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page-break-before: always; - page-break-after: always; } - div.titlepage p {text-align: center; text-indent: 0em; font-weight: bold; - line-height: 1.5; margin-top: 3em; } - .ph1 { text-indent: 0em; font-weight: bold; font-size: xx-large; - margin: .67em auto; page-break-before: always; } - .ph2 { text-indent: 0em; font-weight: bold; font-size: x-large; margin: .75em auto; - page-break-before: always; } - .center {text-align: center; margin-top: 2em; } - .x-ebookmaker p.dropcap:first-letter { float: left; } - /* ]]> */ </style> - </head> - <body> -<p style='text-align:center; font-size:1.2em; font-weight:bold'>The Project Gutenberg eBook of The heart of the railroad problem, by Frank Parsons</p> -<div style='display:block; margin:1em 0'> -This eBook is for the use of anyone anywhere in the United States and -most other parts of the world at no cost and with almost no restrictions -whatsoever. You may copy it, give it away or re-use it under the terms -of the Project Gutenberg License included with this eBook or online -at <a href="https://www.gutenberg.org">www.gutenberg.org</a>. If you -are not located in the United States, you will have to check the laws of the -country where you are located before using this eBook. -</div> - -<p style='display:block; margin-top:1em; margin-bottom:0; margin-left:2em; text-indent:-2em'>Title: The heart of the railroad problem</p> -<p style='display:block; margin-left:2em; text-indent:0; margin-top:0; margin-bottom:1em;'>The history of railway discrimination in the United States, the chief efforts at control and the remedies proposed, with hints from other countries</p> -<p style='display:block; margin-top:1em; margin-bottom:0; margin-left:2em; text-indent:-2em'>Author: Frank Parsons</p> -<p style='display:block; text-indent:0; margin:1em 0'>Release Date: August 1, 2022 [eBook #68664]</p> -<p style='display:block; text-indent:0; margin:1em 0'>Language: English</p> - <p style='display:block; margin-top:1em; margin-bottom:0; margin-left:2em; text-indent:-2em; text-align:left'>Produced by: Richard Tonsing and the Online Distributed Proofreading Team at https://www.pgdp.net (This file was produced from images generously made available by The Internet Archive)</p> -<div style='margin-top:2em; margin-bottom:4em'>*** START OF THE PROJECT GUTENBERG EBOOK THE HEART OF THE RAILROAD PROBLEM ***</div> - -<div class='tnotes covernote'> - -<p class='c000'><strong>Transcriber’s Note:</strong></p> - -<p class='c000'>The cover image was created by the transcriber and is placed in the public domain.</p> - -</div> - -<div class='titlepage'> - -<div> - <h1 class='c001'>THE HEART<br /> <span class='large'>OF THE</span><br /> RAILROAD PROBLEM<br /> <span class='large'>THE HISTORY OF RAILWAY DISCRIMINATION IN THE UNITED STATES, THE CHIEF EFFORTS AT CONTROL AND THE REMEDIES PROPOSED, WITH HINTS FROM OTHER COUNTRIES</span></h1> -</div> - -<div class='nf-center-c0'> -<div class='nf-center c002'> - <div>BY</div> - <div class='c003'><span class='xlarge'><span class='sc'>Prof.</span> FRANK PARSONS, <span class='sc'>Ph.D.</span></span></div> - <div class='c003'><span class='small'>AUTHOR OF “THE STORY OF NEW ZEALAND,” “THE WORLD’S BEST BOOKS,” “THE CITY FOR THE PEOPLE,” “THE RAILWAYS, THE TRUSTS, AND THE PEOPLE”</span></div> - <div class='c002'>BOSTON</div> - <div>LITTLE, BROWN, AND COMPANY</div> - <div>1906</div> - </div> -</div> - -</div> - -<div class='nf-center-c0'> -<div class='nf-center c004'> - <div><span class='small'><em>Copyright, 1906</em>,</span></div> - <div><span class='small'><span class='sc'>By Frank Parsons</span>.</span></div> - <div class='c002'><span class='small'><em>All rights reserved</em></span></div> - <div class='c002'><span class='small'>Published April, 1906</span></div> - <div class='c002'><span class='small'>THE UNIVERSITY PRESS, CAMBRIDGE, U. S. A.</span></div> - </div> -</div> - -<div class='chapter'> - <span class='pageno' id='Page_v'>v</span> - <h2 class='c005'>PREFACE</h2> -</div> - -<p class='c006'>This work is one of the consequences of a conversation -years ago with Dr. C. F. Taylor, of Philadelphia, editor and -publisher of <cite>The Medical World</cite> and of Equity Series. The -doctor said that Equity Series should have a book on the -railroad question. The writer replied that there was room -for a book dealing with the political, industrial, and social -effects of different systems of railway ownership and control. -A plan was adopted for a book, to be called “The -Railways, the Trusts, and the People,” which is now on -the press of Equity Series. For the preparation of this -work the writer travelled through nine countries of Europe -and over three-fourths of the United States, studying railways, -meeting railroad presidents and managers, ministers -of railways, members of railway commissions, governors, -senators, and leading men of every class, in the effort to -get a thorough understanding of the railway situation. He -also made an extensive study of the railroad literature of -leading countries, and examined thoroughly the reports -and decisions of commissions and courts in railroad cases -in the United States.</p> - -<p class='c007'>As these studies progressed, the writer became more and -more convinced that the heart of the railroad problem lies -in the question of impartial treatment of shippers. The -chief complaint against our railroads is not that the rates -as a whole are unreasonable, but that favoritism is shown -for large shippers or special interests having control of -railways or a special pull with the management. This book -<span class='pageno' id='Page_vi'>vi</span>consists, in the main, of the broad study of railway favoritism, -which was made as a basis for the generalizations outlined -in the brief chapter on that subject in “The Railways, -the Trusts, and the People,”—one of the thirty chapters -of that book. This study reveals the facts in reference to -railway favoritism or unjust discrimination from the beginning -of our railway history to the present time, discloses -the motives and causes of discrimination, discusses various -remedies that have been proposed, and gathers hints from -the railway systems of other countries to clarify and develop -the conclusions indicated by our own railroad history.</p> - -<p class='c007'>Special acknowledgments are due to Dr. Taylor, who paid -a part of the cost of the special investigations on which the -book is based and has taken a keen interest in the progress -of the work from its inception, and also to Mr. Ralph -Albertson, who has worked almost constantly with the -writer for the past eight months and more or less for -two years before that, and has rendered great assistance in -research, in consultation and criticism, and in the checking -and revision of proof.</p> - -<div class='lg-container-r'> - <div class='linegroup'> - <div class='group'> - <div class='line'>FRANK PARSONS.</div> - </div> - </div> -</div> - -<div class='lg-container-l'> - <div class='linegroup'> - <div class='group'> - <div class='line'><span class='small'><span class='sc'>Boston</span>, March, 1906.</span></div> - </div> - </div> -</div> - -<div class='chapter'> - <span class='pageno' id='Page_vii'>vii</span> - <h2 class='c005'>CONTENTS</h2> -</div> - -<table class='table0'> - <tr> - <th class='c008'><span class='small'><span class='sc'>Chapter</span></span></th> - <th class='c009'> </th> - <th class='c009'> </th> - <th class='c010'><span class='small'><span class='sc'>Page</span></span></th> - </tr> - <tr> - <td class='c008'>I.</td> - <td class='c009' colspan='2'><span class='sc'>The Law and the Fact</span></td> - <td class='c010'><a href='#Page_1'>1</a></td> - </tr> - <tr> - <td class='c008'>II.</td> - <td class='c009' colspan='2'><span class='sc'>Passes and Politics</span></td> - <td class='c010'><a href='#Page_3'>3</a></td> - </tr> - <tr> - <td class='c008'>III.</td> - <td class='c009' colspan='2'><span class='sc'>Passenger Rebates and Other Forms of Discrimination in Passenger Traffic</span></td> - <td class='c010'><a href='#Page_17'>17</a></td> - </tr> - <tr> - <td class='c008'> </td> - <td class='c009'> </td> - <td class='c009'>The Deadhead Passenger Car</td> - <td class='c010'><a href='#Page_18'>18</a></td> - </tr> - <tr> - <td class='c008'> </td> - <td class='c009'> </td> - <td class='c009'>Ticket Scalping</td> - <td class='c010'><a href='#Page_19'>19</a></td> - </tr> - <tr> - <td class='c008'>IV.</td> - <td class='c009' colspan='2'><span class='sc'>Freight Discrimination</span></td> - <td class='c010'><a href='#Page_23'>23</a></td> - </tr> - <tr> - <td class='c008'>V.</td> - <td class='c009' colspan='2'><span class='sc'>The Early Years, Hepburn Report, etc.</span></td> - <td class='c010'><a href='#Page_25'>25</a></td> - </tr> - <tr> - <td class='c008'> </td> - <td class='c009'> </td> - <td class='c009'>The Granger Laws</td> - <td class='c010'><a href='#Page_26'>26</a></td> - </tr> - <tr> - <td class='c008'> </td> - <td class='c009'> </td> - <td class='c009'>The Hepburn Investigation</td> - <td class='c010'><a href='#Page_27'>27</a></td> - </tr> - <tr> - <td class='c008'>VI.</td> - <td class='c009' colspan='2'><span class='sc'>The Senate Investigation of 1885 and the Interstate Commerce Act</span></td> - <td class='c010'><a href='#Page_37'>37</a></td> - </tr> - <tr> - <td class='c008'>VII.</td> - <td class='c009' colspan='2'><span class='sc'>The Interstate Commission</span></td> - <td class='c010'><a href='#Page_43'>43</a></td> - </tr> - <tr> - <td class='c008'>VIII.</td> - <td class='c009' colspan='2'><span class='sc'>Effects of the Interstate Act</span></td> - <td class='c010'><a href='#Page_49'>49</a></td> - </tr> - <tr> - <td class='c008'> </td> - <td class='c009'> </td> - <td class='c009'>Direct Rebates</td> - <td class='c010'><a href='#Page_53'>53</a></td> - </tr> - <tr> - <td class='c008'>IX.</td> - <td class='c009' colspan='2'><span class='sc'>Substitutes for Rebates</span></td> - <td class='c010'><a href='#Page_57'>57</a></td> - </tr> - <tr> - <td class='c008'>X.</td> - <td class='c009' colspan='2'><span class='sc'>Denial of Fair Facilities</span></td> - <td class='c010'><a href='#Page_66'>66</a></td> - </tr> - <tr> - <td class='c008'>XI.</td> - <td class='c009' colspan='2'><span class='sc'>Classification and Commodity Rates</span></td> - <td class='c010'><a href='#Page_70'>70</a></td> - </tr> - <tr> - <td class='c008'>XII.</td> - <td class='c009' colspan='2'><span class='sc'>Oil and Beef</span></td> - <td class='c010'><a href='#Page_73'>73</a></td> - </tr> - <tr> - <td class='c008'>XIII.</td> - <td class='c009' colspan='2'><span class='sc'>Imports and Exports</span></td> - <td class='c010'><a href='#Page_84'>84</a></td> - </tr> - <tr> - <td class='c008'>XIV.</td> - <td class='c009' colspan='2'><span class='sc'>Locality Discriminations</span></td> - <td class='c010'><a href='#Page_87'>87</a></td> - </tr> - <tr> - <td class='c008'>XV.</td> - <td class='c009' colspan='2'><span class='sc'>Long-Haul Decisions of the Supreme Court</span></td> - <td class='c010'><a href='#Page_95'>95</a></td> - </tr> - <tr> - <td class='c008'>XVI.</td> - <td class='c009' colspan='2'><span class='sc'>Ten Years of Federal Regulation</span></td> - <td class='c010'><a href='#Page_104'>104</a></td> - </tr> - <tr> - <td class='c008'>XVII.</td> - <td class='c009' colspan='2'><span class='sc'>The Elkins Act and its Effects</span></td> - <td class='c010'><a href='#Page_110'>110</a></td> - </tr> - <tr> - <td class='c008'>XVIII.</td> - <td class='c009' colspan='2'><span class='sc'>The Wisconsin Revelations</span></td> - <td class='c010'><a href='#Page_120'>120</a></td> - </tr> - <tr> - <td class='c008'>XIX.</td> - <td class='c009' colspan='2'><span class='sc'>The Colorado Fuel Rebates and Other Cases</span></td> - <td class='c010'><a href='#Page_124'>124</a></td> - </tr> - <tr> - <td class='c008'>XX.