pay for them and own them. They allow us the same car-service that the co-operative lines allow each other, viz, one cent and a half per mile run per car, that being supposed to be about a fair equivalent for the responsibility of keeping them in order, for loss by decay, and for interest on cost. That is a cent and a half per mile run per car. By Mr. DAVIS: Q. A cent and a half a ton a mile for a car, I understand? A. No, sir; a cent and a half for a mile run; a car of eight wheels. Q. What capacity? A. They are built to carry twelve tons. By Mr. NORWOOD: Q. Still the tonnage does not affect the price paid? A. It does not, at least on certain roads. The method of compensating the car-owner differs on various roads. The western system is that which I have just stated. The eastern system is very ordinarily either by the ton of freight carried per mile, or else by a certain percentage of the earnings on that freight per mile, but the general financial result is substantially the same thing. The advantage of the eastern system is that the car is not paid for unless it carries something. The compensation depends altogether in that case upon the amount that the car carries, or if it is a percentage on the rate, it depends on the amount earned on the freight carried. But our compensation, East or West, is that which is paid by the road for cars which the roads themselves own, and which they interchange with each other. It is the ordinary car-service which their experience shows to be about sufficient to cover expenses and interest. The remainder of our connection with the road is that they hire us to do by the contract what they engage Mr. Hayes and his staff to do by salary. In most cases-I believe in all now-the contract rate is a certain percentage upon the rates of freight which are earned. If the rates of freight are high, our compensation is increased in gross amount; if low, our compensation is diminished, because it is a percentage of the earnings. For that percentage we assume certain responsibilities, viz, we collect all the freight-charges, or, if we do not, we lose them; we establish agencies all over the country, and pay their expenses, officerent, stationery-expenses, the services of the men, &c. Those agencies are for the purpose of bringing the route to the knowledge of shippers of way-billing freight, issuing of through-bills of lading, collection of freight-charges, and of settling any claims shippers may have for damages, regardless of what part of the route the damage is done on. If, for instance, a shipper in Omaha wants to send freight to New York, he gets from us our through bill of lading. If that freight arrives here damaged, it is a matter of no moment to him on what road the damage occurred; he looks to our agent at this place to reimburse him, and it is done. If he is overcharged, that is, if the rate collected is higher than that agreed on, the agent here refunds him the money. It makes but a single organization for the public at large to deal with. Those agencies are very numerous, and reach a great many local points other than the principal commercial points, and it has enabled small dealers at small towns to secure all the advantages which would attend their location in large towns. We run, for instance, with our line through Easton, Pa. A man in Easton, wishing grain, can buy it in Peoria, Burlington, Omaha, or Chicago, if he chooses, and have it brought to him in the same car it started in, and just at the same rate as though it had been shipped to New York. Beside the collection of earnings, we assume the payment of all damages that we cannot show to have occurred, through the carelessness of the roads themselves, which are tolerably numerous, such as thefts. Those we have to pay out of the percentage allowed us. By the CHAIRMAN: Q. How about accidents? A. Not if an accident is established on the roads. By Mr. DAVIS: Q. Have you regular tariff-sheets for different classes of goods? A. Yes, sir; it is proper to say, however, that we are merely the agent of each road with which we make a contract; we form, as it were, a joint agency, a kind of fusing of the roads into a single mass for this particular purpose. We have nothing to do with the fixing of the rates at all. The railroad companies fix the rates at which we carry traffic. Those rates are generally fixed by the general freight-agent of the road upon which the freight starts, and whatever rate he names is the rate at which we carry. Those rates are the same as the rates named for the carriage in any other freight cars whatever. Q. Do you pay these roads different rates, or are they all paid pro rata? A. The substantial result is about the same; but every road has its own idea about a variety of points, and some prefer to make arrangements in one way and some in another. The car-service question each road determines for itself. Q. You make the best arrangement you can with each road? A. Yes, sir; but the substantial results are almost exactly identical. They reach the same result in different ways. By Mr. NORWOOD: Q. You have a separate contract, then, with every road? By Mr. DAVIS: Q. Your compensation, if I