The CHAIRMAN. Mr. Chamberlain, I should like to quote one sentence from your report of 1911 and see whether it expresses your present view on the subject. I read from the last paragraph on page 17, as follows:

The Panama Canal will not only double the efficiency of the Navy, but in the hopes and expectations of its friends it will double the efficiency of our means of commercial communication between the Atlantic and Pacific coasts. It will permit a new and cheaper method of transportation between the seaboards, competing with the transcontinental railroads. Every dollar in tolls collected from cargoes or from ships which carry them en route from one seaboard to the other lessens to that extent the value of the canal as a competing transportation route.

Does that express your views to-day?

Mr. CHAMBERLAIN. May I look at that one moment?

The CHAIRMAN. Yes, sir. It is at the bottom of page 17.

Mr. CHAMBERLAIN. If I had occasion to write that sentence again, instead of saying "to that extent," I would say "to an extent,' because that looks like a statement that the dollar would be an exact measure of the effect. Well, I think that is too strong a sentence. I would say, "to an extent;" I would not say, "to the extent of the entire dollar," because, as I say, all business matters are not simple matters; you can not reduce them to two or three facts, as, of course, you know. I would say it lessens it to an extent, but whether I would say it was to the extent of 100 cents or 90 cents or 67 cents, I would not undertake to say. I would make that modification. The CHAIRMAN. Considering the vast amount of merchandise and freight transported by the railroads, exceeding any amount of freight that may be conveyed by boats through the canal, it is estimated that the imposition of a toll of a dollar or a dollar and a quarter upon the boats will confer upon the competing railroads not only that $1.25, but a hundred times that, because of its much enlarged opportunities of imposing freight rates upon all its traffic. What is your view with respect to that situation?

Mr. CHAMBERLAIN. That is too large a question to put before me I do not know that I would be competent to answer it,

in a moment.

at any rate.

The CHAIRMAN. I think that is all. We are very much indebted

to you.

Senator SHIELDS. One question. How far is the commercial transportation on our great rivers included in the coastwise trade? Mr. CHAMBERLAIN. Practically in its entirety.

Senator SHIELDS. That includes all of our great rivers, the Mississippi and its tributaries?

Mr. CHAMBERLAIN. Oh, yes. As I remarked, these ferryboats that run from here to Alexandria are coastwise vessels.

Senator SHIELDS. Could you give any estimate of the number of vessels that are engaged in the coastwise trade along these great rivers? Mr. CHAMBERLAIN. As distinguished from the rest of the country? Senator SHIELDS. Yes.

Mr. CHAMBERLAIN. There is a division here that the western rivers, as they are called-that is, the Mississippi and its tributaries-1961. The term "western rivers" includes the Mississippi, the Missouri and its tributaries, and the Ohio.

Senator SIMMONS. Mr. Chamberlain, just one question. The rate of toll on the canal is $1.20 as now fixed, is it not?

Mr. CHAMBERLAIN. I do not know that exactly. I think it is $1.25. Senator SIMMONS. That is based, as I understood you a little while ago, not upon weight, but upon measure?

Mr. CHAMBERLAIN. Exactly.

Senator SIMMONS. That is, 100 cubic feet is counted a net ton? Mr. CHAMBERLAIN. Yes, sir.

Senator SIMMONS. In 100 cubic feet measured by weight there would be how many tons?

Mr. CHAMBERLAIN. Well, the principal article that I think of just now is, as I say, raw sugar, that would go through the canal. The Bureau of Standards told me yesterday that a square foot of raw sugar weighs 50.8 pounds. Of course, 100 square feet, which would be a ship ton, would be 5,080 pounds. But you have got to allow for the bags.

Senator SIMMONS. That would be over 2 tons weight?

Mr. CHAMBERLAIN. Yes. You have got to allow for the bags; for sugar in bags, you can say, roughly speaking, it would be a little over 2 tons 21 tons.

Senator SIMMONS. I have seen the statement that a ton by this measurement in weight would run an average of from 1 to 2 tons. Mr. CHAMBERLAIN. That is a very good way of putting it, I think. Senator SIMMONS. So that measured by weight the tolls per ton on the basis of $1.25 for 100 cubic feet would not be more than 80 cents, would it ?

Mr. CHAMBERLAIN. No, it would not. The average would be, I should say, somewhere near 624 cents.

