to-morow morning. In his absence I shall be pleased to answer any questions that the committee may desire to put relative to our organization and workings, or if there is anything now that they would like to know, I shall be happy to answer if I am able. This inquiry more properly tends toward obtaining information of the operations controlled by our second and third vice-presidents, both of whom are absent from the city. The third vice-president will certainly not be here until after you have gone on your trip. With reference to our fastfreight lines, and expenses of freighting, we can probably give you as much information as any one.

The examination was postponed.

NEW YORK, September 13, 1873.

The committee met pursuant to adjournment.

J. D. HAYES, general manger Blue Line, fast-freight, (recalled at his own request.)

Mr. CHAIRMAN: I wish to take up a few of the threads of the discussion that Mr. Worcester left out, and a few that I left out myself in my statement the other day, and give little more detailed information with regard to the operation of the lines.

The question was put to you yesterday, why these lines were colored, why the cars were treated differently from cars known as common cars belonging to the same road. That is for the purpose, during the busy time, of furnishin gthe West with the cars, instead of their being used by the New York Central, or any eastern road in a local business to the disadvantage of the West. Therefore, by agreement, these lines are painted a particular color, and put in and turned over to the general management. By the record-book of the movement of these cars, we know every day between what points those cars are from day to day. If we find that a blue car is unreasonably detained on the New York Central Road to the detriment of a western shipper, although the car belongs to the New York Central Road, and is under their control by reason of its ownership, they have no right by reason of their agreement to take that car and appropriate it for their own local business, no matter what their necessities are. Each furnishes its proper quota to do the business of the West, and to place the West on a fair footing with eastern men in respect to distribution of property.

Mr. DAVIS. Who directs where the destination of the car is to be? Mr. HAYES. That is directed by the manager when it is possible for him to do so, but generally by the roads with which the cars are at the time, in proportion to the demand. For instance, suppose fifty cars are required at Peoria, and they have not the cars at Chicago to send there, I would be asked for fifty cars for Peoria, and they would be sent there; but if we had fifty cars for Chicago and fifty at Peoria asked for, and had but fifty to send to both places, they would receive as near as pos sible the proportion of the cars in proportion to the magnitude of the business, so that the pro rata system of supply and demand would be as nearly balanced as it would be possible to do so under such an arrange

ment.

Mr. DAVIS. Who makes the rate of freight of your particular line? Mr. HAYES. That I answered the other day. It is made by the western freight agents from the point that the property starts from; that is, from the competing point.

Mr. DAVIS. The Chicago people.

Mr. HAYES. If it is from Chicago; if it is from Peoria they make it from Peoria. Saint Louis the same.

The local as compared with the through rates was a matter that was left out. Much has been said with regard to the extraordinary charge on local business as compared with the through-business, and a very great popular error has grown out of the discussion of that question much to the injury of railways, and of no benefit to the consumer or producer. If a car-load of property has to be received at a local station, the rule governing common carriers is that they are liable for the property from the time they receive it until it has reached its destination. Therefore, the cost of handling that into store and out again into the cars is just as great to run five miles as it is to run five hundred miles, or one thousand.

Suppose, for instance, that we receive a car-load of grain to haul fifty miles, and put it at a reasonable rate, the cost of handling that property could not be less than 20 cents per ton. There would be $2. If that property has to be unloaded to go into another company's car at the terminus of its road, at the end of fifty miles, the cost of unloading it is $2 more. The cost of an engine to go into switch and take that is spread over the entire train that is waiting. Therefore, a local-freight train to run one hundred miles in a day accomplishes less work than a through-freight train does to run three hundred miles in the same time. Therefore, if you were to apply, say, the one cent per ton per mile of the through business to the one cent per ton per mile for the local business, and deduct your terminal for the receiving and discharging, which is $4, you have $1 left as the proceeds of transportatian for fifty miles. You will see at once that that could not possibly be done. That is out of the nature of things that it should be done. It is unreasonable to expect it to be done. Therefore, all local freight must, of necessity, bear a much larger proportion of cost per ton per mile than throughfreight drawn in full trains over long distances, and it is for the purpose of reducing these expenses to the consumer as well as to the producer, and that railways may get something out of a very low rate of freight, that this organization is effected. The railway companies get a certain amount. The board of trade of Peoria, not touching the lake interest at all, but down into the interior, as a fair sample of the percentage of all those towns, and what the farmers realize, and what the transportation companies do, report:

No. 2 white, and No. 1 red wheat, as reported by the board of trade at Peoria, as sold for cash :

From March 1 to 31, 1872, the prices ranged from $1.60 to $1.68; from April 6 to 30, $1.68 to $2; from May 4 to 31, from $2 to $2.25 per bushel. Then prices fell off some on account of new crop prospects. Could there be any want of facilities at Peoria to move the crops to the sea-board, when wheat would bring such prices there, for the purpose of being sent to the sea-board? Corn sold there from May 4 to June 15 at a range in price from 40 cents to 45 cents per bushel; mixed oats from 36 cents to 42 cents.