understand it, then, is the difference between the arrangements you make with the company and your tariffsheet? A. The arrangement we make with the company is not a fixed arrangement; it is a percentage ordinarily of the actual rate. In other words, they undertake to decide about what the expense of doing the work by salaries would amount to in a percentage on the rate, and that is about what they give us. The only substantial difference, therefore, between our own line and a co-operative line is to be found in the actual financial results to the road itself; that is, whether it is cheaper for the road to have this work done by contract, or to have it done by parties to whom it pays a salary. Which is the cheaper method, I do not know that I can answer. My impression is that our method is cheaper to the roads. Q. Do you, or the company, discharge the cars at the ends of the routes, or at your destination? A. At some points we do. At New York, for instance, we furnish our own depot. It is a peculiarly expensive place, and the business is very large, requiring a very large outlay of money to provide the necessary pier and depot-room. No co-operation could be secured among the various railways we serve for the furnishing of these large facilities. The road over which we run into New York is a short line of only some seventy-four miles, and it could not afford to undertake alone to furnish the expensive depot facilities requisite at this end of the line. The other roads did not feel disposed to furnish any share of it, and the general arrangement is, therefore, for us to furnish the depot here. Q. Have you agents or offices in all the principal points of the West and East? A. Yes, sir; not only at all the principal points, but at a great many minor points. By Mr. NORWOOD: Q. As I understand you, then, while of course there is a profit to both the railroad and to your company, you state that the expense to the producer and the consumer is no greater than if the railroad worked by itself? A. No, sir; onr rates are at all times the same as they are in the cooperative line and in the railroad companies' own cars. Q. I understand you to say you think your plan is the cheaper? A. Yes, sir; to the railroad. I think it gets more net money than it can do by the co-operative or other existing methods. Q. Your rates, however, are the same as the co-operative line? A. Precisely so, at all times. By the CHAIRMAN: Q. What number of cars have you in your line? A. We have between 3,000 and 4,000. Q. Are there any other lines used on the Pennsylvania Road? Q. Is that running now? A. Yes, sir; but the Pennsylvania Railroad Company bought out all of its cars last summer. Q. There is, then, no other freight-line running on the Pennsylvania Railroad but yours? A. No, sir; I think the Merchants' Dispatch, running on the New York Central, owns its own cars. There are a large number of short lines in Pennsylvania established by law. By the old system of public works, under State regulations, the State furnished nothing but the road and motive power, and any one had a right to put on his own car or cars; and that same system has been inherited by the Pennsylvania road, and, indeed, it is made obligatory on most of the Pennsylvania. roads to haul any safe car the owner thereof chooses to present for towage. Q. Is this discrimination that you speak of by percentage, in addition to the mileage for your car? A. The percentage compensation allowed is in addition to the mileage, which is simply the ordinary mileage they pay for cars. Q. You receive, then, a cent and a half a mile for every mile your cars run, and, in addition to that, a certain percentage on the amount of earnings? A. Yes, sir; for which we do the service I have mentioned. Q. Can you state now about how that percentage ranges? A. The percentage is ordinarily a fixed thing. I think it will probably run from 5 to 10 per cent., according to the character and cost of carriage of the goods. Q. The earnings? A. Yes, sir. Q. I understood you to say you had nothing to do with the establishment of prices of freights. A. No, sir; not anything, except so far as we may represent matters to the proper general freight-agent as to what the necessities of any case or set of circumstances seem to demand. Q. Is this company entirely independent of the railroad company? Q. Are any of the directors or officers of the railroad company interested in your line? A. I think none of the directors of any railroad company are interested in our line. I know of none. There are a few of the minor officers, of perhaps not over two or three of the roads, who have an interest; small stockholders. I do not think any officer who has any voice whatever in determining our relations ever had any interest. Those that have, have bought their stock in open market, as they would buy any other stock. Q. But you do not know that any of the directors or controlling offi cers of the railroad company have now any interest in your company? A. Not any. Q. You understand that there is a certain charge of that kind? A. Yes, sir; but I do not think there is 5 per cent. of our property owned by parties having anything to