</td> - <td class='c009' colspan='2'><span class='sc'>Free Cartage, State Traffic, Demurrage, The Expense Bill System, Goods not Billed, Milling-in-Transit</span></td> - <td class='c010'><a href='#Page_142'>142</a></td> - </tr> - <tr> - <td class='c008'><span class='pageno' id='Page_viii'>viii</span>XXI.</td> - <td class='c009' colspan='2'><span class='sc'>Midnight Tariffs and Elevator Fees</span></td> - <td class='c010'><a href='#Page_147'>147</a></td> - </tr> - <tr> - <td class='c008'>XXII.</td> - <td class='c009' colspan='2'><span class='sc'>Commodity Discriminations</span></td> - <td class='c010'><a href='#Page_150'>150</a></td> - </tr> - <tr> - <td class='c008'>XXIII.</td> - <td class='c009' colspan='2'><span class='sc'>Discrimination by Classification</span></td> - <td class='c010'><a href='#Page_155'>155</a></td> - </tr> - <tr> - <td class='c008'>XXIV.</td> - <td class='c009' colspan='2'><span class='sc'>Various Other Methods</span></td> - <td class='c010'><a href='#Page_159'>159</a></td> - </tr> - <tr> - <td class='c008'>XXV.</td> - <td class='c009' colspan='2'><span class='sc'>Terminal Railroads</span></td> - <td class='c010'><a href='#Page_166'>166</a></td> - </tr> - <tr> - <td class='c008'>XXVI.</td> - <td class='c009' colspan='2'><span class='sc'>Private-Car Abuses</span></td> - <td class='c010'><a href='#Page_174'>174</a></td> - </tr> - <tr> - <td class='c008'>XXVII.</td> - <td class='c009' colspan='2'><span class='sc'>The Long-Haul Anomaly</span></td> - <td class='c010'><a href='#Page_208'>208</a></td> - </tr> - <tr> - <td class='c008'>XXVIII.</td> - <td class='c009' colspan='2'><span class='sc'>Other Place Discriminations</span></td> - <td class='c010'><a href='#Page_216'>216</a></td> - </tr> - <tr> - <td class='c008'>XXIX.</td> - <td class='c009' colspan='2'><span class='sc'>Nullifying the Protective Tariff</span></td> - <td class='c010'><a href='#Page_221'>221</a></td> - </tr> - <tr> - <td class='c008'>XXX.</td> - <td class='c009' colspan='2'><span class='sc'>Summary of Methods and Results</span></td> - <td class='c010'><a href='#Page_228'>228</a></td> - </tr> - <tr> - <td class='c008'>XXXI.</td> - <td class='c009' colspan='2'><span class='sc'>Difficulties of Abolishing Discrimination</span></td> - <td class='c010'><a href='#Page_241'>241</a></td> - </tr> - <tr> - <td class='c008'>XXXII.</td> - <td class='c009' colspan='2'><span class='sc'>Remedies</span></td> - <td class='c010'><a href='#Page_252'>252</a></td> - </tr> - <tr> - <td class='c008'> </td> - <td class='c009'> </td> - <td class='c009'>Pooling</td> - <td class='c010'><a href='#Page_265'>265</a></td> - </tr> - <tr> - <td class='c008'> </td> - <td class='c009'> </td> - <td class='c009'>Wrestling with the Long-Haul Abuse</td> - <td class='c010'><a href='#Page_270'>270</a></td> - </tr> - <tr> - <td class='c008'> </td> - <td class='c009'> </td> - <td class='c009'>A Drastic Cure for Rebating</td> - <td class='c010'><a href='#Page_271'>271</a></td> - </tr> - <tr> - <td class='c008'>XXXIII.</td> - <td class='c009' colspan='2'><span class='sc'>Fixing Rates by Public Authority</span></td> - <td class='c010'><a href='#Page_274'>274</a></td> - </tr> - <tr> - <td class='c008'> </td> - <td class='c009'> </td> - <td class='c009'>Alleged Errors of the Commission</td> - <td class='c010'><a href='#Page_279'>279</a></td> - </tr> - <tr> - <td class='c008'>XXXIV.</td> - <td class='c009' colspan='2'><span class='sc'>Can Regulation Secure the Needful Dominance of Public Interest?</span></td> - <td class='c010'><a href='#Page_306'>306</a></td> - </tr> - <tr> - <td class='c008'>XXXV.</td> - <td class='c009' colspan='2'><span class='sc'>Hints from Other Countries</span></td> - <td class='c010'><a href='#Page_313'>313</a></td> - </tr> - <tr> - <td class='c008'> </td> - <td class='c009'> </td> - <td class='c009'> </td> - <td class='c010'> </td> - </tr> - <tr><td class='c011' colspan='4'>APPENDIX</td></tr> - <tr> - <td class='c008'>A.</td> - <td class='c009' colspan='2'><span class='sc'>Latest Decisions of U. S. Supreme Court</span></td> - <td class='c010'><a href='#Page_335'>335</a></td> - </tr> - <tr> - <td class='c008'>B.</td> - <td class='c009' colspan='2'><span class='sc'>President Hadley and the Hepburn Bill. English Experience in the Regulation of Rates</span></td> - <td class='c010'><a href='#Page_337'>337</a></td> - </tr> - <tr> - <td class='c008'> </td> - <td class='c009'> </td> - <td class='c009'> </td> - <td class='c010'> </td> - </tr> - <tr> - <td class='c008'>INDEX</td> - <td class='c009'> </td> - <td class='c009'> </td> - <td class='c010'><a href='#Page_345'>345</a></td> - </tr> -</table> - -<div class='chapter ph1'> - -<div class='nf-center-c0'> -<div class='nf-center c004'> - <div>THE HEART OF</div> - <div>THE RAILROAD PROBLEM</div> - </div> -</div> - -</div> - -<div> - <span class='pageno' id='Page_1'>1</span> - <h2 class='c005'>CHAPTER I.<br /> <span class='large'>THE LAW AND THE FACT.</span></h2> -</div> - -<p class='c006'>It is a principle of the common law that common carriers -must be impartial. “They cannot legally give undue -or unjust preferences, or make unequal or extravagant -charges.... They are bound to provide reasonable and -sufficient facilities. They must not refuse to carry any -goods or passengers properly applying for transportation.... -They have no right to grant monopolies or special -privileges or unequal preferences, but are bound to treat -all fairly and impartially.”<a id='r1'></a><a href='#f1' class='c012'><sup>[1]</sup></a> That is the rule of the common -law which represents the crystallized common-sense -and practical conscience of the Anglo-Saxon and every -other civilized race. The legal principle that a common -carrier must be impartial was established long before the -Interstate Commerce Act was passed, or the Granger laws -enacted,—yes, before railways or steamboats were born. -They inherited the family character and the family law. -It has been applied to them in innumerable cases. There -is a solid line of decisions from the infancy of the English -law to the present time. Constitutional provisions and -State and Federal statutes have been passed to affirm and -<span class='pageno' id='Page_2'>2</span>enforce the rule. The railroads themselves declare the -rule to be right. And yet, in spite of the railway conscience -and the common law, the universal sense of justice -of mankind, and the whole legislative, executive, and judicial -power of the government, the rule is not obeyed. On -the contrary, disregard of it is chronic and contagious, and -constitutes one of the leading characteristics of our railway -system. In spite of law and justice our railway practice -is a tissue of unfair discrimination, denying the small -man equal opportunity with the rich and influential, and -breaking the connection between merit and success.</p> - -<p class='c007'>The railways unjustly favor persons, places, and commodities, -and they do it constantly, systematically, habitually. -If every instance of unjust discrimination that occurs -to-day were embodied in human form and the process were -continued for a year,<a id='r2'></a><a href='#f2' class='c012'><sup>[2]</sup></a> the outlaw host would dwarf the -Moslem hordes that deluged southern Europe in the days -of Charles Martel, outnumber many fold the Grand Army -of the Republic in its palmiest days, and, shoulder to shoulder, -the dark and dangerous mob would reach across the -continent, across the ocean, over Europe and Asia, and -around the world.</p> - -<p class='c007'>The railways discriminate partly because they wish to, -and partly because they have to. The managers favor -some interests because they are linked with the interests -of the railways or the managers, and they favor some other -interests because they are forced to. The pressure of private -interest is stronger than the pressure of the law, and -so the railroad manager fractures his conscience and breaks -the statutes and common law into fragments.</p> - -<div class='chapter'> - <span class='pageno' id='Page_3'>3</span> - <h2 class='c005'>CHAPTER II.<br /> <span class='large'>PASSES AND POLITICS.</span></h2> -</div> - -<p class='c006'>One of the most important forms of discrimination is -the railroad pass. Many persons of wealth or influence, -legislators, judges, sheriffs, assessors, representatives of -the press, big shippers, and agents of large concerns, get -free transportation, while those less favored must pay not -only for their own transportation, but for that of the -railway favorites also.</p> - -<p class='c007'>A farmer and a lawyer occupied the same seat in a railroad -car. When the conductor came the farmer presented -his ticket, and the lawyer a pass. The farmer did not conceal -his disgust when he discovered that his seat-mate was -a deadhead. The lawyer, trying to assuage the indignation -of the farmer, said to him: “My friend, you travel very -cheaply on this road.” “I think so myself,” replied the -farmer, “considering the fact that I have to pay fare for -both of us.”</p> - -<p class='c007'>The free-pass system is specially vicious because of its -relation to government. Passes are constantly given to -public officials in spite of the law, and constitute one of -the most insidious forms of bribery and corruption yet invented. -I have in my possession some photographs of -annual passes given by the Pennsylvania Railroad in 1903, -1904, and 1905 to members of the State Legislature, and -the Common Council of Philadelphia.</p> - -<p class='c007'>The Constitution of Pennsylvania, Section 8 of Article 8, -says: “No railroad, railway, or other transportation company, -<span class='pageno' id='Page_4'>4</span>shall grant free passes, or passes at a discount, to any -persons except officers or employees of the company.”</p> - -<p class='c007'>The question is whether the members of the Legislature -are employees of the Pennsylvania Railroad.</p> - -<p class='c007'>Recently the Pennsylvania Railroad gave notice that -after January 1, 1906, no free passes would be issued except -to employees. As we have seen reason to believe, this -may still include members of the Legislature, and even if -the order should happen to be enforced according to the -common acceptation of the word “employees,” there are -plenty of ways in which free transportation can be given -to men the railroad management deems it desirable to -favor. Railroads have made such orders before, and in -every case the fact has proved to be that the order simply -constituted an easy method of lopping off the overgrown -demand for passes, a ready excuse for denying requests -the railroad does not wish to honor, without in the least -interfering with its power of favoring those it really wishes -to favor. In cutting off passes under said order to multitudes -of city officials in Pittsburg lately the Pennsylvania -railroad officers stated that the demand had become so -great that those having free rides were actually crowding -the paying passengers on many of the trains. The <cite>Philadelphia -North American</cite> declared that in that city every -big and little politician expected free passage when he requested -it, and that there was no ward heeler so humble that -he might not demand transportation for himself and friends -to Atlantic City, Harrisburg, or any other point on the -Pennsylvania line. The <cite>Springfield Republican</cite> said: “It -does not appear to be recognized, in the praise given to the -present action of the railroad company, how great an impeachment -of its management the old order constituted. -We are told that passes were issued literally in bundles for -the use of political workers, big and little.”