or shut down altogether, the wages of employees have been curtailed, the home market for grain has been restricted, and from the farm hand to the head miller the distressing results of this discrimination have left their mark. This is simply an instance of the effect of dishonest application of rates. Various industries of the country have their own sorrowful tales to tell in this regard. I will only discuss this one, believing that the gentlemen who will come before you representing other industries will convince you that their cause of complaint is reasonable and the mode of protection they seek is just. You have heard from Mr. Barry something of the wide scope of territory and the great field of industrial and commercial activity covered by the advocates of this bill.

The CHAIRMAN. You say that thousands of mills have closed down? Mr. GALLAGHER. They have either closed down or are running on limited time--one or two days a week.

The CHAIRMAN. For home consumption?

Mr. GALLAGHER. As I said a while ago, the mills south of the Great Lakes had a very extensive export trade. All that flour is now thrown into the home trade. There is not 5 per cent of that flour going out of that territory for export now.

The CHAIRMAN. It did a few years ago?

Mr. GALLAGHER. Yes, sir; but there is no chance of competing with favored shippers-not a bit.

The CHAIRMAN. Is that all due to the discrimination between the rates on wheat and flour? Do you so regard it?

Mr. GALLAGHER. Yes, sir. Previous to that time we had no trouble at all in getting to Europe and throughout the United Kingdom with a good trade.

If I may be permitted to make a suggestion, the question was asked Mr. Barry awhile ago about organizations in the Northwest. There was an organization among the millers in the Northwest some years ago in the form of a corporation. It was incorporated under the laws of West Virginia, I believe.

Senator ELKINS. That is a good State.

Senator ALLEN. Is that the Northwestern Millers' Association? Mr. GALLAGHER. That held for some months, but they discovered that it was not practicable. That corporation was dissolved, and then they opened an office at Minneapolis, which is still in existence.

Senator TILLMAN. Please state the object of opening that office. Mr. GALLAGHER. They put a freight commissioner in, and they have since that time, as they do now, pooled tonnage. This man will buy, for instance, a thousand cars of freight room instead of ten, as the miller in the country would do. I do not know to what extent it goes; nobody knows outside of the arrangement. Many of the great mills along the lake region-the Minnesota region-are in that freight combination or pooling arrangement of tonnage; but I do know that quite a large number of millers up in that country-small millers-are ardently in favor of the enactment of this bill, while the large millers-the people benefited by this tonnage pool and the mills that are represented in what is called McIntyre's trust, so called-the gentlemen have doubtless heard of that organization

Senator KEAN. The United States Milling Company?

Mr. GALLAGHER. The United States Milling Company. And with the exception of that system which I have described, which centers in

Minneapolis, every miller in the United States of whom I have heard is in favor of the passage of this bill. They have held State conventions all over the country and adopted resolutions, which, if it is necessary, I will be glad to file with the committee as a part of the record. Senator TILLMAN. A point I wish to bring out, if you will kindly address yourself to it, is this: I understand that the millers complain that the railroads give the exporters of wheat an advantage.

Mr. GALLAGHER. They do give them an advantage.

Senator TILLMAN. I so understand.

Mr. GALLAGHER. That is the complaint.

Senator TILLMAN. That is a new thing. The difference in rates as between wheat and flour begun only recently.

Mr. GALLAGHER. It begun February 1 of last year.

Senator TILLMAN. Has there been any association of millers who themselves are trying to rob the farmers, or, rather, fix the price of wheat?

Mr. GALLAGHER. I never knew of such a thing.

Senator TILLMAN. Do you suppose there is any difference owing to the relative keeping qualities of wheat and flour? Which will keep the better, if you are shipping to the Tropics, to South America, or Africa; which will remain the longer in merchantable or in sound condition, flour or wheat?

Mr. GALLAGHER. I think flour crosses the equator in better condition. Senator TILLMAN. Our exports of wheat are mainly to England? Mr. GALLAGHER. Yes, sir; England and the Continent.

Senator TILLMAN. From my general knowledge of the subject, I know that Europe grows nearly all its own wheat. The Continent does not import much. Some countries export once in a while. Russia and Roumania export, and sometimes France exports a little, but the balance of them about raise their own supplies. Our principal customer for wheat is England.

Mr. GALLAGHER. Yes, sir; the largest customer.

Senator TILLMAN. Therefore when we ship wheat there instead of flour the profit on grinding, together with the by-products, is obtained. by the English miller?

