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detained that steamer one week beyond her scheduled sailing date, and has also thrown the two steamers following her one week bebind their schedule, thereby creating much confusion and dissatisfaction on the coast; and all this without anything having been gained by it, for, as before stated, we could have taken Advance's cargo by steamships Acapulco and City of Para. These two steamers represent a measurement capacity of 5,500 tons, more than sufficient to have moved balance of accumulated cargo on hand, and that to arrive the following week. However, as you were kind enough to allow us the wharf for our steamships City of Peking and Aztec

As a favor when the lumber vessels were there; and I read this to show you that there is no intention or desire on our part to do wrong to the Panama Railroad. On the contrary, there is the agent's own letter, acting on his own authority, trying to help him out in every way, which we are all trying to do. (Reading:)

However, as you were kind enough to allow us the wharf for our steamships City of Peking and Aztec, we acceded to your request to hold Peking for Advance's cargo, being under the impression when we did so that you were desirous of getting all the accumulated freight off by the Peking and Aztec, and start in with a new system of handling cargo on the departure of those two steamers, that is to say, that you would have cargo loaded direct from ship to car in future instead of piling it on your piers. We regret to note, however, that no change has been made in the system of handling; that cargo is still being piled on the pier. This system greatly detains the departures of our steamers, for it entails delay in getting the cargoes over the road.

* We wanted the 'Frisco cargo ex Advance as stiffening for steamship Acapulco. However, for reasons given, we held Peking for it, and ordered the 'Frisco ex Merico to Acapulco and the 'Frisco ex Harana to City of Pira. As these two cargoes have not come over the road promptly our steamers are suffering great detention, steamship Acapulco having only sailed to-day, and the way it looks City of Para will not get out before Tuesday next. Delay in getting the coal over the road is also contributing to the detention of our steamers. As, for instance, I would mention the City of Para, now in port; work on that steamer was at a standstill all day yesterday for the reason that she did not yet have the coal ordered. Had she been coaled she would bave been taking in Corinto and Amapala cargo all day of the sth. The Para is a tender ship and can not receive. cargo in the 'tween decks until she has 'Frisco or coal in the lower holds for stiffening. You will therefore see that the delay in delivering the coal for the Para caused the loss of all of yesterday.”

Now, there is a case where, had we had Frisco cargo, it would have gone in the lower holds, and that was a lost cargo; but even then, if she had had the coal on she could have taken the cargo in the between decks, which this ship would not have been able to have taken without some ballast in her to make her stand up, with her holds empty, showing even there that we were handling the ship in a way that it is improper to handle a ship.

* Further than detaining our ships, the delay in making delivery to us of coal runs up our expense in handling fuel for we are obliged to work overtime on the coaling in order to lessen the detention as much as possible. We have always asked for our coal through the regular channel, and that is by requisition on your La Boca agent, Mr. Hunt, but he has found it impossible to give us the coal for the reason that he can not get it over the road. That is why I have taken the matter up with you by telegraph. I sincerely trust that you may be able to take some steps to remedy this condition in order that our steamers will not continue to be detained and our expenses increased through not receiving the coal in due time.

“ That you may see what detention our steamers have suffered through inability to obtain large cargo and coal promptly, I beg to point out that the City of Para arrived 28th ultimo, making her to-day thirteen days in port, and she has only seven cars of Frisco cargo aboard. This certainly makes a very bad showing. Steamship City of Peking was in port seventeen days and the Aztec twenty-two days. It will be a very hard matter for me to explain to our management the detention to the steamship City of Peking in view of the fact that the cargo she waited for could have just as well been taken by steamship Acapulco. The only explanation to give is that which I have already mentioned. We were desirous of helping you out, and were anxious to move all the accumulated and detained cargo by the Peking and Aztec, so that you could begin afresh with a new system on the departure of those steamers. Consequently, with that end in view, we acceded to your request to hold the Peking.

". I also beg to bring to your attention the fact that the La Boca trains have been arriving late at La Boca, causing a loss to us at times of an hour and a half in one day in turning the laborers to. Would feel greatly obliged if you will bring this matter to the attention of your train dispatcher so that the remedy may be applied.

“Also beg to bring to your attention the great delay in the recent past in sending us cargo papers ex the Atlantic steamers. This delay in receiving the accountable receipts throws us back in our work, and is always likely to create detention in the loading of our ships. We should have the cargo papers at earliest possible moment after arrival of a steamer, so that we may know exactly what the steamer brings and plan out the cargo for ordering to our steamer and then give the cargo order to your La Boca office so that they can prepare for delivery of the cargo to us.