</p> - -<p class='c007'>We watched with much interest to see what the railroad -would really do when the time for full enforcement of the -<span class='pageno' id='Page_5'>5</span>order came. In Pennsylvania, as was anticipated, the order -has been used as a basis for refusing passes to the overgrown -horde of grafters who have feasted so long at the Pennsylvania’s -tables. The railway does not want anything this -year in Pennsylvania that the grafters can give it, and it is -an excellent opportunity to punish the Pittsburg politicians -for allowing the Gould lines to enter the city. But in Ohio -the situation is different, and, in spite of the recent order, -the time-honored free passes have been sent to every -member of the Ohio Legislature. A press despatch from -Columbus, January 1, says: “One of the notable events -that marked the opening of the general assembly to-day was -the unexpected arrival of railroad passes for every member. -The Pennsylvania, first to announce that the time-honored -graft would be cut off, was the first to send the little -tickets, and the other lines followed suit.”</p> - -<p class='c007'>The Pennsylvania is not alone in its delicate generosity -to legislators and other persons of influence. The <em>practice</em> -is <em>practically</em> universal.<a id='r3'></a><a href='#f3' class='c012'><sup>[3]</sup></a> From Maine to California there -is not a State in which the railroads refrain from giving -passes to legislators, judges, mayors, assessors, etc. And -the roads expect full value for their favors. Some time -ago a member of the Illinois Legislature applied to the -president of a leading railroad for a pass. In reply he -received the following:</p> - -<p class='c007'>“Your letter of the 22nd to President ——, requesting an -annual over the railroad of this company, has been referred -to me. A couple of years ago, after you had been furnished -with an annual over this line, you voted against a bill -which you knew this company was directly interested in. -<span class='pageno' id='Page_6'>6</span>Do you know of any particular reason, therefore, why we -should favor you with an annual this year?”</p> - -<p class='c007'>The railroads give passes to legislators and public officials -not, as a rule, in any spirit of philanthropy or respect for -public office, but as a matter of business; and if a legislator -does not recognize the obligation that adheres to the pass, -the pass is not likely to adhere to him in subsequent years.</p> - -<p class='c007'>In many cases the pass is the first step on the road to -railroad servitude. Governor Folk said to me: “The railroads -debauch legislators at the start by the free pass. It -is a misdemeanor by the law of this State to take such a -favor.<a id='r4'></a><a href='#f4' class='c012'><sup>[4]</sup></a> But it seems so ordinary a thing that the legislator -takes it. He may start out with good intentions, but -he takes a pass and then the railroad people have him in -their power. He has broken the law, and if he does not do -as they wish they threaten to publish the number of his -pass. He generally ends by taking bribe money. He’s in -the railroad power anyway to a certain extent, and thinks -he might as well make something out of it. In investigating -cases of corruption I have found that in almost every -instance the first step of the legislator toward bribery was -the acceptance of a railroad pass.”</p> - -<p class='c007'>At the annual dinner of the Boston Merchants’ Association, -January, 1906, Governor Folk said: “One of our -greatest evils is the domination of public affairs by our -great corporations, and we will never get rid of corporation -dominance till we get rid of the free pass. That is the -insidious bribe that carries our legislators over the line -of probity. First seduced by the free pass, destruction is -easy. No legislator has a right to accept a free pass; no -more right than to accept its equivalent in money.” Even -the laws against the free pass, Governor Folk says, often -play into the hands of the railways and emphasize and -<span class='pageno' id='Page_7'>7</span>fasten corruption upon the State by putting legislators and -officials at the mercy of the railroads in consequence of the -fact that the taking of a pass is a violation of law, so that -the railway has a special hold upon the donee as soon -as the favor is accepted. This is likely to be the effect -unless the law is so thoroughly enforced as to prevent the -taking of passes, which is very difficult and very seldom -achieved.</p> - -<p class='c007'>Governor Folk is doing his best to abolish the pass evil. -It used to be a common thing for officials of all grades to -ride on passes. And any influential person in Jefferson -City could get a pass by seeing a member of the House or -Senate, who would send a note to Colonel Phelps and a pass -would be forthcoming. Now the legislators decline to -accommodate their friends by making these little requests, -for the matter might come to the ear of Governor Folk. -Moreover the government employees in Missouri have been -cut off from these railroad “courtesies.” The statute does -not apply to appointive officers, but the Governor does not -intend that his department shall be honeycombed with railroad -influence if he can help it. One of the officers of a -subordinate branch of the government went to him and -asked him about the matter. “I do not want a pass for -myself,” said the interrogator, “but Mr. W. told me that he -would like for me to see you before he accepted a pass and -see if you had any objections. And I want to add, Governor, -that it has always been the custom for the employees -in this department to use free passes.” Governor Folk’s -countenance lost its smile for the moment, as he said very -slowly and sternly: “Tell the employees of your department -that if any of my appointees ride upon railway passes -they will be instantly discharged.”</p> - -<p class='c007'>These insidious bribes in the guise of courtesy and honor -for position—these free passes which Governor Folk denounces -as the first steps to corruption—are prevalent in -all our States. Even in honest old Maine, the frosty forest -<span class='pageno' id='Page_8'>8</span>State, I found the railroad pass in full bloom. Speaking to -a joint committee of the House and Senate at Augusta a -few months ago, I exhibited a number of photographs of -passes given to legislators and councilmen by one of our -big railroads. The members examined these photos with -much interest and some facetious remarks. On the way -into town a famous lobbyist who has long and close acquaintance -with the legislature of Maine laughed till the -tears ran down his cheeks over the memory of the scene, -puffing out between his explosions the explanation of his -merriment: “Every one of those fellows has a railroad pass -in his own pocket.” Inquiry in other directions tends to -confirm his statement.</p> - -<p class='c007'>It is hardly possible to imagine that the ordinary legislator -or judge can be entirely impartial in reference to a -railroad bill or suit when he is under obligation to the railroads -for past favors and hopes for similar courtesies in the -future.</p> - -<p class='c007'>When a judge finds that jurors in a railroad case have -accepted passes from the railroad he discharges the jurors -as unfit for impartial service,<a id='r5'></a><a href='#f5' class='c012'><sup>[5]</sup></a> yet that same judge may -have in his pocket an annual pass over all the lines of the -road that is plaintiff or defendant in the case.</p> - -<p class='c007'>Some railroad presidents and managers have told me that -passes are given as mere courtesies and are not intended to -influence the conduct of officials. This may be true in some -cases, but as a rule the railroads do not give charity; but -expect favor for favor, and value for value, or multiplied -value for value. Railroad men have sometimes admitted -to me that the psychology of the pass is closely related to -<span class='pageno' id='Page_9'>9</span>that of the bribe, and that they sought and obtained political -results from the distribution of transportation favors. -And aside from such admissions the evidence on the facts -is overwhelming.</p> - -<p class='c007'>A prominent judge who had been on the bench for years -in one of our best States and had always received passes -from various railroad companies, found at the beginning of -a new year that one of the principal railroads had failed to -send him the customary pass. Thinking it an oversight he -called the attention of the railroad’s chief attorney to the -fact. “Judge,” said the lawyer, “did you not recently -decide an important case against our company?” “And -was not my decision in accordance with law and justice?” -said the judge. The attorney did not reply to this, but a -few days later the judge got his pass. After some months -it again became the duty of the judge to render a decision -against the company. This second act of judicial independence -was not forgiven. The next time he presented -his pass the conductor confiscated it in the presence of -many passengers and required the judge to pay his fare.</p> - -<p class='c007'>The railroad commission in one of our giant States says -the fact “that for the most part passes are given to official -persons for the purpose of influencing official conduct, -is made manifest by the fact that they are not given to -such persons except while they hold official positions.”<a id='r6'></a><a href='#f6' class='c012'><sup>[6]</sup></a></p> - -<p class='c007'>The president of an important railroad is stated to have -said that he “saved his company thousands of dollars a -year by giving annual passes to county auditors.” And -a man who had been auditor for many years said that the -taxes of the —— railroad company were increased about -$20,000 a year because it was so stingy with its passes.<a id='r7'></a><a href='#f7' class='c012'><sup>[7]</sup></a></p> - -<p class='c007'><span class='pageno' id='Page_10'>10</span>Members of legislatures and of Congress have told me -that after voting against railroad measures the usual passes -were not forthcoming.</p> - -<p class='c007'>A little while before the introduction of the rate legislation -now pending, in pursuance of President Roosevelt’s -regulative policy, a congressman from the Far West was -visiting with us. He had free transportation for himself -and family anywhere in the United States any time he -wanted it. A lady in the family asked him if it was the -same way with the rest of the congressmen, and he said -“Yes.” I have in my notes conversations with senators -and representatives from eighteen States, and all of them -stated, in reply to my questions, that passes were an established -and regular part of the perquisites of a member of -Congress.</p> - -<p class='c007'>But since the Esch-Townsend bill for the fixing of rates -by a government commission came on deck, I understand -that the congressmen who supported it are learning the -lesson conveyed in the pass-denying letter above quoted, as -some of the railroads are refusing all the requests of such -congressmen for free transportation. The president of one -of these railroads is reported to have said: “I never was -in favor of granting political transportation, and now I have -a good opportunity to cut off some of these deadheads. -Transportation has been given them in the past on the -theory that they were friends, but when we needed friends -they were not there.”</p> - -<p class='c007'>This, however, is only a passing phase—an emergency -measure to punish a few congressmen who have shown so -little appreciation of the right of the railroads to make the -laws affecting transportation, that they actually voted for -what they deemed right or for what the people desired, -rather than for what the railroads wanted.</p> - -<p class='c007'>Aside from such little eddies, the great stream of dead-headism -flows on as smooth and deep as ever. The people -take the thing so much as a matter of course that it has -<span class='pageno' id='Page_11'>11</span>been a constant cause of surprise to passengers on the New -York, New Haven, and Hartford Railroad to see Governor -Douglas pay his fare day by day as he travelled to and fro -on an ordinary commutation ticket.