of wheat in a car, and that car passes through without transfer, and the inspection of the car here shows that it arrived in good order here, and that the seals are unbroken, and we deliver to that man all that the car contains, we take the ground that we have delivered all that he put in, and are not responsible for what he says that he put in, or what the other man says he took out, because we do not weigh it at either end.

Mr. SHERMAN. In Chicago the men who own the elevators are really and practically the agents of the railroad companies. There it is weighed by the railroad company.

Mr. HAYES. I was just coming to that point. At Chicago, for instance, or where there is an elevator that is controlled, or where a railway official can be sent to weigh the grain into the car, and it comes down, and the proper facilities for inspection, and grading, and delivering from a railway elevator, no matter whether it is owned by the railway company or by individuals, we are bound, in my opinion, to deliver every single pound of property that we receive, and I think the law would compel us to do that just the same as it would compel a canal-boat to deliver the quantity, but it is unreasonable to expect that we shall deliver what is said to be in a car when we have no agency whatever in putting it in or taking it out.

Right here I will mention the system of receiving the grain at New York. In the lines of railways coming into Jersey City that is the end of their road. They go no farther. The lines of railroads coming into New York get to New York. Now who shall say where New York is; whether it is up to Thirty-third street as far as the freight-cars can get down; down at Saint John's Park, where the dry goods are delivered; or way round the battery to the piers, where the flour is delivered; or over in Brooklyn, where the grain is delivered? There is great difference of opinion where New York is. Now, the railroad companies, for the purpose of competing with other cities who have furnished these elevating facilities for the discharge of grain, have taken upon themselves to bring this property to the end of their road, but it does not stop there. If it is in five car-load lots to one consignee, and one grade, they discharge it into a barge, and that barge is delivered alongside of a ship anywhere in the harbor, to any elevator, or any public storehouse, free to the shipper. That is one of the Credit Mobilier rings that is spoken of as existing inside of these other rings. Seven years ago I was connected with just that ring myself. I came here to make a contract for the delivery of that property from the end of the rail to any point in New York where the man wanted it. I did the very best that I could, and it cost a dollar a ton to deliver that property, but it did not cost the consignee one cent, nor the receiver one cent, nor the shipper one cent. The roads paid it.

Mr. CONKLING. To deliver it how?

Mr. HAYES. From the end of the road to the ship or the elevator. I was at liberty to make the contract with any man that I could do the best with. I made the contract. The supposition was that if there was anybody to get any money out of that I was to get a share of it. I state to you distinctly that from that time to this I have never received, and never known of any railroad official having received, one single farthing.

Mr. CONKLING. When you say you never received, you say you include,, also, the parties behind you?

Mr. HAYES. I do not speak of that from my knowledge.

Mr. CONKLING. I do not understand you now. You came here not to contract for yourself individually alone, but for that line?

Mr. HAYES. Yes, sir.

Mr. CONKLING. And the line you say never received any money? Mr. HAYES. I say that the line which has the ring within a ring, supposed to be that I made the contract to do this business, and that I would naturally share in its benefits. I say, so far as I am personally concerned, or any railway officer I ever knew being connected with the roads at any point, never received, to my knowledge, one single farthing of the money, and for that part of it we have received no thanks from the merchants of New York, simply because we were not entitled to any, because it was a matter governed by the law of supply and demand. We had to do it in order to compete with the lines that furnish these facilities at other points. The time has now got to be such that this property handled by rail cannot be done in that way in the large quantities you speak of, therefore a different system in the handling of grain received here by rail will have to be inaugurated and the grain inspected and go into storage, according to the grade, so when a train of cars comes in it can be unloaded at once by the inspector's designation of the quality of grain, and the cars moved out. The consignee will be notified that he has so much No. 1 or 2 grain in store. He pays no attention to it whatever. If it lies there thirty days it is all very well; he need never see the grain at all. He can go to the bank and borrow money upon his storage receipt; that storage receipt forms a capital of trade, and continues on from bank to bank, and perhaps from month to month. When he sells it he sells it subject to charge or charges paid, and the same party goes and presents his receipt, and draws from the bin the quantity he is entitled to. It is that cheap storage and the facilities for handling it here, so that the purchaser of the West can afford to keep it here instead of keeping it out west, that must afford the relief that the merchants of New York ask for, or their business must be turned over to parties who do furnish these things.

Mr. CONKLING. What is your remedy for the difficulty stated by Mr. Sherman in consequence of which you are unwilling to guarantee a sufficient number of bushels or pounds on delivery, owing to the fact that it is weighed by strangers to you at the termini?

