By Mr. NORWOOD: Q. Then your profits in winter are less than in summer? A. The net profit, if it was separated between the summer and winter operations of the road, I think would be less in winter than in the summer, notwithstanding the increased prices. And it is this increase that is complained of, and they put it upon the ground that it is because water communications are closed. I think that covers nearly all that I now have in mind with regard to the operations of these through-lines. They were established for the purpose of meeting this very demand and necessity of the changed manner of doing business, so that the producer could get a car to his own door and ship it to his own friend anywhere he liked at the current rate, without the intervention of middle-men at all. By Mr. SHERMAN: Q. Are not some of these freight companies organized by an association of capitalists or individuals distinct from the railroad companies? A. Nothing of the sort, sir. Q. You correct an impression that I had formed myself, that some of the freight lines were incorporated companies of associated capitalists. A. No, sir; my office is the office of the joint railroad companies combined. My salary and the salary of my staff is all paid monthly; and all vouchers for overcharges, losses, damages, locks, seals, way-bills, stationery, and all that sort of thing, for the purpose of doing this business, is all done in my office. Q. It is furnished by each company? A. Furnished by me at my office. I furnish it myself for the lines. Once a month we have a meeting of the general freight agents of these lines, and that expense is prorated in proportion to the earnings of the roads in these cars and is paid to me monthly. Q. By the companies? A. By the companies. By the CHAIRMAN: Q. Of what freight companies do you speak? A. I speak now for the "Blue Line." The 66 Blue," "Red" and "White" lines, "Milwaukee Line," and all that I am aware of that pass over the New York Central Road, are upon the same basis. By Mr. CONKLING : Q. May I inquire what is your office which you have described? A. My office is general manager of the Blue Line for joint account of all the railroads combined. Q. Located in New York? A. Located in Detroit. I would state that the New York Central Railroad, so far as they are concerned, or the Boston and Albany Road, have no voice whatever in the making of rates eastward-bound. The rates are made by the general freight agents of western roads centering in Chicago. They get together and find what the water communications are doing their rates, &c., and base their rates upon that as a competing rate. They don't even consult the Boston and Albany Road, the New York Central, or any road east, at all. They establish their tariff, and under that tariff the roads are obliged to take their pro rata of it, if it is not but 10 cents a hundred. Q. And this convention of freight managers gauge their freight tariff by the water-rates and not by the cost of doing the business? A. They have to gauge their rates by the rates of competing lines, for the simple reason that the rate carries the property. Therefore, if waterrates are so much below railroad-rates, we cannot expect to carry it. Therefore, they have, to a certain extent, to make up their tariff as against competing lines, whether it is water or rail. For instance, if there is a short line of rail into Baltimore, and they are taking property for a cent a ton a mile, and we cannot haul it, taking less than that, and their shorter distance gives them the preference, we have to make our tariff to correspond with those competing lines, and whatever that tariff is, the New York Central and Boston and Albany Road have no voice in it at all. They take their pro rata of that rate, and are satisfied, or must draw out. By Mr. DAVIS: Q. Where does the power come from; who gives it to the agent there to regulate it? A. That is done by a joint arrangement with the roads East and West. The roads from the East make the rates on the property moving to the West, and the roads from the West make the rates on the property moving to the East.. Q. How is it divided between the main lines coming East; how is it prorated? A. The same rate per ton per mile. Q. That is not my meaning. Suppose you have a thousand tons to come, who regulates what road shall take it-what route it shall take? A. The shipper himself, or consignee. By Mr. CONKLING: Q. What roads does the "Blue Line" traverse? A. The Eastern Road from Portland to Boston, Boston and Albany Road, Providence and Worcester, Worcester and Nashua, Housatonic, Hudson River, and New York Central. The Great Western of Canada, Michigan, Central, Jackson, Lansing and Saginaw, Detroit, Lansing and Lake Michigan; Fort Wayne, Jackson and Lansing, and the Eel River Road; Chicago, Burlington, and Quincy; Illinois Central, Chicago and Alton, Chicago and Northwestern and the West Winconsin which come into Saint Paul. But the cars are not restricted to these roads. The cars go anywhere where they are asked for; and as I said before, I think in the month of November last the cars ran on 124 different roads, going into nearly all the New