Wish to particularly call your attention to the fact that the steamship Venezuela and the German steamer arrived about November 1, but their cargo papers have just been received to-day. Your steamship Allianca arrived on the 6th instant and her account receipts are not yet to hand. You therefore have an evidence of the delay in the forwarding of these papers. The account receipts just to hand are in very bad condition and, besides, a great many are short. Shall appreciate it if you will kindly bring this matter to the attention of your Mr. Crutchley.

“Another matter I desire to bring to your attention is the mixed-up condition of cargo coming over from Colon. I have noticed as many as four and five destinations come out of a single car. This condition of affairs results in a great deal of cargo being short delivered and going astray, and it makes considerable extra work in assorting the cargo here. The cargo forwarded to Colon from La Boca is loaded separately, and it would improve matters remarkably if steps could be taken to the end that all cargo also be loaded separately in cars at your end. The complaints from Central America in regard to shortshipped cargo are becoming more bitter every day. Shipments continue to go forward with packages short, and these short packages often create the greatest inconvenience to consignees. A number of cables have recently been received relative to sending forward shortshipped packages. You can readily understand what a serious inconvenience this is to consignees, especially, for instance, where machinery is concerned. The shortage of a piece of machinery is quite likely to indefinitely retard the work on a mill, factory, etc., and cause the consignee a large financial loss.

" The facts herein presented are not brought to your attention in the light of a complaint, but merely to show you the condition of affairs and to ask that you kindly take whatever steps you deem advisable to remedy the conditions referred to. We are always desirous to cooperate with you in every way possible in handling the business, and will also greatly appreciate your cooperation in bettering conditions. In regard to loading the transit cargo direct from ship to cars instead of piling it on pier, I beg to conclude by saying that I think my suggestion of having it loaded direct to cars would be for the best interests of all concerned, and for the best interests of the Panama route.

" Thanking you in anticipation of whatever you may do in improving matters, I am, “Very truly,

F. PEARNE, Agent." The ACTING CHAIRMAN. What is the date of that letter?

Mr. SCHWERIN. November 9, 1905, sir. Now, gentlemen, it does not require any great grasp of the situation

Senator DRYDEN. What induced you in the face of all these conditions, which certainly must have resulted, relatively, in a loss to your company, to reduce your rates?

Mr. SCHWERIN. We did not reduce our rates; we were forced to reduce them.

Senator Dryden. You were compelled to do it; you did not do it voluntarily?

Mr. SCHWERIN. No, sir.
Senator DRYDEX. But you have reduced them?

Mr. SCHWERIN. I have not accepted the reduction of the Panama Railroad people yet on the Mexican rates. That has got to be thrashed out vet. Without any consent on our part they issued the schedules with the reduced rates.

Senator Knox. You said a moment ago that that was done for the purpose of assisting the steel trust. What do you mean by that?

Mr. SCHWERIN. I mean that the traffic manager of the United States Steel Trust wrote Mr. Taft a letter setting forth the fact that the rates from Europe to Mexico were cheaper than they were from New York, and setting forth the fact that the United States manufacturers were suffering great injury from the fact that these conditions prevailed. Mr. Secretary Taft sent that letter to Mr. Walker, and Mr. Walker sent it to me, and I wrote a letter to the Secretary in which I called attention to the fact that the trust practiced the same thing; that is, they sold their articles abroad cheaper than they sold them to us in the United States, and I thought that if the shoe was put on the other foot it would be very much more in order; that the reason why we made these low freights from Europe was in competition with the German ships around the Horn, and sailing ships. You perhaps remember some time ago a controversy as to the rates of freight shipped to Europe and then by sailing vessels to the west coast of America

a very low rate. The rates have been as low as 14 and 17 shillings from Europe to west Mexican ports. We can not compete with those rates.

Senator Knox. Then, as I understand, the reason assigned was to enable the steel manufacturers here to compete with the European manufacturers of steel in the ports of Mexico? That was the reason of the reduction? Mr. SCHWERIN. That is alleged. Senator Knox. I say, that is the ostensible reason?

Mr. SCHWERIN. Yes; and that will be proven by the amount of tonnage that the steel trust ships to those ports in the coming season.

Senator Knox. You say that is alleged. Now, what other reason would you assign, or can you assign?

