As to our coastwise shipping, I will speak only especially of the Atlantic and Gulf lines. Of the large ship lines in that trade over 60 per cent of the tonnage is owned and controlled by railroads and about 33 per cent by the two large steamship consolidations, the Eastern Steamship Corporation and the Atlantic, Gulf and West Indies Steamship Lines. Altogether, the railroads and these two consolidations control over 93 per cent of the regular steamship lines tonnage. These lines have used various means to prevent or crush competition. They have discouraged the flotation of stock, or the building or chartering of steamers for independent companies, by making credit difficult and in other ways. They have also used fighting ships to destroy a competitor. A unique example of this was shown at Beaumont, Texas. Dealers there in canned goods found they could get no goods delivered direct by water from Baltimore. Also that in shipping such goods from Baltimore to New York by rail and thence to Galveston by water and thence to Beaumont by rail not only were the goods injured by so many handlings but the rates charged were higher than these dealers thought just. They proceeded to organize a company and charter a vessel for direct shipment. They calculated correctly that they could thus ship the goods not only quicker and in better condition but 40 per cent cheaper and still make money for the company. They used all the secrecy they could, but somehow the conference lines found out about their venture and when their chartered vessel got to Baltimore and began collecting its cargo, they found a new company had a vessel there offering to carry the goods at rates greatly reduced, in fact, 25 per cent under the rates on which the Beaumont people had calculated they could safely do business. The first result of this was that the vessel of the Beaumont people procured only about three-fourths of a full cargo on its maiden voyage for the company and lost about $4000 instead of making a profit of about that sum, as expected. The second result was that the Beaumont people abandoned their enterprise, and the third result was that the new company that cut under them in rates disappeared, the ship used for fighting purposes having gone back to its regular line. The fourth result was that Beaumont's canned goods are now shipped the old way, around by New York and Galveston and at the old rates.2

See vol. iv, p. 394, of the Committee's report.

These conference lines also used spies and informers against independents, influenced insurance companies as to the marine insurance rates charged, and threatened the patrons of the independent lines. They refused independent ship lines membership in the "Southwestern Tariff Committee," representing the railroads and the steamship conference lines and established for the purpose of economically printing tariffs, discussing and determining rates periodically, and arranging for the division of through rates between the conference lines and the railroads. By this refusal the independent line is put to heavy printing expense, and is excluded from any prorating with the railroads in rail-water shipments. On all through freight, the independent ship line must take what is left after payment to the railroad of full local rates. Thus on a shipment from Buffalo by rail to New York, thence by water to Galveston via a conference line, and thence to Dallas by rail, the proportion of the freight rate received by each carrier would be fixed by the joint "Tariff Committee," but if an independent or non-conference ship line carried the goods by water from New York to Galveston, such line would simply have to take what was left of the through rate, after paying the local rates by rail from Buffalo to New York and from Galveston to Dallas.3

As a whole, our coastwise shipping seems to be even freer from competition than our overseas shipping. I think one reason for this is the fact that ships built only in the United States can engage in the coastwise trade. Our ship builders most likely find it to their interest to work in harmony with the big shipping combinations. They can give preference in many ways, and are not at all concerned about competition or monopoly. As a result, our coastwise steamship rates are often more than twice as high as trans-oceanic rates, for an equal service. Rates are held up by steamship line understandings with each other and with the railroads, and are held down only by the final judgment of the steamship lines as to how high rates may be made without provoking a rebellion against them by a patient and not over well-informed public. In a statement as to our domestic shipping the committee report says:

3 Ibid., p. 397.

▲ Ibid., p. 405.

Considering all the line services noted in the preceding chapters as engaged in the coastwise and Great Lakes trade, the following totals appear: The lines number 66; the steamers operated strictly in the domestic trade, 474; and the gross tonnage of these steamers, 1,180,897 tons. Of these totals nineteen railroads, control 209 steamers (44.1 per cent of the total) and 589,561 gross tons (nearly 50 per cent of the total). Eleven lines belong to shipping consolidations and operate 121 steamers (25.5 per cent of the total) of 279,180 gross tons (23.6 per cent of the total). All told, the thirty lines referred to in the preceding chapters as controlled by the railroads or shipping consolidations operate 330 steamers of 868,741 gross tons, or nearly 70 per cent of the total number of steamers and 74 per cent of the tonnage.