</p> - -<p class='c007'>A prominent judge of Chicago tells me that for years -the leading railroads entering that city have sent him -annual passes without request. I found the same thing in -Denver, San Francisco, New York, Boston, and nearly -everywhere else I have been in this country. The mayor -of one of our giant cities told me this very morning that -the principal railroads sent him annuals but he returned -them. It would be better if he would turn the next lot -over to a publicity league or put them in a museum.</p> - -<p class='c007'>In many cases the railroads are practically forced to give -passes. A. B. Stickney, President of the Chicago and -Great Western Railroad was asked by the Industrial Commission<a id='r8'></a><a href='#f8' class='c012'><sup>[8]</sup></a> -about the giving of passes to members of the -judiciary of Minnesota and Illinois. President Stickney -said, “If any of them ask for transportation, they get it; -we don’t hesitate to give to men of that class if they ask -for passes; we never feel at liberty to refuse.”</p> - -<p class='c007'>“Is there any good reason why a judge who gets a good -salary should have a pass—any greater reason than why -John Smith should have a pass?”</p> - -<p class='c007'>“That depends,” said President Stickney, “on what you -call a good reason.... Twenty-five years ago I had -charge of a little bit of a road that was a sort of subordinate -of a larger road.</p> - -<p class='c007'>“I had occasion to visit the president of the superior road -about something, and he said: ‘Mr. Stickney, I see that -the sheriff of this county has a pass over your road. I -should like to know on what principle you gave that -sheriff a pass.’</p> - -<p class='c007'>“‘I did it on the principle that he was a power, and I -was afraid to refuse him,’ I said.</p> - -<p class='c007'><span class='pageno' id='Page_12'>12</span>“‘Well,’ said he, ‘I refused him.’</p> - -<p class='c007'>“‘You will wish you hadn’t before the year is over,’ I -replied.</p> - -<p class='c007'>“Sometime afterwards, and during the year, I went into -the office to see the superintendent, but he was not in; I -went into the general freight agent’s office, and he was not -in; I went into the general manager’s office, and he was -not in. So I then went into the office of the president and -said, ‘What kind of a road have you got? Your superintendent -is not here, your general freight agent is not here, -and your general manager is not here.’</p> - -<p class='c007'>“He hung his head down and said: ‘Do you remember -that conversation we had about that sheriff’s pass? He’s -got all those men on the jury and has got them stuck for -about two weeks.’”</p> - -<p class='c007'>Q. “That answer seems to indicate that railroads would -be afraid to refuse for fear of the penalties?”</p> - -<p class='c007'>A. “I think the railroads find there is a class of men -that it is to their interest not to refuse if they ask for -passes.”</p> - -<p class='c007'>Van Oss says that at one time in this country half the -passengers rode on passes.<a id='r9'></a><a href='#f9' class='c012'><sup>[9]</sup></a> That seems incredible. There -is no doubt, however, that the pass evil was enormous -before it was checked by State and Federal legislation, and -still prevails to an astonishing extent. Six years after the -Interstate Act prohibited all preferences, and twenty years -after the State crusade against passes and other discriminations -began, C. Wood Davis, a railway auditor of large -experience, and an executive officer having authority to -issue passes, stated that “ten percent of the railway travel -of this country is free, the result being that the great mass -of railway users are yearly mulcted some $33,000,000 for -the benefit of the favored few. No account of these passes -is rendered to State, nation, or the confiding stockholders.”<a id='r10'></a><a href='#f10' class='c012'><sup>[10]</sup></a> -<span class='pageno' id='Page_13'>13</span>If ten percent still ride deadhead, as is quite probable, -the resulting tax upon paying railway users is now over -$50,000,000 a year. The effect of legislation has been to -give the railways an excuse for shutting off the less influential -of the former deadheads, while the big people ride -free in spite of the law.<a id='r11'></a><a href='#f11' class='c012'><sup>[11]</sup></a></p> - -<p class='c007'>The Hon. Martin A. Knapp, Chairman of the Interstate -Commerce Commission, says: “A gentleman told me that -on one occasion he came from Chicago to Washington -along in the latter days of November, and every passenger -in the Pullman car, besides himself, was a member of Congress -or other Government official, with their families, and -that he was the only passenger who paid a cent for transportation -from Chicago to Washington, either for his -passage or for his Pullman car.”<a id='r12'></a><a href='#f12' class='c012'><sup>[12]</sup></a></p> - -<p class='c007'>Paul Morton says: “Passes are given for many reasons, -almost all of which are bad.... Passes are given for -personal, political, and commercial reasons.”<a id='r13'></a><a href='#f13' class='c012'><sup>[13]</sup></a></p> - -<p class='c007'>Big shippers and their agents get them as a premium on -or inducement to shipments over the donating railroad. -When we went to the St. Louis Exposition we had to pay -our fare, but the shipping manager of a large firm I have -in mind was given free transportation for himself and -family, though he was abundantly able to pay. In fact, -those best able to pay ride free, while the poor have to -pay for the rich as well as for themselves.</p> - -<p class='c007'>One way in which the railway managers evade the Interstate -Commerce Law, in giving passes to large shippers and -others, is to designate the recipients as employees of their -own or other companies.<a id='r14'></a><a href='#f14' class='c012'><sup>[14]</sup></a></p> - -<p class='c007'>President Stickney, of the Chicago and Great Western -Railroad, said in a recent address before the Washington -Economic Society:</p> - -<p class='c007'><span class='pageno' id='Page_14'>14</span>“The law which makes it a misdemeanor for any individual -not an officer of a railway company to use a pass -was enacted by Congress and approved by the President -18 years ago, and as an individual rule of action it was -ignored by the congressmen who passed it and by the President -who approved it; and subsequent congressmen and -presidents, with rare exceptions, have ignored its provisions. -Travelling, they present the evidence of their -misdemeanor before the eyes of the public in a way which -indicates no regard for the law. The governors of the -States, many of the judges,—in short, all officialdom from -the highest to the lowest,—the higher clergy, college professors, -editors, merchants, bankers, lawyers, present the -evidence of their misdemeanor in the same manner.”</p> - -<p class='c007'>As we shall see presently, there are other forms of passenger -discrimination, such as the free private car, the rate -war, etc.</p> - -<p class='c007'>But neither of these nor the selling of tickets below the -normal rates through scalpers, constitutes so inequitable or -dangerous a form of discrimination as the pass system. As -Hadley says: “The really serious form of passenger discrimination -is the free-pass system. It is a serious thing, -not so much on account of the money involved, as on account -of the state of the public morals which it indicates -(and develops). When passes are given as a matter of -mere favoritism, it is bad enough. When they are given -as a means of influencing legislation, it is far worse. Yet -this last form of corruption has become so universal that -people cease to regard it as corrupt. Public officials and -other men of influence are ready to expect and claim free -transportation as a right. To all intents and purposes they -use their position to levy blackmail against the railroad -companies.”<a id='r15'></a><a href='#f15' class='c012'><sup>[15]</sup></a></p> - -<p class='c007'>Other leading countries are not afflicted with this pass -disease to any such extent as we are; some of them do not -<span class='pageno' id='Page_15'>15</span>have the malady at all. In France and Italy I was offered -passes, but the government roads of Austria, Germany, -and Belgium not only did not offer passes, but refused to -grant them even when considerable pressure was brought to -bear.<a id='r16'></a><a href='#f16' class='c012'><sup>[16]</sup></a> The Minister of Railways in Austria informed -me that he had no pass himself, but paid his fare like any -ordinary traveller. No amount of personal or official pull -could secure free transportation. The same thing I found -was true in Germany. Only railway employees whose -duty calls them over the road have passes. The Minister -pays when he travels on his own account. And the Emperor -also pays for his railway travel. It is the settled -policy of government roads in all enlightened countries to -treat all customers alike so far as possible, concessions -being made, if at all, to those who cannot afford to pay -or who have some claim on the ground of public policy: as -in South Africa where children are carried free to school; in -New Zealand, where men out of work are taken to places -where they may find employment, on credit or contingent -payment; and in Germany and other countries, where -tickets are sold at half price for the working-people’s trains -in and out of the cities morning and night.</p> - -<p class='c007'>Even in England, though the roads are private like ours, -the working-people have cheap trains, and public officials -pay full fare. The King of England pays his fare when -travelling, and if he has a special train he pays regular rates -<span class='pageno' id='Page_16'>16</span>for that too. Members of Parliament also and minor public -officers pay for transportation. Passes are not given for -political reasons. The law against this class of discriminations -is thoroughly enforced. But in this country not -only members of Congress and other public officials, but -some of our presidents even have subjected themselves to -severe criticism by accepting free transportation in disregard -of Federal law.</p> - -<div class='chapter'> - <span class='pageno' id='Page_17'>17</span> - <h2 class='c005'>CHAPTER III.<br /> <span class='large'>PASSENGER REBATES AND OTHER FORMS OF DISCRIMINATION IN PASSENGER TRAFFIC.</span></h2> -</div> - -<p class='c006'>In addition to the passengers who travel free on passes, -there are many who have free transportation in other forms. -One method of favoritism is the payment of rebates, which -are in use in the passenger departments as well as in the -freight departments of our railroads. Passenger rebates -are repayments of a part or the whole of the amounts paid -by favored parties for tickets or mileage. For example, -large concerns that employ travelling men buy ordinary -passenger mileage books, and when the mileage is used -the cover of the book is returned to the railroad and a -refund is made.<a id='r17'></a><a href='#f17' class='c012'><sup>[17]</sup></a> In the investigation of the Wisconsin -railroads, instituted by Governor La Follette in 1903, it -was found that every railroad of importance in the State -had been paying passenger rebates in large amounts every -year for the whole six years that were covered by the -search. From 1897 to the end of 1903 the Chicago, Milwaukee -and St. Paul refunded $170,968 in passenger rebates, -the Chicago and Northwestern refunded $614,361; -adding the Chicago, St. Paul, Minneapolis and Omaha, the -Wisconsin Central, and the “Soo Line,” the total passenger -rebates paid by the five roads named in the said time was -over $972,000.</p> - -<p class='c007'>In the case of some favored shippers in Wisconsin it -was found that the railroads secretly refunded the entire -<span class='pageno' id='Page_18'>18</span>original cost of the mileage books bought by the said shippers -for themselves or their agents, or $60 per book. So -that these favored houses “were able to send out their -entire force of travelling men without paying one cent of -railroad fare, while their competitors paid full fares.”