Mr. GALLAGHER. Yes, sir; and employment is given to people over there.

Senator TILLMAN. The milling over there gives employment to labor there and the profit on the capital goes to the man owning the mill? Mr. GALLAGHER. Certainly.

Mr. ELKINS. He gets the bran and shorts.

Mr. GALLAGHER. The advantage is with the other side at this time, because most of our tonnage goes in foreign ships, and the British shipowner is usually a man of position and wealth. He is interested to some extent in politics. Quite a few are members of Parliament. It is a fact that because we have no jurisdiction over that shipping, because the ships do not sail under the Stars and Stripes, they will haul raw material away from this country at a lower rate than manufactured products at all times, in order to build up industries abroad. We have continually to face that condition.

Senator TILLMAN. We not only have favoritism or inequality in transportation rates on land, but on water also?

Mr. GALLAGHER. The whole way; from the farm to the foreign country.

Senator TILLMAN. Without undertaking to bring another terrible subject in here, do I understand that any of you gentlemen have anything to say about or do you intend to bring in the subject of the subsidy to American shipping as an agency for remedying this trouble in our international commerce?

The CHAIRMAN. They want this bill passed.

Mr. GALLAGHER. My object is to discuss that bill strictly.

Senator TILLMAN. But you made the statement that the owners of these vessels will haul the raw product away from our shores to have it milled in England more cheaply than they will haul four, which you manufacture here. Suppose the railroads gave you an equal showing here. Suppose that so far as concerns transportation to the ocean the transportation companies afforded you absolute equality, what remedy would you have against inequality provided the vessels were owned by English capitalists who would give raw material a lower rate across the ocean? Would you not be at their mercy?

Mr. GALLAGHER. Yes, sir; we would be at their mercy, but they could not give a sufficiently low rate to overcome the advantages that would be held by the American miller. The American miller is a better miller than the foreign miller. The economy of milling has reached its highest standard in the United States.

Senator TILLMAN. You can take the wheat and make better flour? Mr. GALLAGHER. Yes, sir.

Senator TILLMAN. And more of it?

Mr. GALLAGHER. Yes, sir.

Senator TILLMAN. And cheaper than anybody else on the globe?
Mr. GALLAGHER. That is exactly what I mean. That can easily be

verified.

Senator ALLEN. Are any of the English mills or milling interests concerned in a financial way in our mills and elevator companies?

Mr. GALLAGHER. English investors controlled the Pillsbury-Washburn Company, Limited, perhaps, at Minneapolis, for several years. Senator ALLEN. Does not that embrace substantially all the wheat milling interests of Minneapolis?

Mr. GALLAGHER. No, sir. It amounts to 25,000 barrels capacity daily of flour; but I believe, Senator, that the control has been lost by the English. I have been told so.

Senator ALLEN. I should like in this connection, because it is a part of the investigation, to ask a question. Have you any evidence that the land and ocean transportation is pooled?

Mr. GALLAGHER. No, sir.

Senator TILLMAN. The Senator means the railroads and steamships. Senator ALLEN. Railroads and steamships.

Mr. GALLAGHER. I think positive evidence of that would be very hard to obtain, but I believe it is a fact that such lines as those operating to ports like Newport News, in connection with the Chesapeake and Ohio Railroad, do pool. You could not prove that. Take the Port Arthur route and the Pittsburg and Gulf Railroad as another instance.

The CHAIRMAN. When it includes the railroad and steamship transportation, do they make whatever rate they please?

Senator ALLEN. It is another name for pool.

Senator TILLMAN. Has it not become necessary, in the competition which is so strenuous now and then, for certain railroads, in order to

get business, to furnish steamships--to make arrangements with steamships? Take the port of Galveston. The exports of wheat from that port have gone up enormously, several hundred per cent in the last five or six years. The railroads which carry that wheat to the port had necessarily to make arrangements with steamships to be there to take it or else the roads would not have had the business. It seems that in any export trade it is absolutely necessary for a pool or combination to exist.

Senator ELKINS. They make a through rate.

The CHAIRMAN. Let us hear from this gentleman on that question. Senator TILLMAN. After we have shown how muddy we are on the question, perhaps then he will give us what light he is able to throw on it as a specialist.

Senator ALLEN. That does not answer the question. There is a pool, no doubt, between certain railroads and certain steamship companies. What I want to know is whether there is a pool between a certain number, or any number, of railroad companies and any number of ocean steamship companies?