Senator SIMMONS. Now, considering the different between water transportation and rail transportation, do you believe a reduction in water rates to the full extent of that toll, 60 or 80 cents, would have any very material influence in reducing rail rates across the continent? Mr. CHAMBERLAIN. When you come to railroad questions, I want to own up at once the broadest and most complete ignorance. I know absolutely nothing about them. I have never had any occasion to give any attention to railroad matters, and any opinion I gave would not be worth giving. But when you ask me to compare railroads and ship matters I feel at a loss how to do it. I should say, as a general economic proposition, when you put any kind of a tax on anything somebody has got to pay it, and it must enter, if only to an inappreciable extent, as a factor in competition. But whether it would be an appreciable factor or whether it would be so small that you could not see it with the naked eve, I do not know. The factor is there. How much it would be in the matter of competition I would not undertake to say. As you put it, Senator, I should think it would be very small, but I do not know."

The CHAIRMAN. You still adhere to the opinion expressed in your report of 1911, that every dollar imposed by way of a tax on water transportation will be for the benefit of the competing railroads?

Mr. CHAMBERLAIN. I say, instead of saying "to that extent," I want to say "to an extent."

The CHAIRMAN. We are very much indebted to you, Mr. Commissioner.

(Thereupon, at 1.10 o'clock p. m., the committee took a recess until 2.30 o'clock p. m.)

AFTER RECESS.

The committee met at 2.30 o'clock p. m.

The CHAIRMAN. The committee will come to order. Dr. Huebner, you might begin your testimony now.

STATEMENT OF DR. S. S. HUEBNER, PROFESSOR OF INSURANCE AND COMMERCE, UNIVERSITY OF PENNSYLVANIA, PHILADELPHIA, PA.

The CHAIRMAN. Will you state your name, occupation, and address?

Dr. HUEBNER. S. S. Huebner, professor of insurance and commerce, University of Pennsylvania, Philadelphia, Pa.

The CHAIRMAN. Doctor, you were engaged, I believe, by the House Committee on Merchant Marine and Fisheries as an expert during their recent investigations into the shipping and railroad conditions of the country?

Dr. HUEBNER. I was expert to the committee for a period of about two years in the investigation under House resolution 587.

The CHAIRMAN. You are familiar with transportation in this country, both by rail and water?

Dr. HUEBNER. I am familiar, I feel, with transportation by water, but do not feel that I am as competent to speak about rail transportation as I am about water transportation.

The CHAIRMAN. Have you any views which you desire to present to the committee regarding the economic aspects of the proposal to allow American coastwise vessels to use the canal without the payment of tolls?

Dr. HUEBNER. No, sir; I was invited to appear here to state the nature of the control of coastwise carriers.

Mr. Chairman, taking into account each of the divisions of our coastwise traffic, it appears that everywhere nearly the entire line tonnage is either under the control of the railroads or under the control of ship consolidations, and that the line carriers nearly everywhere, through meetings by conference, determine the rates that are to prevail, both port to port rates as well as through rates, part rail and water. My feeling is that because the lines are acting through conferences or otherwise have a monopoly of the trade, they will, if they are granted an exemption from tolls, simply regard that exemption as a decrease to that extent in the cost of operation.

The CHAIRMAN. That is, if the railroad-controlled boats have that privilege, you mean?

Dr. HUEBNER. If the railroad-controlled boats had that privilege my feeling is that they would be to the good an amount equal to the tolls.

The CHAIRMAN. Of course, you are familiar, I suppose, with the Panama Canal act, which excludes from the use of the canal all railroad owned or controlled boats in competition with the railroads? Dr. HUEBNER. Yes, sir.

The CHAIRMAN. What proportion of the coast wise

Senator THORNTON. Mr. Chairman, pardon me one moment, before we get away from that subject. I want to know if I understand the witness correctly. I understood him to say that in the matter of

exemption from tolls those who were exempted would consider it simply a diminution of their operating expense. Your question seemed to indicate that he confined that entirely to railroad boats. I understood him to mean the whole business.

Dr. HUEBNER. I mean the whole business, Senator.

Senator THORNTON. That is a very different thing from what you have got down now.

The CHAIRMAN. What proportion of the coastwise shipping is subject to railroad influence, if you know?

Dr. HUEBNER. I think, Senator, that can be best explained by considering the coastwise traffic by section, if I may be permitted to do so. The CHAIRMAN. Yes; use your own plan.

Dr. HUEBNER. It is impossible for me to separate offhand the railroad controlled from the consolidation controlled. But in the New England traffic the New York, New Haven & Hartford interests and the Eastern Steamship Corporation, which is the one large consolidation in that region, control 88 per cent of the gross tonnage of all the lines operating in the New England traffic. As regards the middle and south Atlantic coast trade, there are 96 line vessels of 232,000 tons. These 96 vessels are owned and operated by 11 lines.