When we come to a consideration of river and canal transportation, we find that it lingers only on sufferance. The railroads, drawing from and supported by territory not touched by the river or canal, can and have so lowered their rates at water competing points as to starve to death any boat line on such waters, i.e., any boat line not belonging or subservient to them-and this they do without loss since they recoup themselves by higher rates at noncompetitive points.5

The condition between rail and water transportation, as sketched above, is inevitable. Why should we attempt to regulate and control traffic by rail and not by water? I shall not discuss the regulation of carriers in our foreign trade, but as to domestic water carriers, surely the time has come for Congress to act and act effectively.

The Interstate Commerce Commission must be given as ample power over our domestic water carriers as over our railroads, and that power must extend to the regulation and control of the joint and interrelated operations and activities of both kinds of carriers. All agreements between water carriers or between water and rail carriers, as well as all rates and charges both all-water and rail-andwater, should be filed with the commission and be subject to its control. The commission should have power to fix or alter any rate or joint rate, or forbid or approve any agreement filed with them, and to require full reports of the financial and business operations of each carrier. Rebates and discriminations of all kinds and unfair contracts must be prohibited. Likewise, the use of fighting ships and other unfair measures against competitors or shippers, patronizing competitors, must be prohibited. The commission should have

Ibid., p. 407.

power to make such investigations and establish and enforce such rules and orders as will secure a full compliance by the carriers with the law; also to investigate all charges of unfair treatment and to punish carriers when found guilty of such unfair treatment. All carriers must be permitted to participate freely, under regulations and rules prescribed by the commission in all conference agreements between ship lines or ship lines and railroads, and given under equal conditions equal facilities and divisions of joint rates. These rates and the division or apportionment of the same must be fair and just to all parties, shippers and carriers. The commission should also have power to regulate all transfer and terminal facilities with a view to preventing unfair practices and to securing equal treatment and just charges to all; and it is believed also that to prevent vicious combination between water and rail carriers it is necessary to prevent railway companies from owning or being interested in water lines, and vice versa.

AGREEMENTS AND CONFERENCES IN THEIR
RELATION TO OCEAN RATES

BY WILLIAM BOYD,

President of Houlder, Weir and Boyd, Inc., New York.

In practically all recognized ocean trade routes served by more than one steamship line, we find agreements or conferences of some kind. These agreements have lately been subject to investigation, not only in this country, but abroad, prompted doubtless by the belief-more or less general-that combinations must of necessity be in restraint of trade. It is not the purpose of this article to defend agreements or conferences (although to the practical shipping man it is hard to see how our export trade could be properly served without them), but to consider them in their relation to, and their bearing upon, ocean rates.

In considering this question it is necessary first to be quite clear as to the meaning of the word "conference." In England and Germany this term refers to a group of lines working together in a highly organized manner, and which has imposed upon the shipping trade a tie, generally in the shape of a deferred rebate usually a percentage of the net freight-payable at stated intervals to all "loyal" shippers. In effect this rebate acts as a deterrent to shippers who might support an occasional opportunity to ship cheaper, as the amount retained in hand by the conference lines is quite important, depending of course upon the extent of the shipper's cargo. In these countries it is recognized that conferences, which afford the shipper a thoroughly organized, regular and dependable service, are entitled to require from the shipper some assurance of support and protection from sporadic attack by outsiders, and the deferred rebate system has been upheld by the highest courts.

Lord Chancellor Halsbury in a decision by the House of Lords, December, 1891, says:

I have been unable to discover anything done by the members of the Associated Body of Trades (the conference being sued), other than an offer of reduced freights to persons who would deal exclusively with them; and if this is unlawful, it seems to me that the greater part of commercial dealings where there is rivalry in trade must be equally unlawful.