Mr. HAYES. At the receiving points many of the railway companies receive it, weigh it, and load it, and give a receipt for a specified quantity to be delivered here to an elevator or storage, where the railway company also weigh' it.

Mr. SHERMAN. The trouble is in that way the owner of the wheat is compelled to take the actual quantity that comes through without regard to the amount that he actually delivered; that is the point.

Mr. CONKLING. Not as he states it now. If they weigh it themselves and give him a bill at Peoria, which bill acknowledges the receipt by them of 360 bushels of wheat, that entitles him to 360 bushels of wheat here.

Mr. HAYES. The merchant who tells you about guaranteeing, if he will take the trouble to look further on his bill of lading, he will see that it is receipted for in that way, "weight not guaranteed," simply because we do not weigh it.

Mr. CONKLING. But I understand you to say if you had to weigh it, then you are willing to guarantee the weight which you yourself ascer tained?

Mr. HAYES. That we have done, going from the company's elevator in Chicago to the Boston and Albany elevator in Boston, less one per

cent. shrinkage. Now it is a matter of no difference at all whether we assume that one per cent. or the shipper, as the rate might govern the risk. My own opinion is that we should assume it in a general arrangement for transportation.

Mr. CONKLING. Waiving whatever there may be of shrinkage, I understand you if you superintend the loading and unloading of wheat you are willing to guarantee the quantity in transitu as the receipt calls for? Mr. HAYES. The arrangement should be that we should deliver where we weigh in and weigh out. There was one of the difficulties that created the necessity for these lines. For instance, the Michigan Central Road would weigh in a certain quantity of grain and give its receipt. for it. It would come down to Boston and be weighed out by an entirely different company. A man in Boston says, I am not going to guarantee the weight of the Michigan Central Railroad elevator. The necessity of the consignees to receive the overcharge, if any, or damage, if any, at Boston, compelled the formation of lines by which this receipt should not be a Michigan Central Railroad receipt, but should be a line receipt that would bind the settlement of these overcharges, losses, and damages, and shortages at Boston precisely the same as it would if it was the Michigan Central Road ending in Boston. And the estab lishment of the general management of all these lines is simply that when a thing of that kind does occur, and the Boston and Albany Road or the New York Central or Hudson River Road here are compelled to honor that line's receipt as a part and parcel of the whole, he does it for that line, but he does not go to work and piece-meal this out and collect 50 or 75 cents at different points; he simply charges the whole of it to me.

Mr. CONKLING. You spoke of wheat being taken on in many places where, as you said, the railways were too poor to supply elevators. How in case of wheat taken on at stations where there are not railway facilities? Do you propose to superintend the weighing or measurement of wheat so that you would be willing to guarantee the quantity?

Mr. HAYES. There are many points where it would be impracticable to do that. From those points the roads would have a local rate to an elevator at the termini of the road, and would there be weighed and then delivered to us by the elevator-weights at the terminus.

Mr. CONKLING. And from the first elevator you strike, this arrangement would hold?

Mr. HAYES. Yes, sir.

The CHAIRMAN. I think I do not understand either you or Mr. Potts on one point. You spoke of the effect of these lines west of Chicago being to carry freights the same at the same rates per mile from competing points that they are carried from Chicago east, or am I mistaken?

Mr. HAYES. That was the effect.

The CHAIRMAN. Now, what I want to know is this: suppose that from Winona, Minn., the charge averages three mills per ton per mile, and assuming that to be one of your points-not carried upon your line, and your pro rata rates are one and one half mills through, would it, put on your cars, go cheaper than put on ordinary cars.

Mr. HAYES. Not at all.

The CHAIRMAN. How do I understand then the effect to be produced suggested a moment ago?

Mr. HAYES. The effect of that would be that we furnish that man with the through car. Suppose he hauls it fifty miles and loads it, he has the expense of loading that car for the main line, which, perhaps, may

occupy him a whole day, and the expense of receiving, and all that sort of thing, but when he gets to the main line, where it takes a competing rate, neither the road where the load originated is put to the expense of unloading that, and the receiving company agree to load it up again. Both companies are relieved from that expense, by which they can afford to reduce to a corresponding extent the through rate from that point on, while the local rate from that fifty miles up to the main line is not remunerative at anything like the difference you speak of because of the short haul and the cost of handling.

The CHAIRMAN. Now, I understand you that Saint Paul is a competing point?

Mr. HAYES. Yes, sir.

The CHAIRMAN. Winona is not?

Mr. HAYES. Saint Paul is a competing point to a limited extent. Not so much as Chicago or Saint Louis.

The CHAIRMAN. I am speaking now of the points west of Chicago. Is it any cheaper for the farmer or the shipper at those points to ship by your cars or the other?