England towns and the towns of the West, and from the East through to the Pacific Coast. Q. All the roads you have named are proprietors of the Blue Line? A. Yes, sir; and have cars in the line. Q. As you understand it, is there a difference among these various roads in the actual cost of moving freight? A. There are sometimes differences in the cost of moving property. Where one road would have heavy grades and another road would have no grades, of course the road having the heavy grade would cost them more to move that per ton per mile than the other. That is their misfortune. They get no more for hawling it than the other. Q. So that in this arrangement you prorate upon mileage alone? Q. Taking the actual illustration given by this list of roads, what is the difference in actual cost of moving freight between the road which can do it cheapest and the road whose grade and alignment makes it dearest? A. To go into that it would be necessary to know the value of the land, and the grades, and that sort of thing, which is on each road. Q. Why the value of the land? A. If you go through a city where you pay $300 a foot for land, of course you have a greater outlay than through a country place, where the people are willing to give the land. Q. My inquiry is merely as to the actual running expenses, as to the actual expenditure necessary for the operations of moving freight along the road? A. There should not be any difference at all, where there is no difference in grades, or cost of fuel, or the costs of operators. Q. Therefore it is that I repeat my question. Taking this list of roads as you know them, what, in your belief, is the difference in actual cost of moving freight between a road, and I wish you would name it, which has the hardest grade and alignment, and that road whose situation is such that it can move cheapest. What is that difference, and which are the two roads, illustrating the difference? A. I don't know that I could give you that. I think the Boston and Albany road cost more money per ton per mile than any other. Q. That is, from grade? A. From grade; yes, sir. Q. How much more does the Boston and Albany Railroad than the New York Central ? A. That I don't know, sir. Q. Have you no opinion about it? A. I should think not less than 10 per cent. and may be more. Of course, they have to haul a much less number of cars, owing to upgrade, than they would if it was level, and each train requires about the same amount of men and an engine. Therefore, the greater their grades, of course, the more their expenses. Q. But they sink this difference in the general benefits they derive from this co-operative sending of cars by the Blue Line? A. Yes, sir; it is their misfortune to have the heavy grades. By Mr. SHERMAN : Q. You are a very intelligent gentleman about this matter, and I wish to get at the elements of the cost of transportation. Take the distance between Chicago and New York and take the lines which you are familiar with, the New York Central and Lake Shore Line, and the Penesylvania Central and Pittsburgh and Fort Wayne Lines. Take these two, a distance of about a thousand miles, excluding now the capital invested in the roads, the interest, &c., and taking the actual cost of moving by the ton or bushel, whichever is most convenient to you; tell the committee what is the actual net cost upon those two lines of railroad, as constructed. A. That is, taking the business as it now is? Q. Yes, sir; as it is this year. It is developing and increasing, as a matter of course. What would be the lowest rate per ton per mile? A. In order to get at that, the committee would have to take into consideration the cost of hauling a very large number of empty cars back again to get another load. Q. Take that into view, because that is a part of the cost. A. It is; but if the tonnage could be so equalized as that a return freight could be had, so that instead of moving a large proportion of these cars one way loaded and back empty for another load, really hauling two miles for one earning, that would reduce the cost very much. Q. I want the actual cost per ton per mile, taking the average of the year. A. Do you mean outside of a fair outlay for the road? Q. Leave out all interest on bonds and dividends to stockholders, and give the actual net cost of transporting a ton of merchandise from New York to Chicago by either route, whichever you are the most familiar with. Give first the actual cost, including the pay of the fuel and all the necessary expenses of moving the trains? A. I went into that one time on the Michigan Central Road, when I was the assistant superintendent there, and I think it was about threefourths of a cent a ton a mile. By Mr. CONKLING : Q. Did that include the maintenance of the road? Q. I mean in track-repairs, &c.? A. No, sir; I am going to make a little explanation of that. And that was another reason why these through lines were a matter of necessity. At that time we had to handle the property at the terminus of each line, find storage-room, take the property out and deliver to the next company. They had to do the same thing; it had to be checked over three or four