Mr. SCHWERIN. I think they have simply gotten a reduction on the tonnage which they have been previously moving, which they have always been trying to get; that is all. There is no traffic manager of any large corporation that is not always showing his value by trying to bring down the rates. That is what he is there for.

Senator Knox. And your answer to Secretary Taft was that the steel companies were selling their products in Europe for less prices than they were charging in the United States?

Mr. SCHWERIN. Yes, sir. I never received any reply to that letter. I asked the Secretary to consider our interests before any such rates were made.

Senator DRYDEN. Does the Panama Railroad have a right to arbitrarily fix rates on your steamship lines?

Mr. SCHWERIN. I did not discover that until this case came up, sir. Under the old contract either initial carrier had the right to make the initial rate. That is, on all freight originating in the United States, west bound, the Panama Railroad made the rate. On all freight originating in the United States, east bound, we had the right to make the rate. That was down to a minimum. If either line desired to go below that minimuni, in order to obtain competitive freight, it had to be done by mutual consent. Now, Mr. Walker wrote me a letter in regard to these rates and said that in view of the public opinion calling for reduced rates via the Isthmus he thought we ought to reduce the rates to meet the European classifications. I took the matter up and it was under discussion. While it was under discussion the first thing I saw was the schedules issued and effective.

Senator Knox. But were these rates fixed on still below the minimum? Mr. SCHWERIN. Oh, yes, sir.

Senator Knox. Then, under that arrangement, they are not binding upon you unless you acquiesce!

Mr. SCHWERIN. That is the old contract. The old contract does not exist.

The ACTING CHAIRMAX. That is the contract that was annulled?

Mr. SCHWERIN. That was annulled, you see-that is, since last Julyand this was only very recently.

Senator Knox. What is the situation now? Do the steamships that carry the freight from New York down to Colon have the right to fix the through rate?

Mr. SCHWERIN. Apparently that is the assumption that exists to-day--that they have a right to make any rates they please.

Senator Krox. Then they have not done anything more than they had a right to do?

Mr. SCHWERIN. I never have discovered any traffic arrangement · between connecting carriers by which one can make the rate over the other man's line except by mutual consent.

Senator Knox. I understood you just now to say that that has been the practice.

Mr. SCHWERIN. Under the contract-the written agreement between us.

Senator Knox. No; you do not understand me, then. I say, in the absence of a contract, what is the rule where freight is carried by several carriers in respect to the initial rate; by whom is it fixed ?

Mr. SCHWERIN. It is fixed by mutual consent.

Senator Knox. By mutual consent. Then, there being no contract, this rate upon steel would not be binding upon you without your consent?

Mr. SCHWERIN. Oh, certainly not. There is nothing to bind us to accept these divisions which the auditors may account to us for; we may decline to accept them.

Senator Knox. Then, whatever may have been done in the way of reduction would not be accepted by you unless you desired to accept it?

Mr. SCHWERIN. Yes, sir. Nevertheless that is a very arbitrary way to make a rate effective, and I doubt if any ordinary transportation lines, mutually working together, would make such a rate effective.

Senator Knox. Do not misunderstand me. I am not trying to defend it; I am just trying to find out what the facts are.

Senator DRYDEN. You have seen no improvement in these conditions down to the present day!

Mr. SCHWERIN. No, sir; I fear they are getting worse.
Senator Knox. What is your idea of the remedy?

The ACTING CHAIRMAN. May I ask one question before you answer that?

Senator Knox. Certainly; go ahead, sir.

The Acting CHAIRMAN. Is there any appreciable increase in commercial business to-day as compared with trattie a year or two years ago!

Mr. SCHWERIN. There is about 100,000 tons of freight of all classes that crosses that road between the Atlantic and Pacific seaboard, and with our line there is about 200,000 tons. We handle more freight with the Panama Railroad than the South American companies do. You notice that in their testimony the South American companies are not accused of making any blockade. The freight from San Francisco east is about the same. The freight from New York to San Francisco bas fallen off, and it has fallen off just about as much as the freight from New York and Europe to Central America has increased. The freight from New York to Colon has increased about 15,000 tons.

Mr. SCHWERIN. Over last year.
The ACTING CHAIRMAN. Bi last year" you mean 1905?
Mr. SCHWERIN. 1905. I am speaking of 1905, practically.
Senator Knox. Can you tell us what percentage of increase there is?

Mr. SCHWERIN, I think I have it here, sir. (After consulting papers.) The increase of 1905 over 1904 of freight from the United States and Europe to the Isthmus of Panama, that stayed there, you

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