</p> - -<p class='c007'>One of these Wisconsin concerns, the Northern Grain -Company, received from the Northwestern Railroad alone -$151,447 rebates in five years, or over $30,000 a year, -partly as refunds on the passenger mileage books of their -travelling men and partly as cash rebates on their business. -The president of the Northern Grain Company is O. W. -Mosher, who was a State senator in 1901 and 1903 and -fought the railroad reforms proposed by Governor La -Follette. He vigorously defended “individual liberty” -and the right of the railroads to “control their own property,” -and it is easy to understand his earnest opposition -to railroad regulation since it has come out that “individual -liberty” and railroad <i><span lang="fr" xml:lang="fr">laissez faire</span></i> meant $30,000 a year -to his company.</p> - -<h3 class='c013'><em>The Deadhead Passenger Car.</em></h3> - -<p class='c014'>Along with the less-than-carload lots of deadheads travelling -on trip passes or annual passes, or transportation with -a rebate attachment, there are carload lots going deadhead -in private passenger cars.</p> - -<p class='c007'>In a tour to the Pacific coast and back a score of private -cars at different times were attached to the various trains -I was on. A friend who went a year or so later counted -nine private cars on his journey in California, four of them -being attached to the same train at the same time, and in -the whole 9000 miles he travelled the total number of private -cars ran up to 54. Any trust or railroad magnate or -governor of a State may have a private car with his retinue, -while the lesser deadheads ride in the ordinary cars or Pullman -coaches; and the common people pay for it all.</p> - -<div> - <span class='pageno' id='Page_19'>19</span> - <h3 class='c013'><em>Ticket Scalping.</em></h3> -</div> - -<p class='c014'>For many years the railroads aided and abetted the ticket -scalpers, paying commissions on the sale of tickets,<a id='r18'></a><a href='#f18' class='c012'><sup>[18]</sup></a> or -making arrangements so that scalpers could get tickets -from the railway offices for less than the regular prices. -Railroad offices have been known to sell tickets systematically -to scalpers at 33, 50, and 66 percent off, or ⅔, ½, and -⅓ of the regular rates. The scalper shared the discount -with the passenger, and the railway prevented some other -line from getting the traffic.</p> - -<p class='c007'>In some cases scalpers induced conductors not to cancel -tickets taken up, so that they could be resold in the scalping -offices, the profits being divided with the conductors. -In 10 States where statutes were passed against scalping, -the brokers and the railroads practically nullified the law. -And by collusion with these brokers the railroads secretly -violated the Interstate Commerce Act.</p> - -<p class='c007'>A mass of facts upon this subject appears in the expert -testimony pro and con before committees of both Houses -of Congress, notably in January, 1898. It was shown that -at that time 346 newspapers, substantially all the railway -and steamship passenger lines of the United States, the -laws of 10 States, the long example of Canada, the resolutions -of numerous national, State, and mercantile associations, -the resolutions of the railway commissioners of -19 States, the insistent and repeated views of the Interstate -Commerce Commission, the lesson taught by every other -railway country of the earth, the due protection of the -large organizations to whom special fares are granted and -<span class='pageno' id='Page_20'>20</span>of the railways granting them, the due observance of law, -and the best moral sense of all the commercial world, were -all arrayed on the honest side of every phase of this question. -Ticket brokerage was defended by not over 3 railroads -and 560 ticket brokers. The two organized bodies -of scalpers, the American Ticket Brokers’ Association and -the Guarantee Ticket Brokers’ Association, stood behind -the scalping business.</p> - -<p class='c007'>George R. Blanchard, former commissioner of the Joint -Traffic Association, says in his testimony before the United -States Industrial Commission (IV, 623): “There are two -organized bodies of scalpers: the American Ticket Brokers’ -Association and the Guarantee Ticket Brokers’ Association. -They have their directors, officers, and agents, -rules and regulations, and they adopt resolutions and discuss -and decide questions of cut fares.”</p> - -<p class='c007'>One railroad president told me that most of the tickets -the scalpers sold they got directly from the railroads. -Another railroad president has given similar testimony -before the Industrial Commission, and also stated that -he did not believe the railroads could stop the scalping -trade in unused tickets.<a id='r19'></a><a href='#f19' class='c012'><sup>[19]</sup></a></p> - -<p class='c007'>This method of discrimination has, however, received a -serious setback so far as railway collusion is concerned. -The presidents of the leading railroads have agreed with -each other to support the law, and scalping is a more limited -profession than it formerly was. In fact, a much -larger claim than this is made by some. In going over -this year the materials I have collected on the subject, I -came upon the statement that “scalping has been practically -abolished.” I put up my pen and went down town -to see. I found on Washington Street (Boston), in the -ticket-office district, a man with “Cut Rates” printed in -large letters on his back. The same sign was above a -door near by, and on the stairway. I went up.</p> - -<p class='c007'><span class='pageno' id='Page_21'>21</span>“What will it cost me to go to Chicago?” I asked.</p> - -<p class='c007'>“I can give you a ticket for $12 if you are going within -a few days.”</p> - -<p class='c007'>“Suppose I don’t go for a month or two?”</p> - -<p class='c007'>“Well, I can give you a $15 rate most any time.”</p> - -<p class='c007'>“First-class?”</p> - -<p class='c007'>“Yes.”</p> - -<p class='c007'>“Over what route?”</p> - -<p class='c007'>“The Boston & Maine and Grand Trunk.”</p> - -<p class='c007'>“What can you do over the Boston & Albany?”</p> - -<p class='c007'>“I’ll give you transportation on that route for $18.”</p> - -<p class='c007'>“Will that be first-class?”</p> - -<p class='c007'>“No.”</p> - -<p class='c007'>“Tourist?”</p> - -<p class='c007'>“Yes.”</p> - -<p class='c007'>“Do you have the $12 tickets often?”</p> - -<p class='c007'>“Sometimes; but I can give you a $15 rate any time.”</p> - -<p class='c007'>I went to the railway ticket offices and learned that the -fare from Boston to Chicago by the Boston & Maine and -Grand Trunk was $18 first-class, and $17 tourist; by the -Boston & Albany $22 first-class, and $19 tourist, and -through New York $25.</p> - -<p class='c007'>It is clear, therefore, that scalping is not a lost art. The -regular one-price ticket agents say that the cut-rate business -is still in flourishing condition. It may be that railway -offices no longer act with scalpers to evade the law, -but when a scalper says he will give you a first-class ticket -(worth $18 at the depot) for $15 any time you want it, it -looks as though he had some pretty certain source of -supply. One scalper here, I am told, is the brother of the -advertising manager of a monthly magazine. Railroads -advertising in the magazines pay in tickets and the manager -turns these tickets over to the scalper. The same -thing is done in New York and Chicago, and probably in -other places. Scalpers also get unused portions of excursion -and other tickets. And perhaps some of the railways -<span class='pageno' id='Page_22'>22</span>are still in direct collusion with scalpers. Every freight -pool or agreement to prevent cutting freight rates that was -ever made was broken by some railroad secretly cutting -prices, and it may be that an agreement to maintain fares is -not safe against secret cutting either.</p> - -<p class='c007'>One of the most peculiar things about scalping is that, -unlike other forms of discrimination, its benefits go to the -poor man instead of the rich man. It is the only kind of -discrimination that gives the poor man any comfort or tends -to diffuse wealth instead of concentrating it. In this one -case the rich help to pay for the poor man’s transportation; -in all other cases the poor man and the man of moderate -wealth help to pay for the service the rich man gets. Perhaps -this partly explains why it is that many railroads have -taken a more decided stand against this abuse than against -any other in the long list of evils that afflict transportation -in this country.</p> - -<div class='chapter'> - <span class='pageno' id='Page_23'>23</span> - <h2 class='c005'>CHAPTER IV.<br /> <span class='large'>FREIGHT DISCRIMINATION.</span></h2> -</div> - -<p class='c006'>We come now to a kind of discrimination that enables a -railway manager to determine which of the merchants, -manufacturers, mine owners, etc., on his line shall prosper -and which shall not; what cities and towns shall grow, -what States shall thrive, what industries shall be developed.</p> - -<p class='c007'>The purpose of discrimination may be (1) to keep business -from going to a competing line; (2) to increase revenue -by creating new business for which, if necessary, rates may -be dropped very low, as anything above the cost of handling -on new business will add to income; (3) to simplify and -solidify traffic; (4) to favor persons who, through political -influence or other power may aid or injure the road, or who, -through friendship, marriage, business or civic relation, or -otherwise, have a “pull” with the management; (5) to -advance the interests or enhance the value of a business, or -property, or place, in which the railway or its officers or -their friends are interested; or (6) to kill or injure a place -or person or business that has incurred the enmity of the -railways or their allies.</p> - -<p class='c007'>As a result of the play of these motives our railroad -history is full of unfair discriminations between persons, -places, and industries in the United States, and between -domestic and foreign trade. The methods and forms are -many and have grown more numerous with each succeeding -epoch, but the predominant forms vary in the different -strata. We still have plenty of living specimens of the -<span class='pageno' id='Page_24'>24</span>species that prevailed in earlier periods, but the leading -forms now are comparatively recent evolutions.</p> - -<p class='c007'>The history of discriminations would fill many volumes. -The Hepburn Committee (1879) appointed by the New -York Legislature collected about 5000 cases of discrimination. -It was shown to be a common thing for railroads to -give favored shippers discounts of 50, 60, 70, and even 80 -percent from the regular rates. The special contracts -involving favors in force for one year on a single railroad, -the New York Central, were estimated at 6000. The -United States Senate Committee of 1885, the Congressional -Committee of 1888, the Interstate Commerce Commission, -1887–1905, the United States Industrial Commission, 1900–1902, -the Wisconsin investigation in the fall of 1903, the -United States Senate Committee of 1905, the State railroad -commissions, the courts, and other investigating bodies -have brought to light additional thousands of discriminations. -We shall select some examples illustrating various -methods of discrimination.</p> - -<div class='chapter'> - <span class='pageno' id='Page_25'>25</span> - <h2 class='c005'>CHAPTER V.<br /> <span class='large'>THE EARLY YEARS, HEPBURN REPORT, ETC.</span></h2> -</div> - -<p class='c006'>One of the discriminations most complained of in early -years was the charging of lower rates for a long haul than -for a short haul on the same line—less for the whole than -for a part.