Mr. HAYES. Not at all the same price.

The CHAIRMAN. So that they really pay over those Western roads to Chicago on your cars the rates of the Western roads?

Mr. HAYES. Yes, sir; if you are familiar with the charges from Saint Paul down to Chicago you will understand they are higher in proportion per ton per mile than they are from Chicago here. That is in consequence of competition at Saint Paul being much less than at Chi

cago.

The CHAIRMAN. I understand that, but that is not the point I want to get at. The information I want is the effect of your line upon shipping transportation over your line. It does not cheapen it, I understand you?

Mr. HAYES. We have not yet opened into Saint Paul, but are now going into it. The effect of that will be to stimulate another line going up over the Milwaukee and Saint Paul line to bring this property to another route, and I apprehend that in less than twelve months time the rate per ton per mile would be no more out of Saint Paul into Chicago than it is from Chicago here. Therefore the benefit to be derived from this line being extended to Saint Paul will be to reduce that proportion of transportation simply, because the facilities furnished will enable them to haul twice as much. Therefore they can afford to haul it for less. That is the effect.

The CHAIRMAN. Name one of your competing points west of Chicago. Mr. HAYES. Burlington.

The CHAIRMAN. Do you carry at any less rate per ton per mile from Burlington than you do from Dubuque ?

Mr. HAYES. Yes, sir.

The CHAIRMAN. It is prorated from Burlington to New York, and pays no more over the line west of Chicago than it does east of Chicago.

Mr. HAYES, Yes, sir. This same town of Peoria will illustrate that as well as anything else. When you come down to Peoria, the rate from there, owing to a shorter line to the sea-board by the way of Baltimore and the other outlets south, is only 5 cents more per hundred than from Chicago, winter and summer. During the summer sometimes the rates have been the same as from Chicago. Therefore, when we take the property from Peoria and bring it up to Madison they cannot afford to bring it for that short distance at the same rate; therefore,

we allow them, say, 10 cents a hundred, to bring it up there. When the rate is 5 cents more we are compelled to take that property that originated in Peoria from the points at Chicago down here at 5 cents per hundred less than the Chicago rate, and the whole line receives just that prorated proportion less, because it originated at a point where competition to a shorter line compels us to do it or lose the business, and the business comes to Baltimore instead of coming to New York.

Watered stock of railroads comes in for its share of investigation. The original cost of the road, or its present actual value, seems to be the question at issue, upon which the capital stock should be issued. There should be no question about it at all; any property should be rated at its value. If new roads are to be built to compete with those now in operation, they must be based upon present value or cost of building them. If they cost twice as much now as they would have done thirty years ago, you certainly would not expect them to get twice as much money for doing the business, or for capital to get only half as much return, owing to the additional cost. If not, then is not both of equal value, whether built years ago or now? Therefore, when the various roads which form the present New York Central and Hudson River Railroad were consolidated into one, each section would value its part, so as to agree upon its proper share in the new issue of stock. The property in New York may have advanced 500 per cent., while that at Auburn or some other points have remained about the same. Therefore, there could be no other way upon which to arrive at an equalization of stock ownership in the new organization only by valuation of each section. To illustrate this, I will take for example the early settlement of Rochester, N. Y. Then two men lived there, one owning too much land and the other too many cattle, so they traded, a piece of land for ore yoke of cattle. That land now, without any improvement, would be worth about two millions of dollars. If wanted to establish a manufactory upon, and the owner was willing to take stock in the company for the land, would there be any question about his getting stock for the cash value of the cattle, the original cost, or at the present value of the land? If not, then why should not the different short lines of railroads get the value of their property when getting paid for their share of the new organization. It may be said that the State granted the companies peculiar franchises in their charter, for which the people have a right to expect some privileges in return.

Let us see what some of those "peculiar franchises" were.

First. Was the right to pay for all the property required at its full value.

Next. The state owning the Erie Canal would not permit the railroad to carry freight over the canal, but might bring it to the canal. Finally, small valuable parcels might be taken, to meet an urgent demand, in charge of a messenger or passenger trains. This created the express companies. The pressing demands of the public finally allowed freight to be carried without discrimination.

Next. The State fixed the rate of passenger fare at two cents per mile, while other roads in other States got from three to four cents per mile. By this "peculiar franchise," the people reserved to themselves about one-third of the ordinary fair paid in other States for the same service. The control of legislatures, by railroad monopolies, is also urged. But little is said of the very absurd bills that are brought into legislatures by members-bills that are wholly impracticable, and were they allowed to pass, would ruin the business people of New York, as well as the railroads. Some of them may be honestly believed in by