Mr. GALLAGHER. I do not believe that that could be proved.

Senator ALLEN. Wherein the profits of the entire transaction are aggregated and divided, and by which rates are fixed?

Mr. GALLAGHER. I could not give you any positive or reliable evidence on that score.

The CHAIRMAN. Have you any personal knowledge of transactions of the association to which you belong, or which you represent, as to their manner of doing business or their contracts with railroads or common carriers on land and on sea? Do you know anything about that?

Mr. GALLAGHER. Yes, sir.

The CHAIRMAN. Let us hear what you know.

Mr. GALLAGHER. I know that a railroad will take one shipment of flour to-day for a certain price to Liverpool and to-morrow will make a difference of 3 cents, on the ground that competition forces them to do it. I have known the rate from St. Louis to Antwerp to be cut 5 cents on a “midnight tariff" without any excuse whatever, except that the agent wanted the business; he needed it, and he would file one of these three-day tariffs a "midnight tariff," so called-which would be in and out before the other millers would know the rate was made. The CHAIRMAN. And before the Interstate Commerce Commission would know about it.

Mr. GALLAGHER. About the time it got to the commission and went on file, it would be about time for it to go out.

The CHAIRMAN. Was that a compliance with the law?

Mr. GALLAGHER. In the New York hearing on this question of discrimination against flour we had a witness-I will send you the official record of that proceedings--who under oath did not hesitate to say that he would charge one man 12 cents and another man 15 cents on the same day, if it was necessary to get the business. That kind of rate making is simply destructive of all chance of business profit. But as to any knowledge of a suggested pool I have none, and I think it would be worked in such a clever way, considering our existing laws. that it would be impossible to get at the exact facts in the case.

Senator ALLEN. Have you had any intimations that there was such a pool?

Mr. GALLAGHER. I have heard that.

Senator ALLEN. I was informed here three or four years ago by a very eminent man in the East, who was in a position to know, that there was such a pool. It was in operation then, and I have never heard that it has gone out of existence.

Mr. GALLAGHER. I will now read to you a resolution that was adopted by the National Board of Trade yesterday. Mr. Barry made a very comprehensive statement of the supporters of that measure. Senator ELKINS. In session here in Washington?

Mr. GALLAGHER. Yes; the National Board of Trade suggests an amendment to this measure, which was concurred in by the several railroad attorneys who were here and who demanded the pooling privilege the right of contract. The committee having this in charge, sixteen men pretty well informed on the subject, took two days upon it, and discussed the matter and pretty nearly quarreled over it for that length of time, and it was finally determined that it would be the best way out of the matter both for the railroad and the shipper. This was adopted by the committee and brought in, and it received every vote in the National Board of Trade but one, a gentleman from Philadelphia, whose instructions forbade him voting for the approval of Senate bill 1439. He came under those instructions and could not help himself. I will now read the resolution:

"The committee on railroad transportation, to which was referred the several propositions contained in the official programme relative to amendments to the interstate-commerce act, beg leave to make the following report:

"We recommend the enactment by Congress of Senate bill 1439, introduced in the United States Senate December 12, 1899, by Senator Cullom, of Illinois, and that the following addition be made thereto;

"It shall be lawful for the carriers, whether persons or corporations, to maintain associations for the establishment and maintenance. of fair, uniform, and lawfully published rates, rules, or regulations affecting the transportation of persons or property, not in violation of the provisions of section 5 of the act to regulate commerce, approved February 4, 1887, and acts amendatory thereof: Prorided, That all such rates, rules, or regulations, and any methods adopted for the maintenance of the same, shall be filed with the Interstate Commerce Commission and be subject to its approval."

The National Board of Trade's annual meeting was attended by delegates from New England to intermountain territory in the West, and from Minneapolis in the North to New Orleans in the South. The bill in question was submitted to a committee of sixteen gentlemen selected on account of their fitness to pass upon such questions, and that committee, after the most careful consideration and deliberation, rendered the report above quoted. Out of the entire membership of the board, as I have said, there was but one dissenting vote, and that was cast by a delegate who explained that his instructions forbade him to vote for the approval of the bill as numbered above. Since there is in various sections of the country, and particularly between prorailroad advocates and most shippers, a difference of opinion regarding the proper amendment of the act to regulate commerce, it is most surprising that a greater conflict of opinion did not appear in the body of such widely diversified interests as are represented in the membership of the National Board of Trade.