There was moved by rail from Peoria for 1872, 432,353 tons. Then the board of trade report:

In this, the increase from year to year is apparent, and an increase in the movement of freight implies an increase in the means of transportation. And the proof is in the above statement that the railroad corporations and transportation companies have not neglected the business of this city.

The enlargement of the railroad facilities for the handling of freights has been con

tinuous during the year. The present capacity for transportation would be doubled, provided sufficient storage room existed at the markets to which western products are shipped. Cars could then be discharged upon arrival, and returned, laden or unladen, for more freight. But this storage capacity does not exist; and cars loaded with grain, especially corn and oats, at points in the West, and shipped to points in the East, remain, frequently, from seven to forty-five days from the time of arrival before being discharged. In eastern markets, blockades are common; and lines of railroads leading to them are crowded with cars, which are used as storage-room for indefinite periods, because of inadequate warehouse provisions.

Those are the remarks from the secretary of the board of trade at that point. The capacity to handle grain at the destination would double the capacity. Should not your attention be directed to the facilities at the sea-board to receive what is sent to them, instead of opening up rival lines to be used for loaded cars to stand upon side-tracks for storage purposes? Have the people at Peoria suffered by the "railway monopoly?" Let the following lines cut from their board of trade report for 1872 answer:

*

*

* * *

The demand, however, for money at the banks for legitimate business in the movement of the different products of the West, and for mercantile purposes, has been satisfied. The general business of the city has been most satisfactory. All leading articles show a large increase in the quantities handled-wheat and flour excepted. The amount of general work done at the manufactories in iron, and the number of orders executed in the machine-shops, have been larger than during any previous year. In all branches of general merchandise a large and satisLabor, skilled and unskilled, has had its A habit of thrift prevails among the work

factory business has been done. share in the general prosperity. ing classes of Peoria, which insures a partial independence upon which opposing interests find it difficult to encroach. The success of one savings bank as a depository for the savings of this class in the community has induced, during the year, the establishment of a second, and the number of depositors of small sums of money is daily on the increase. The amount of the savings in the two banks is double the amount at the close of last year, and now aggregates $400,000.

Does this sound much like the wailings of an oppressed people, ground down by "railroad monopoly?" Would they exchange their prosperity for some locality where there are no railroads, or are they anxious to change places with the stockholders of the railroads that have made them what they are? If not, why this hue and cry about oppression?

It will always be out of the power of all the inhabitants of the West to have railroads run to each man's barn; therefore some must adapt themselves to circumstances. Corn cannot command a high price when far removed from railroad facilities. In such localities it will become more profitable to condense it by feeding to cattle and hogs, which can be driven to the nearest railway for transportation, and by establishing manufacturing to consume the surplus productions. It does not follow that because the freight and charges on a bushel of corn from some out-of-the-way place to New York, that it must be burned, instead of being fed out to hogs and cattle, or made into high-wines, that can be sent to a profitable market. There may be such an extreme case of suffering for fuel that the owner of a fine piano would be justified in using it for stove-wood; but it does not follow that it would be more profitable to make a business of burning pianos than coal, any more than burning corn under like necessity for doing so.

The question was asked by Senator Sherman yesterday, why the people did not invest their money in elevators in New York. I will answer that question, although I may trespass beyond my time, if you will allow me. While the very strange fact appears, that the capitalists of New York are investing their money in the same kind of storage capacity at the West, the difference and the reason of that is simply because of the difference in the system of storage of grain. At the West it is done

by inspection, and the grain of one grade passes into a bin with a capacity, perhaps, of 40,000 or 50,000 bushels. Therefore, with 20 bins of 50,000 bushels, you have a storage capacity of 1,000,000 bushels. That million of bushels done at a cent would be profitable. If you have the same amount distributed 1,000 bushels in a bin, and kept distinct by itself in the city of New York, you would have to have a thousand different bins, covering perhaps five or six acres of storage. It is utterly impossible to do the business spread over such an enormous amount of storage capacity, and make it profitable.

Mr. CONKLING. Won't you explain why five or six acres will have to be covered with bins ?

Mr. HAYES. Simply because you will have to have a thousand bins. Your bins going up to contain 10,000 bushels need not be any larger than a small bin to contain a thousand bushels. Therefore, you have to spread the small-capacity bin out over a large proportion of territory. Mr. CONKLING. If you eliminated the particular business usage here and trade in grain by inspection, what you are now saying is obviated? Mr. HAYES. Yes, sir; it is that very point I wish to get at, and at that very point I wish you to particularly understand, as regards the freight of New York against the freight of other sea-port towns, and what the business men of New York will be compelled to meet, or lose their traffic.