do with the railroad companies we traverse. By Mr. DAVIS: Q. I understand your line is principally on the Pennsylvania Road? A. We run over the Pennsylvania Road east of Marysville, where the Northern Central Road crosses, then follow the Northern Central up to Sunbury; we then follow the Philadelphia and Erie to Erie. From Erie we branch off to the different western points. Q. Do you use roads other than those that are controlled by the Pennsylvania Central ? A. O, yes, sir; the largest portion, about 85 per centum of the mileage, of the roads that we run over are not only not controlled by them, but are very strong enemies of the Pennsylvania Central in a business point of view. Between New York and Erie we run over the New Jersey Central, Lehigh Valley, the Philadelphia and Reading until we West of Erie we run over the Lake strike the Philadelphia and Erie. Shore, Chicago, Burlington and Quincy, Burlington and Missouri River, the Cleveland, Columbus and Indianapolis, and the various roads to Saint Louis. Q. The cause of the question was, when you were introduced I understood you represented the Pennsylvania Road. A. That part of our route from which there is no divergence, exWe run over cept at its termini, is the route which is controlled by the Pennsylvania Railroad, namely, the Philadelphia and Erie Road. that line its entire length, and hence it might be considered as the trunkline of our whole system, and therefore, in a measure, we represent the Pennsylvania Railroad Company's, freight organization more especially In fact we are the only fast-freight line now running than any other. over any of the Pennsylvania Railroad Company's organization, except as before stated. By Mr. SHERMAN : Q. Do you run on the route between Harrisburgh and Pittsburgh? Q. Who runs that route now? A. The Union Line still exists, but the Pennsylvania Railroad Com pany bought out all of its cars. It was formed at a time when the Pennsylvania Railroad had no connections west of Pittsburgh which they controlled, and when many of their western connections were poor and could not furnish the necessary equipment for accommodating the trade that was tendered; some of them were partially antagonistic to the Pennsylvania Railroad, and the Union Line took the intermediate position of joint agent of all the lines, and furnished cars extending over the various western roads to the Mississippi and the Ohio; but since it was established in 1862, nearly all of such western roads have passed under the control of the Pennsylvania Railroad, either by lease, purchase, or otherwise, and there was no longer the same occasion for such an intermediary. Q. What company runs on the Fort Wayne Road? A. The same company. Q. Then those lines are run by the Pennsylvania Company without an intermediate company? A. Yes, sir; they still maintain the organization, inasmuch as it is a useful commercial organization. Q. But still the ownership of the cars is in the company itself? A. Yes, sir; instead of paying a percentage as heretofore to the Union Line organization, they pay the expenses of that organization—that is, of the men, the salaries, &c. They employ them. Q. In other words, they have substituted their own agents for another company? A. Yes, sir; that is, without dismissing their own agents, they have also employed the agents and personnel of the Union Line. Q. Are you prepared to tell us to what extent the Pennsylvania Central Railroad Company use the canals of Pennsylvania, and how much is the tonnage of those canals? A. I could not give you any very accurate information on that point. Q. We desire to ascertain from some one the extent to which the Pennsylvania Central use water-transportation, and the cost. I will ask you the same question I put to Mr. Hayes; you see what I wish to arrive at. I wish to get, if possible, the net cost over and above the interest on bonds, &c., and capital employed, of running a ton of freight from Chicago to New York, or from New York to Chicago. As near as you can get at it, what would be the maximum cost? A. It depends almost entirely on quantity. Q. You know the route very well between Chicago and New York, via Philadelphia, Pittsburgh, and Fort Wayne, or, if you choose, you can take it via the Philadelphia and Erie Road, and Lake Shore route. Could you give us the net cost? A. Do you mean the present net cost, what it now costs them with the present business? Is that your idea? Q. Yes, sir. That probably would be the better way, taking the whole line through from Chicago to New York. A. I could not answer you what it has cost on the Lake Shore Road, because I have not seen their report for 1872. The cost on one road per ton per mile is not a criterion of the cost on another road if the conditions vary. Q. Then you are not able to give the whole line? A. No, sir. I can tell you what it costs on the Philadelphia and Erie; it costs them on an average about nine-tenths of a cent per ton per mile, I think a trifle under that. That was the actual operating cost, the entire amount of money which they disbursed and charged to freight expenses. It included the maintenance of track, the supply of the motive |