through.

Mr. MARTIN. I might say there, Mr. Wire, that one of the witnesses for the carriers put in a table of canal tonnage. Mr. WIRE. Then you have that?

Mr. MARTIN. There is a table of canal tonnage in the record. I believe it was Mr. Hastings who put it in.

Mr. HASTINGS. Mr. Chairman, you are referring to me. I believe, I am quite sure, I did not put in iron and steel figures separately. Mr. MARTIN. No, no.

Mr. HASTINGS. But I have, in answer to the question of Congressman Reece asked of Mr. Wire-I have in my room over at the hotel some data from which I could, either through Mr. Wire or directly, if it is of interest to the committee, supply for the years 1926 to 1934, inclusive, the westbound movement of iron and steel tonnage separate from other commodities.

Mr. MARTIN. I think we would be glad to have those figures, if it is agreeable to Mr. Wire for you to furnish them.

Mr. WIRE. Yes.

Mr. KERR. Mr. Chairman, I supplied Mr. Wire those figures. Mr. WIRE. These are evidently the figures that I have before me, Mr. Chairman.

Mr. MARTIN. You might put those in the record. I should like to ask you a question.

(The figures referred to are as follows:

Manufactures of iron and steel, Atlantic to Pacific coasts via Panama Canal

Fiscal year ending June 30

1929_

1930_

1931.

1932.

1933_

Source: Reports of the Governor of the Panama Canal.

Long tons

2, 349, 566

2, 128, 712

1, 320, 091 781, 494

502, 503.

Mr. MARTIN. Mr. Wire, in view of the not only long but unusually varied experience in traffic matters that you have had, I want to ask you a question relating to the pending bills and the existing law, if you care to answer it. The Pettengill bill is substantially the paragraph of the existing section 4, which says that the carrier shall not charge greater compensation for a through rate than the aggregate of the intermediate rates.

The Rayburn bill, also known as the "Eastman bill", consists of two provisions with relation to section 4; the first of these two provisions is briefly the long- and short-haul clause. The second provision of the Rayburn bill is the Pettengill bill plus this provision, that the right to charge a less through rate than the aggregate of the intermediate rates shall not be construed as authorizing a carrier to charge as great compensation for a shorter as for a longer distance.

I mentioned to you before we convened that I had received a letter this morning from perhaps the next largest shipper to the Colorado Fuel & Iron Co., in Colorado. At any rate, they are by far the largest shipper in another important industry in that State. In that letter they indicate that they had apparently thoroughly considered both of these bills and favored both of them, but gave preference to the Rayburn bill. They mentioned the fact that it was somewhat more restrictive than the Pettengill bill.

I wondered if you would kindly point out to the committee what objection, if any, you have to the provision of the Rayburn bill that I just read to you, just leaving the long-and-short-haul clause out of

it, and considering the second provision of the Rayburn bill as covering the whole situation.

Mr. WIRE. The only part we have considered in connection with the Rayburn bill that I am in a position to answer you about is that

Mr. MARTIN. First let me ask you if I made that clear.

Mr. WIRE. I think so-is that our objection is to the procedure that is necessary, which makes it necessary for the manufacturer, the shipper, to make an application to the railroad; the railroad in turn making an application to the Commission to establish some rate that they may desire, resulting in an indefinite delay which may be 2 years or 3 years or longer. What we require and desire is an amendment that the Pettengill bill permits, that will enable us to indicate to interstate carriers our need, and if they can comply and enable us to meet a situation, to publish a tariff. If no one objects, does not ask for a suspension of it within a reasonable time, the tariff is effective so that we can ship our products.

Mr. MARTIN. Your principal objection, then, to that provision of the Rayburn bill relates to the procedure involved in that section, involving delay.

Mr. WIRE. I would not want to answer you just that way. We paid very little, if any, attention to the Rayburn bill, because it did not permit the carrier to act without the application. So, we have decided to devote what time and energy we could in support of the Pettengill bill which we think meets our needs a great deal better than the other, on account of the element of delay.

Mr. MARTIN. Do you wish to make any additional statement?
Mr. WIRE. No, sir.

Mr. MARTIN. If there are no further questions by members of the committee, we thank you very much, Mr. Wire.

The next witness is Mr. Hammond, of the Inland Steel Co.

STATEMENT OF W. J. HAMMOND, TRAFFIC MANAGER INLAND STEEL CO., INDIAN HARBOR, IND.

Mr. HAMMOND. Mr. Chairman and gentlemen, my experience in transportation matters covers a period of about 18 years with the railroads in the transportation and traffic departments, and about 15 years in the steel business. About 6 years of that period I acted in the capacity of assistant traffic manager of the Inland Steel Co., and since 1926 in the capacity of traffic manager.

I have a short statement which I would like to present to the committee.

My name is W. J. Hammond, and I am traffic manager of the Inland Steel Co., manufacturers of iron and steel articles, with the principal plant located at Indiana Harbor, Ind., which is in the extreme northwestern section of Indiana on Lake Michigan, and a smaller plant at Chicago Heights, Ill.

I might say that we also have coal mines in eastern Kentucky, Pennsylvania, and Illinois; ore mines in Michigan, Wisconsin, and Minnesota: and a limestone quarry in Michigan.

I ask your indulgence for not more than 10 minutes of the committee's time in which I may state our interest in the passage of this bill, avoiding details.