Mr. SHERMAN. That is the very point I wish to get at. Why do they not change that?

Mr. HAYES. Simply because the custom for years has been to do it in its present shape. To do the business in that form, large warehouses had been built, at an enormous expense, and they are owned and controlled by the very men who own and control the operations of the Corn Exchange, and a different system of doing the business here would bring about a necessary loss to that particular kind of property. Therefore, there is a difficulty to be arrived at.

Mr. CONKLING. Is there no other advantage supposed to exist in preserving the identical grain?

Mr. HAYES. Not of sufficient consequence to overbalance.

Mr. CONKLING. What are the advantages, great or small, that are supposed to recommend the system that prevails here?

Mr. HAYES. None whatever, any more than would be in Boston, Chicago, or Baltimore.

Mr. CONKLING. What would they be, if you please, if they had any existence at all in any place?

Mr. HAYES. Simply suppose you buy a very choice article of grain out West and send it here, you might suppose that an inspector of grain would favor one party as against another, and inspect the grain a lower grade than the standard would warrant, and the man receiving would receive an inferior quality than the grain that started.

Mr. CONKLING. Does that in truth occur appreciably where inspection of grain is the custom?

Mr. HAYES. Not much; it does to a very limited extent. Where the board of trade appoint their inspector of grain he is liable to the board of trade, and what is called the arbitration committee furnishes him with samples of grain, to inspect by, in glass bottles. If he inspects the wheat No. 1, it goes into No. 1 bin. But because he has inspected it No. 1 does not compel you to receive that wheat as No. 1. When it is drawn out and delivered to you you say you won't take it. Your remedy is simply to put the sample beside the sample of No. 1, refer it to the arbitration committee, and, if it is not up to sample, the

warehouse company have to give you what your receipts call for. If that system was established here it would take some little time to bring it about; but it could be brought about, and it is for the interest of the merchants of New York to bring it about, or their trade is gone.

Mr. CONKLING. Is the evil or hazard you have just stated the only consideration that you know weighing in favor of preserving the identity of grain?

Mr. HAYES. That is all.

Mr. CONKLING. Now will you be good enough to state for me again, as I did not quite understand you, in regard to the warehouse property here and the objection of owners, the warehouse-men, to the inspection system?

Mr. HAYES. The system, as I stated before, of receiving and delivering the identical grain which originally came down by the canal, as the only means of transportation, came generally by boat-load. There was not so much difficulty in keeping boat-loads separate as there is in keeping car-loads separate, because a boat-load will amount to six or seven thousand bushels, and to an elevator would be of fair quantity to go into one bin, being of equal grade; but when you come to private bins for car-load quantities the difficulty is increased very radidly. For a seven-thousand-bushel boat-load you require a seven-thousandbushel bin, but for the same quantity by car-load you require one hundred and forty different bins, supposing it was consigned to one hundred and forty consignees and it was the same grade of grain. No man can afford to provide one hundred and forty bins for the same quantity of grain that he can receive in a canal-boat. Therefore, the inspection of grain here, by grade, received by cars, is a matter of necessity that must be brought about.

Mr. CONKLING. And so I understand that the facilities which grew up to receive grain which came down the river in tows by barges, are the only facilities existing now for the reception of grain that comes by rail?

Mr. HAYES. That is all, sir; I am coming right to that point.

Mr. SHERMAN. In conversing with an intelligent business man here engaged in business, he told me that the real difficulty of changing the system was because the railroads refused to guarantee the quantity of freight. They were willing to carry the wheat, but they refused to guarantee the exact quantity. There was more or less wastage, and it was only at exceptional times that they would guarantee the identical quantity.

Mr. HAYES. The operation of these lines going directly to the place of production reached many times a section of country where the road is too poor to own their own warehouses, and, for the purpose of developing the resources of that country, an individual will go in and build a warehouse. That owner of the warehouse is the owner of the grain. He loads it himself; we have nothing to do with it, only to see that he does not overload the cars. It is natural to suppose he will put in about as little as will turn the scales. When it reaches its destination, instead of passing into the company's elevator, or to an elevator situated where the company can see it weighed, it passes out of our hands entirely into the hands of other parties, so that we have nothing in this world to do with weighing the property in or weighing it out. Therefore it is unreasonable to suppose that we have got to make good the shortcomings of the two weighers which we have nothing to do with whatever. But if it is satisfactorily established that a man has put in honestly three hundred and fifty or three hundred and sixty bushels