The CHAIRMAN. When you speak of lines, you mean railroad lines, I suppose?

Dr. HUEBNER. Railroad lines, as well as other lines. Of these 96 vessels, of 232,000 tons, the railroad-controlled lines control 61 per cent of the vessels and 67 per cent of the tonnage; and the steamship consolidation known as the Atlantic, Gulf & West Indies Steamship Lines, and its subsidiaries, controls 25 per cent of those vessels and slightly over 26 per cent of the tonnage.

Senator WALSH. There has been no adjudication of the character of that combination, I suppose?

Dr. HUEBNER. No, sir: there has not.

Senator WALSH. You simply assume that it is a combinationDr. HUEBNER. It is a consolidation of several lines, and any consolidation

Senator WALSH. That you assume to be in contravention of the act?

Dr. HUEBNER. No, sir; I am not sure that any of these consolidations are in contravention of the act. I make no statement relative to that.

Senator WALSH. But simply that they are combinations?

Dr. HUEBNER. That is right. In other words, of the total line tonnage in the Middle and South Atlantic coast trade the railroads and the consolidations combined represent 86 per cent of the steamers and nearly 94 per cent of the total tonnage. There are in the Middle and South Atlantic coast trade only four small independent lines. And, I might say, of those four lines, three have their respective routes entirely to themselves. So there is no rate competition. And the one small remaining line went into the hands of receiver at the time we had our hearings, during the recent investigation, and I do not exactly know what the status of that line is at the present time.

Taking next the Atlantic coast-Gulf coast trade, I find that all of the steamers, with the exception of four boats, were under the control of the railroads or the Atlantic, Gulf & West Indies Steamship Lines. Of these, two small independent lines, one called the Phila

delphia & Gulf Line and the other called the Seaboard & Gulf Line, the Philadelphia & Gulf Line was recently in the hands of a receiver, and the Seaboard & Gulf Line has its route to itself, and the manager of the line testified that it also would long ago have disappeared if it had not been for the support of a small railroad in Texas, which supplied it with sulphur and other articles to carry.

In other words, taking the Atlantic coast trade in the aggregate— the New England coast trade, the Middle Atlantic coast trade, and the Atlantic and Gulf trade-it appears that the railroads control 54.5 per cent of all of the line steamers and nearly 62 per cent of the tonnage; that the Eastern Steamship Corporation controls 11 per cent of the steamers and 10 per cent of the tonnage; and the Atlantic, Gulf & West Indies Steamship Lines 18 per cent of the steamers and 22 per cent of the tonnage. Combining the two consolidations with the railroads we find there are 199 steamers that may be characterized as line steamers, and of that number nearly 85 per cent is controlled by the railroads and the two consolidations. These 199 steamers represent 516,000 gross tons, and of that entire tonnage the two consolidations mentioned and the railroads represent nearly 94 per cent. The CHAIRMAN. Are you confining that observation to the ships on the Atlantic coast?

Dr. HUEBNER. On the Atlantic coast and the Gulf coast. Now, as regards the Pacific coast

Senator SIMMONS. Pardon me, Doctor, are those vessels at this time engaged in any trade except the coastwise trade along the line of the Atlantic seaboard?

Dr. HUEBNER. With the exception of the Morgan Line, which is owned by the Southern Pacific Railroad. That line carries a great deal of traffic which is destined by the "Sunset-Gulf" route to the Pacific coast. In other words, it is in competition with the intercoastal lines operating via Panama and the Isthmus of Tehuantepec. Senator SIMMONS. And with that exception

Dr. HUEBNER. With that exception they are engaged in the coastwise trade. I may also state that I have not included in my figures the several lines that operate to Porto Rico, although strictly speaking that is coastwise traffic. As regards that traffic the committee was unable to prove the existence of an agreement. All the evidence tends to show that three of the four lines operating there are working in harmony; but one line refuses to work in harmony with the other lines, and consequently there was cut-throat competition until recently, at least. The rates were cut some weeks as much as 70 per cent from the regular schedule. I have, in other words, briefly presented the entire situation in regard to the Atlantic and Gulf coasts with the exception of the Porto Rico traffic.

Senator SIMMONS. The act which the chairman referred to a little while ago with reference to railroad ships confines that prohibition to ships in competition with railroads. Can you give us any idea as to whether these ships engaged in this local traffic are in competition?

Dr. HUEBNER. Generally speaking, the railroad owned boat lines are not in competition with the railroads themselves. They are extensions of the rail lines. There are some exceptions in New England, but generally speaking, the railroads have acquired these boat lines in order to get an inlet into territory which the railroad