sets of roads; and all that our present system of through-cars has wiped out. I think if you can go still further, and unite the interests of the railroads more closely, even without consolidation, under the form of a clearing-house plan, by which the whole of this clerical labor at this point would be done away with, and each road receive a clearing-house certificate for its proportion of the line-earnings, so that there would be no handling, and no clerical labor at these terminal points, and the trains run uniformly, I think that could be. reduced, probably, to fiveeighths of a cent a ton a mile. By Mr. SHERMAN: Q. Now, let us go on one step further and give us the other elements. What amount per ton per mile would, in your judgment, pay the interests of the cost of railroads built along the lines of either of these two routes which I have mentioned. In other words, what would pay for the capital employed in building a line of railroad similar to either of these two great lines. As a matter of course that includes the maintenance of the road? A. There is such a great variety of cost to the road that you would have to equalize the whole thing. For instance, ten miles from here out would cost as much as one hundred and fifty miles beyond Albany. Q. But what would it cost to build either of these lines of railroad; about a thousand miles long? A. Put into single tracks? Q. Such a road as there is now. What would duplicate either the New York Central or the Pennsylvania Central lines. As near as you can get at it? A. That, of course, would have to cover its equipment? Q. Yes, sir. A. The magnitude of the business, of course, increases the cost of equipment very much. Q. Take the present business of either road and state what, in your judgment, per ton, per mile would compensate for the capital employed. I want to get at the actual cost of freight? A. The right way to get at that would be, of course, to find the cost of the road and put that over the number of tons moved a year. The New York Central can move 4,300,000 tons a year with its two tracks, and can move 6,000,000 tons a year with its four tracks. The cost of those four tracks and its equipment for freight, would have to be taken into account at its actual cost, together with the actual cost of the equipments necessary to move 6,000,000 tons a year; and you put a fair interest after paying cost of maintaining that, over the 6,000,000 of tons, and it would give net cost. For instance, suppose a single track: the track alone costs $25,000 a mile, and its equipments and station-buildings and that sort of thing $25,000 more; there would be your four tracks and equipment, $200,000 a mile, and put that over the four hundred and fifty miles from here to Buffalo, and distribute that over 6,000,000 of tons of freight, you would have it at once. Q. Take your own mode of computation and state what would be a fair return for the capital employed. A. In our figuring of the thing, we think when we get below a cent a ton per mile on the average for the year, we have got then so that the business is not worth carrying. Q. Then you say a cent a ton a mile is the minimum at which railroads, according to their present development, can carry heavy freight from Chicago to New York? A. Yes, sir. Of course these things differ as you strike the different tonnage and cost of the roads; but taking the general average, when you get below a cent a ton, we think we have got where the business is not worth having. Q. What is the cost of running the New York Central? How much percentage is expended in running expenses; how much percentage is their gross receipts ? A. I think their running expenses would be about 65 per cent. Q. About two-thirds? A. Yes, sir. By the CHAIRMAN : Q. Are you not carrying wheat now for less than a cent a ton a mile? A. Yes, sir. Q. Are you carrying it at a loss? A. Yes, sir; when business is light. Q. Do you mean to say that the rates fixed on all these roads, 45 cents. a hundred between Chicago and New York, is an actual loss to the companies? A. It perhaps becomes necessary to make some little explanation. I have been asked that question once before. In the movement of property over lines of roads, it has to be in the charge of competent men. Take, for instance, from the 1st of May until middle of August, at the opening of navigation; the force of men to operate a road with the increased business, when the canal and lake navigation is closed, is double, probably, what it would be during the summer-months. Therefore these men, being mostly poor men, must have employment during the dull time. No road can afford to let these tried men go from them to find business for the dull season. Therefore, if they can keep those men employed through the summer, and actually lose money upon the business that they are doing, instead of undertaking to put new men that know nothing of the road, or its running regulations, or anything of that kind, on during the busy season, they had better earn enough to pay part of their expenses, and keep those men for the balance of the time, when the roads earn more by their increased business, than to let |