</p> - -<p class='c007'>For example, the rate from New York to Ogden was $4.65 -per hundred, while $2.25 per hundred carried the same -freight all the way from New York to San Francisco. The -railroads charged more if the car stopped part way than if -it went on to the Pacific,—more than twice as much, in -fact, for the part haul as for the full distance, so that the -extra charge for not hauling the car on from Ogden to -Frisco was greater than for hauling it the entire distance -from ocean to ocean. They seemed to be willing to take -off half for the privilege of hauling the car another 1000 -miles. These methods are still in practice.</p> - -<p class='c007'>The C. B. & Q. hauled stock from points beyond the -Missouri River to Chicago for $30 a car, while charging $70 -a car on much shorter hauls to points in Iowa. The Northern -Pacific charged twice as much from New York to points -a hundred miles or more east of Portland, as from New -York clear through to Portland. Freight was shipped from -New York State to Council Bluffs and then back to Atlantic, -Iowa, 60 miles west of Council Bluffs on the Rock -Island, for less than the charge direct to Atlantic. From -Chicago to Kankakee, 56 miles, the Illinois Central charged -16 cents per cwt. for fourth-class goods, while it carried -<span class='pageno' id='Page_26'>26</span>the same goods to Mattoon, 116 miles farther on, for 10 -cents per cwt. The grain rate on the Pennsylvania Railroad -from Chicago to Pittsburg was 25 cents in 1878, while -the same road would carry the grain clear through from -Chicago to New York for 15 cents. Glassware paid 28 -cents a hundred from Pittsburg to Chicago, and only 14 -cents from Philadelphia to Chicago, half the rate for nearly -double the distance. A tub of butter from Elgin, Ill., to -New York, 1000 miles, paid 30 cents, while the freight on -the same tub from points 165 miles out of New York City -was 75 cents. The railways put the farmers of Western -New York further from market than their competitors in -the West. By such arrangements as this it was claimed the -railroads had caused a depreciation of $400,000,000 in -the value of improved lands in New York, Pennsylvania, -New Jersey, Maryland, and Delaware, while the area of -improved lands in those States had increased 4,500,000 -acres.<a id='r20'></a><a href='#f20' class='c012'><sup>[20]</sup></a></p> - -<p class='c007'>The evils of unjust rates and railway favoritism for persons -and places were earnestly discussed in the press, and -in State legislatures, and in Congress. One of the examples -of discrimination that caused much discussion in Congress -was the Winona case. Cotton paid $1 a bale from Memphis -to New Orleans, 450 miles; from Winona to New -Orleans, 275 miles, travelling possibly in the same train -with the Memphis bales, the rate was $3.25 per bale. -Another example adduced in Congress was the 75 cent rate -from New York to New Orleans, while points half way paid -$1.00 for the same service.</p> - -<h3 class='c013'><em>The Granger Laws.</em></h3> - -<p class='c014'>In the early seventies (1872 and following years), Iowa, -Nebraska, Minnesota, Kansas, and other States of the Middle -West passed what are known as the “Granger laws,” -<span class='pageno' id='Page_27'>27</span>fixing maximum rates and forbidding discriminations. -Railroad commissions were also established in these States -to control the roads, and it was hoped that these commissions, -which grew out of the Granger agitation and were to -represent the public interest and the people’s sovereignty in -their relations with the railways, would be able to diminish -greatly and perhaps abolish unjust discriminations. -In this hope, however, the people were disappointed.</p> - -<p class='c007'>Speaking of this experience Governor Larrabee of Iowa -said in 1893: “Every year seemed to add to the grievances -of the public. Success greatly emboldened the railway -companies. Discriminations seemed to increase in number -and gravity. At many points in the western part of the -State freight rates to Chicago were from 50 to 75 percent -higher than from points in Kansas and Nebraska. A car -of wheat hauled only across the State paid twice as much -freight as another hauled twice the distance from its point -of origin to Chicago. Minnesota flour was hauled a distance -of 300 miles for a less rate than Iowa flour was carried -100 miles. Certain merchants received from the railroad -companies a discount of 50 percent on all their freights, -and thus were enabled to undersell all their competitors. -The rate on coal in carload lots from Cleveland, Lucas -County, to Glenwood was $1.80 per ton, and from the same -point to Council Bluffs only $1.25, although the latter was -about thirty miles longer haul. Innumerable cases of this -kind could be cited. There was not a town or interest in -the State that did not feel the influence of these unjust -practices.”</p> - -<h3 class='c013'><em>The Hepburn Investigation.</em></h3> - -<p class='c014'>This most famous and enlightening investigation of the -early period was that of the Hepburn Committee of New -York in 1879. The committee found that many shippers -were paying two or three times, and in some cases five times, -the rates paid by their rivals.</p> - -<p class='c007'><span class='pageno' id='Page_28'>28</span>William H. Vanderbilt told the committee that, as a -rule, all large shippers who asked for special rates got them. -Among the men his road had helped to build up by special -rates was A. T. Stewart, the great dry-goods merchant of -New York. He had a rate of 13 cents from his factories -over the New York Central to New York, while small concerns -paid 20 to 40 cents for this same service. A big -dealer in cotton cloth had a 20 cent rate, while others paid -the regular 35 and 40 cent rate. Five grocery firms in -Syracuse had a flat 9 cent rate instead of the published -tariff of 37, 29, 25, and 18 cents, according to the class of -goods. Four Rochester firms had a special rate of 13 cents -against the regular tariff of 40, 30, 25, and 20 cents. Five -firms at Binghamton and five at Elmira had rates from ⁵⁄₉ -to ⅓ of the tariff. Three Utica dry-goods merchants had a -rate of 9 cents and another had a rate of 10 cents, while -the regular rates which the outside public paid were 33, 26, -and 22 cents, according to class. Soap shipped by B. of -New York to C. of Syracuse cost 12 cents freight per box -if the freight was paid by the shipper in New York, but -only 8 cents a box if the freight was paid by the consignee -in Syracuse.</p> - -<p class='c007'>A report of the Erie Railroad showed 34 cases of special -cut rates, and a New York Central report showed 33 examples. -The books of the Central showed 6000 special rates -granted during the first 6 months of 1880. About 90 percent -of the Syracuse business and 50 percent of the entire -business of the road was done on special rates.<a id='r21'></a><a href='#f21' class='c012'><sup>[21]</sup></a> It had -given special rates to individuals and firms at 22 points on -its line between Albany and Buffalo. The specials generally -went down to about ⅓ of the scheduled rates to the same -place, but in Syracuse a special agreement was unearthed -in which the rate was so emaciated as to be only ⅕ of the -size of the regular rate on first-class goods to which it -applied.</p> - -<p class='c007'><span class='pageno' id='Page_29'>29</span>The committee also found the long-haul discrimination -in full bloom. Flour went from Milwaukee to New York -for 20 cents, while the charge from Rochester to New York -was 30 cents. On some goods the rate from New York to -Syracuse, 291 miles, was 10 cents; New York to Little Falls, -217 miles, 20 cents; New York to Black Rock, 445 miles, -20 cents also. Syracuse must have had a strange fascination -for the railroad men, to keep them from making a -lower rate from the point 400 miles away than from the -point 200 miles away, for they love long hauls. Goods -were shipped from Rochester to New York and then from -New York back over the same road through Rochester to -Cincinnati more cheaply than they could be sent direct -from Rochester to Cincinnati. W. W. Mack, a Rochester -manufacturer, testified that he saved 14 cents a hundred in -this way, and that he saved 18 cents a hundred in his -St. Louis business in the same way. In both these cases -the railroad company carried the goods 700 miles farther -than the direct course for a charge considerably less than -for the direct haul.</p> - -<p class='c007'>Butter was carried from St. Lawrence Co., N. Y., to -Boston for 60 cents a hundred, while the rate from nearer -stations was 70 cents, 80 cents, and even 90 cents at St. -Albans, Vt., increasing as the distance decreased. The -railroads appear to recognize the fact that happiness consists -in the exercise of the faculties, and they wish to exercise -their faculties to the utmost by securing long hauls -even though the long rate may not leave nearly so much -profit as the rate for the short haul.</p> - -<p class='c007'>Some of the worst discriminations of the early years -were those connected with the oil business.<a id='r22'></a><a href='#f22' class='c012'><sup>[22]</sup></a> In 1872 the -Oil Combine (then called the South Improvement Co.) -<span class='pageno' id='Page_30'>30</span>secured a secret agreement from all the railroads running -into the oil regions, first, to double freight rates on oil; -second, not to charge the S. I. C. the increase; third, to -pay the S. I. C. the increase collected from all other -shippers. The rate to Cleveland was to be raised to 80 -cents, except for the S. I. C., which continued to pay 40, -and would receive 40 of the 80 paid by any one else. The -rate to Boston was raised to $3, and the S. I. C. would -receive $1.32 of it. The Combine was to have 40 cents to -$1.32 a barrel rebate not only on their own oil which constituted -only one-tenth of the business, but on all the oil -their competitors shipped, so they would get $9 in rebates -for every dollar they paid in freight. The S. I. C. were -to receive an average of $1 a barrel on the 18,000 barrels -produced daily in the oil regions. The rates were raised -as agreed, but the excitement in the oil regions was so -intense that mobs would have torn up the tracks of the -railways if Scott and Vanderbilt and the rest had not telegraphed -that the contracts were cancelled, and put the -rates back. But some of the contracts afterwards came -into court, and had not been cancelled at all. In 1874 -the roads began gradually to carry out the plan that had -been stopped by popular excitement in 1872.</p> - -<p class='c007'>In 1874 the Oil Combine had on some lines 10 different -transportation advantages over its competitors, <em>i. e.</em>, 49 -cents direct rebate per barrel of refined oil, 22 cents rebate -on crude-oil pipeage, 8½ percent of refined oil carried free -(due to the method of calculating crude and refined equivalents), -13 cents a barrel advantage through possession of -the railroad oil terminal facilities, 15 percent of by-products -carried free, a rate to New York 10 cents a barrel less than -the published rate on refined oil, and 15 cents on crude -oil, exclusive use of tank cars, underbilling of carload -weights, twenty thousand lbs. often for cars containing -forty thousand or even sixty thousand lbs. of oil, or a -lump sum per car regardless of excess weight, and a mileage -<span class='pageno' id='Page_31'>31</span>payment from the railroads on the tank cars amounting -in itself to a large rebate.</p> - -<p class='c007'>Nearly all the refineries of the oil region and of Pittsburg -passed by sale or lease into the hands of the Combine -in 1874–5.</p> - -<p class='c007'>W. H. Vanderbilt, and other prominent railroad men -were stockholders in the Standard.</p> - -<p class='c007'>Frank Rockefeller, brother of John D., testified before a -congressional committee July 7, 1876, that he believed -Tom Scott, W. H. Vanderbilt, and other big railroad men -shared in the oil rebates.</p> - -<p class='c007'>The New York Central and the Erie sold their terminal -facilities for handling oil to the Standard Oil Co., thereby -making it practically impossible for the roads to transport -oil for the competitors of the Trust. The Pennsylvania -Railroad also, under compulsion of a rate war, made a deal -with the Standard by which the latter acquired the oil -cars, pipe lines, and refineries of the Empire Company, a -creature of the Pennsylvania Railroad.<a id='r23'></a><a href='#f23' class='c012'><sup>[23]</sup></a></p> - -<p class='c007'>Vanderbilt told the Hepburn Committee, August 27, -1879, that “if the thing kept on the oil people would own -the roads.”</p> - -<p class='c007'>After the Pennsylvania fought the Standard in 1877 and -lost, the Combine paid 11 cents net freight (after deducting -rebate) on each barrel of oil to New York, while its -competitors paid $1.90 per barrel,<a id='r24'></a><a href='#f24' class='c012'><sup>[24]</sup></a>—a discrimination of -1600 percent by means of exclusive tank cars and rate -arrangements. The trunk lines would not furnish competitors -of the Standard with tank cars nor give them rates -and conditions that would allow them to use their own -tank cars.</p> - -<p class='c007'><span class='pageno' id='Page_32'>32</span>The independents had to sell their tank cars or side-track -them, because the Oil Combine prevented the railroads from -giving them practical terms. At times when oil could -have been shipped by the independents they could not get -cars, though hundreds were standing idle on the switches.</p> - -<p class='c007'>So the independents had to ship their oil in barrels, paying -a higher rate than on tank oil, and paying not only on -the oil, but on eighty lbs. of wood in the barrel, making -four hundred lbs. per barrel instead of three hundred -twenty lbs. per barrel by tank.</p> - -<p class='c007'>Josiah Lombard of New York, the largest independent -refiner of oil at the seaboard, testified as follows before the -Hepburn Committee June 23, 1879:</p> - -<p class='c007'>“Tom Scott, President of the Pennsylvania Railroad -Co., was questioned whether we could have, if there was -any means by which we could have, the same rate of -freight as other shippers got, and he said flatly, ‘No.’</p> - -<p class='c007'>“And we asked him then, if we shipped the same amount -of oil as the Standard, and he said, ‘No.’</p> - -<p class='c007'>“We said that ‘if they had not sufficient cars to do the -business with we would put on the cars.’</p> - -<p class='c007'>“Mr. Scott said that they would not allow that, and -said that ‘the Standard Oil Co. were the only parties that -could keep peace among the roads.’”</p> - -<p class='c007'>Cassatt, Vice-President, confirms the above and adds:</p> - -<p class='c007'>“The discrimination would be larger on a high rate of -freight than a low rate of freight;” also admits that the -“Standard Oil Co. had some 500 cars full here and at -Philadelphia and Baltimore; that he had not discovered it -until recently.”</p> - -<p class='c007'>Mr. Lombard further testified:</p> - -<p class='c007'>“Refineries were thus shut down for want of cars.</p> - -<p class='c007'>“Cassatt threatened, if the independents built the -Equitable Pipe Line or any other lines of pipe [as follows]:</p> - -<p class='c007'>“‘Well, you may lay all the pipe lines you like, and we -will buy them up for old iron.’</p> - -<p class='c007'><span class='pageno' id='Page_33'>33</span>“R. C. Vilas, General Freight Agent of the Erie (and -brother of Geo. H. Vilas, Auditor of the Standard Oil Co.), -absolutely refused us cars, saying the Standard Oil Co. -had engaged them all.</p> - -<p class='c007'>“J. H. Rutter, General Freight Agent, New York Central, -would not furnish any cars, and also said, ‘We have no -terminal facilities now.’”</p> - -<p class='c007'>A. J. Cassatt testified before the New York Committee -that in 18 months the Standard Oil had received rebates -amounting to $10,000,000.</p> - -<p class='c007'>In addition to many other advantages enjoyed by the -Standard people the Pennsylvania Railroad in 1878 gave -the Combine, through the “American Transfer Co.,” a -“commission” of 20 cents a barrel on all shipments of -petroleum,—not only on their own shipments, but on shipments -made by the independents also. At the same time -the New York Central and the Erie were paying the Standard -“commissions” of 20 to 35 cents a barrel on all the -oil shipped over those roads.</p> - -<p class='c007'>At one time the transcontinental lines charged $105 to -return an empty “cylinder” tank car from the Pacific -Coast to the Missouri River, while making no charge to -the Standard for returning their “box” tank cars, each of -which contained a cylinder, which, however, was set upright -instead of being placed longitudinally; a distinction without -a difference, but it served to make a discrimination -of over $100 a car in favor of the Trust.</p> - -<p class='c007'>The railroads allowed the Oil Trust to stop its cars and -divide up a tank load at two or more stations, but denied -this privilege to the competitors of the Trust.</p> - -<p class='c007'>The Hepburn Committee reported (1879) that “the -Standard Oil Co. receives rebates from the trunk lines, -ranging from 40 cents to $3.07 a barrel on all oil shipments: -That the trunk lines sell their oil-tank car equipments -to the Standard and agree to build no more: That -the Standard controls the terminal facilities for handling oil -<span class='pageno' id='Page_34'>34</span>of the four trunk lines by purchase or lease from the railroads: -That it has frozen out and gathered in refineries of -oil all over the country: That it dictates terms and rates -to the railroads: That the trunk lines have hauled its oil -300 miles for nothing to enable it to undersell seaboard -refineries not then under its control: That it has succeeded -in practically monopolizing the oil business: That the -transactions of the Standard are of such character that its -officers have been indicted, and that its members decline -under oath to give details lest their testimony should be -used to convict them of crime.”<a id='r25'></a><a href='#f25' class='c012'><sup>[25]</sup></a></p> - -<p class='c007'>The oily people were able in one way or another to gain -ascendency over all the railroads. “We made our first contract -with the Standard Oil Company,” said Mr. Cassatt, -“for the reason that we found that they were getting very -strong, and they had the backing of the other roads, and, if -we wanted to retain our full share of the business and get -fair rates on it, it would be necessary to make arrangements -to protect ourselves.”</p> - -<p class='c007'>The Combine used the railroads to ruin its rivals, and did -it with a definiteness and vigor of attack never before attempted, -and with a success that would have been impossible -without the use of the railroad power. An example or -two will make the matter clear.</p> - -<p class='c007'>Mr. Corrigan, an oil refiner of Cleveland, became so -prosperous in the seventies that he attracted the attention -of the Standard Oil, and in 1877 he began to have trouble. -He could not get the crude oil he bought shipped to Cleveland, -nor his product shipped away, with reasonable promptness. -The railroads refused him cars, and delayed his -shipments after they were loaded. And he was driven to -lease and finally sell his works to the Standard, which had -no difficulty in getting cars and securing prompt service.</p> - -<p class='c007'>George Rice became a producer of oil in 1865. A little -later he established a refinery at Marietta, Ohio. In January, -<span class='pageno' id='Page_35'>35</span>1879, the freight rates on oil were raised by the railroads -leading out of Marietta, and by their connections. -In some cases the rates were doubled, while the rates from -Cleveland, Pittsburg, Wheeling, and other points where -the Combine had refineries, were lowered. The Baltimore -& Ohio, the Pennsylvania, the Lake Shore, and all the -other railroads involved, made the deal in unison, and after -a secret conference of railway officials with the Standard -Oil people. The change hurt the railroads, cut off their -business in oil from Marietta entirely, but they obeyed the -orders of the Standard nevertheless.</p> - -<p class='c007'>“What would be the inducement?” the freight agent of -the B. & O. connection was asked.</p> - -<p class='c007'>“That is a matter I am not competent to answer,” he -replied.<a id='r26'></a><a href='#f26' class='c012'><sup>[26]</sup></a></p> - -<p class='c007'>Rice, finding himself shut off from the West, North, and -East, developed new business in the South, but everywhere -he went he was met with new discriminations, and even -refusals in some cases to give him any rates at all. He could -not ship to certain points at any price. In other cases the -oil rates were jumped up for his benefit, and his cars were -delayed or side-tracked by the railroads. Not satisfied with -obstructing and in large part blocking the shipment of refined -oil out of Marietta, the Combine did all it could to -cut off Rice’s supply of crude oil from the wells. It -bought up and destroyed the little pipe line through which -he was getting most of his oil. Rice then turned to the -Ohio fields and brought his oil in by rail over the Cleveland -and Marietta Railroad. Under threat of withdrawing its -patronage the Combine then compelled the road to double -the rates to Rice and pay over to the Combine five-sevenths -of all the freight the road collected on oil. Rice had been -paying 17 cents a barrel from the oil fields to his refinery. -His rate went up to 35 cents while the Combine paid only -<span class='pageno' id='Page_36'>36</span>10 and got 25 cents of each 35 paid by Rice.<a id='r27'></a><a href='#f27' class='c012'><sup>[27]</sup></a> “Illegal -and inexcusable abuse,” said Judge Baxter when Rice took -the case into court; and the Senate Committee was also -emphatic in its condemnation. The case is in line with -the whole history of the railroads in their relations with -the Oil Combine, the remarkable fact in this instance being -that the victim had nerve enough to fight the Combine. -He took the facts to the Ohio Legislature, to the courts, to -investigating committees of New York, and Congress, and -rendered a great public service by bringing the ways of -the railroads and the trust to the light of publicity. If all -the victims of the Oil Combine had manifested equal pluck -and public spirit, the evil we are discussing would long -since have ceased to exist.<a id='r28'></a><a href='#f28' class='c012'><sup>[28]</sup></a></p> - -<div class='chapter'> - <span class='pageno' id='Page_37'>37</span> - <h2 class='c005'>CHAPTER VI.<br /> <span class='large'>THE SENATE INVESTIGATION OF 1885 AND THE INTERSTATE COMMERCE ACT.</span></h2> -</div> - -<p class='c006'>In 1885 the United States Senate appointed a committee -to investigate railway discriminations, etc., and this committee -made one of the ablest reports that has ever been -issued in relation to railway abuses. It threw a flood of -light upon the nature and prevalence of discrimination, and -the reasons for it. On page 7 of this report the committee -says that our efficient service and low rates (low average -rates) “have been attained at the cost of the most unwarranted -discriminations, and its effect has been to build up -the strong at the expense of the weak, to give the large -dealer an advantage over the small trader, to make capital -count for more than individual credit and enterprise, to -concentrate business at great commercial centres, to necessitate -combinations and aggregations of capital, to foster -monopoly, to encourage the growth and extend the influence -of corporate power, and to throw the control of the -commerce of the country more and more into the hands of -the few.”</p> - -<p class='c007'>On page 40 the committee says: “Railroad companies -are not disposed to regard themselves ‘as holding a public -office and bound to the public,’ as expressed in the ancient -law. They do not deal with all citizens alike. They discriminate -between persons and between places, and the -States and Congress are consequently called on to in some -way enforce the plain principles of the common law for -the protection of the people against the unlawful conduct -<span class='pageno' id='Page_38'>38</span>of common carriers in carrying on the commerce of the -country.”</p> - -<p class='c007'>On page 188 the following example is given: “One -reference to the testimony must suffice to illustrate the -universality of individual favoritism, the reasons which influence -the railroads in favoring one shipper to the ruin of -another, and the injustice of the system. Mr. C. M. Wicker -of Chicago, a former railroad official of many years’ experience, -was asked if he knew anything of discrimination upon -the part of the transportation companies as between individuals -or localities, and testified as follows:</p> - -<p class='c007'>“<span class='sc'>Mr. Wicker.</span> Yes; I do. And this discrimination, -by reason of rebates, is a part of the present railroad system. -I do not believe the present railroad system could -be conducted without it. Roads coming into this field to-day -and undertaking to do business on a legitimate basis -of billing the property at the agreed rates would simply -result in getting no business in a short time.</p> - -<p class='c007'>“<span class='sc'>Senator Harris.</span> Then, regardless of the popularly -understood schedule rates, practically it is a matter of -underbidding for business by way of rebates?</p> - -<p class='c007'>“<span class='sc'>Mr. Wicker.</span> Yes, sir; worse than that. It is individual -favoritism, the building up of one party to the detriment -of the other. I will illustrate. I have been doing it -myself for years and had to do it.</p> - -<p class='c007'>“<span class='sc'>Senator Harris.</span> Doing it for yourself in your -position?</p> - -<p class='c007'>“<span class='sc'>Mr. Wicker.</span> I am speaking now of when I was a -railroad man. Here is quite a grain point in Iowa, where -there are 5 or 6 elevators. As a railroad man I would -try and hold all these dealers on a “level keel” and give -them all the same tariff rate. But suppose there was a road -of 5 or 6 or 8 miles across the country, and these dealers -should begin to drop in on me every day or two and tell me -that the road across the country was reaching within a mile -or two of our station and drawing to itself all the grain. -<span class='pageno' id='Page_39'>39</span>You might say that it would be the just and right thing to -do to give all the 5 or 6 dealers at this station a special rate to -meet that competition through the country. But as a railroad -man I can accomplish the purpose better by picking -out one good, smart, live man, and giving him a concession -of 3 or 4 cents a hundred, let him go there and scoop the -business. I would get the tonnage, and that is what I want. -But if I give it to the five, it is known in a very short -time.... When you take in these people at the station on -a private rebate you might as well make it public and lose -what you intend to accomplish. You can take hold of one -man and build him up at the expense of the others, and the -railroad will get the tonnage.</p> - -<p class='c007'>“<span class='sc'>Senator Harris.</span> The effect is to build the one man -up and destroy the others?</p> - -<p class='c007'>“<span class='sc'>Mr. Wicker.</span> Yes, sir; but it accomplishes the purposes -of the road better than to build up the 6.</p> - -<p class='c007'>“<span class='sc'>Senator Harris.</span> And the road, in seeking its own -preservation, has resorted to that method of concentrating -the business into the hands of one or a few, to the destruction -of the many?</p> - -<p class='c007'>“<span class='sc'>Mr. Wicker.</span> Yes, sir; and that is a part and parcel -of the system.”</p> - -<p class='c007'>On page 189 the committee says:</p> - -<p class='c007'>“The practice prevails so generally that it has come to -be understood among business men that the published -tariffs are made for the smaller shippers, and those unsophisticated -enough to pay the established rates; that those -who can control the largest amounts of business will be -allowed the lowest rates; that those who, even without this -advantage, can get on ‘the inside,’ through the friendship -of the officials or by any other means, can at least secure -valuable concessions; and that the most advantageous rates -are to be obtained only through personal influence or -favoritism, or by persistent ‘bulldozing.’</p> - -<p class='c007'>“It is in evidence that this state of affairs is far from -<span class='pageno' id='Page_40'>40</span>satisfactory, even to those specially favored, who can never -be certain that their competitors do not, or at any time may -not, receive even better terms than themselves. Not a few -large shippers who admitted that they were receiving favorable -concessions testified that they would gladly surrender -the special advantages they enjoyed if only the rates could -be made public and alike to all.”</p> - -<p class='c007'>Again, on page 191:</p> - -<p class='c007'>“Universal complaint has been made to the committee -as to the discriminations commonly practised against places, -and as to the conspicuous discrepancies between what -are usually termed ‘local’ rates and what are known as -‘through’ rates.”</p> - -<p class='c007'>In summing up the testimony on pages 180–182 of their -report, the committee presents this tremendous indictment:</p> - -<p class='c007'>“The complaints against the railroad systems of the -United States expressed to the committee are based upon -the following charges:</p> - -<p class='c007'>“1. That local rates are unreasonably high, compared -with through rates.</p> - -<p class='c007'>“2. That both local and through rates are unreasonably -high at non-competing points, either from absence of competition -or in consequence of pooling agreements that restrict -its operation.</p> - -<p class='c007'>“3. That rates are established without apparent regard -to the actual cost of the service performed, and are based -largely on what the traffic will bear.</p> - -<p class='c007'>“4. That unjustifiable discriminations are constantly -made between individuals, in the rates charged for like -service under similar circumstances.</p> - -<p class='c007'>“5. That improper discriminations are made between -articles of freight and branches of business of a like character, -and between different quantities of the same class of -freight.</p> - -<p class='c007'>“6. That unreasonable discriminations are made between -localities similarly situated.</p> - -<p class='c007'><span class='pageno' id='Page_41'>41</span>“7. That the effect of the prevailing policy of railroad -management is, by an elaborate system of special secret -rates, rebates, drawbacks, and concessions, to foster monopoly, -to enrich favored shippers, and to prevent free -competition in many lines of trade in which the item of -transportation is an important factor.</p> - -<p class='c007'>“8. That such favoritism and secrecy introduce an element -of uncertainty into legitimate business that greatly -retards the development of our industries and commerce.</p> - -<p class='c007'>“9. That the secret cutting of rates and the sudden fluctuations -that constantly take place are demoralizing to all -business except that of a purely speculative character, and -frequently occasion great injustice and heavy losses.</p> - -<hr class='c015' /> - -<p class='c007'>“14. That the differences in the classifications in use in -various parts of the country, and sometimes for shipments -over the same roads in different directions are a fruitful -source of misunderstandings, and are often made a means -of extortion.</p> - -<p class='c007'>“15. That a privileged class is created by the granting -of passes, and that the cost of the passenger service is -largely increased by the extent of this abuse.</p> - -<p class='c007'>“16. That the capitalization and bonded indebtedness of -the roads largely exceed the actual cost of their construction -or their present value, and that unreasonable rates are -charged in the effort to pay dividends on watered stock, -and interest on bonds improperly issued.</p> - -<hr class='c015' /> - -<p class='c007'>“18. That the management of the railroad business is -extravagant and wasteful, and that a needless tax is imposed -upon the shipping and travelling public by the unnecessary -expenditure of large sums in the maintenance of -a costly force of agents engaged in the reckless strife for -competitive business.”</p> - -<p class='c007'>The result of this investigation and report was the passage -of the Interstate Commerce Act, in 1887, affirming the -<span class='pageno' id='Page_42'>42</span>common law rule that carriers’ charges must be reasonable -and impartial. Common carriers are forbidden to give “any -undue or unreasonable preference or advantage to any person, -locality, or description of traffic in any respect whatever, -or subject any person, locality or description of -traffic to any undue or unreasonable disadvantage in any -respect whatsoever.” “No common carrier” says Section -2, “shall directly or indirectly, by special rate, rebate, -drawback, or other device, charge or receive from any person -greater or less compensation for any service in the -transportation of passengers or property than it charges or -receives from others for a like and contemporaneous service -under substantially similar circumstances and conditions.” -Section 4 makes it “unlawful to receive more for -a shorter than for a longer distance, including the shorter -on the same line, in the same direction, under substantially -similar circumstances and conditions,” except where the -Commission created by the Act shall authorize the carrier -to charge less for the longer than for the shorter distance. -Rates must be published and filed with the Commission, -and 10 days’ notice must be given of advances. Any deviation -from the published tariff is unlawful. The Act excepted -traffic “wholly within one State,” and provided that -property might be handled free or at reduced rates for the -United States, State, or municipal governments, or for -charitable or exhibition purposes; that preachers might -have reduced rates, and that passes might be given to employees -of the road or by exchange to employees of other -roads. The penalty for breach of the law was made a fine -not exceeding $5000 for each offence, and victims of discrimination, -etc., could collect damages.</p> - -<div class='chapter'> - <span class='pageno' id='Page_43'>43</span> - <h2 class='c005'>CHAPTER VII.<br /> <span class='large'>THE INTERSTATE COMMISSION.</span></h2> -</div> - -<p class='c006'>A strong Commission was appointed, the Chairman being -Thomas M. Cooley, one of the ablest jurists in the country, -Chief Justice of the Michigan Supreme Court, author of -“Constitutional Limitations” and other works of the highest -authority. The Commission started with a review of -the evils the Interstate Act was intended to abolish, and -entered earnestly upon the great work of enforcing the -law.</p> - -<p class='c007'>The Commission’s statement of the arrangements used -by the railways for discrimination is so admirably clear -that a part of it cannot fail to be useful here.</p> - -<p class='c007'>“These arrangements,” says the Commission, “took the -form of special rates, rebates and drawbacks, underbilling, -reduced classification, or whatever might be best adapted to -keep the transaction from the public; but the public very -well understood that private arrangements were to be had if -the proper motives were presented. The memorandum book -carried in the pocket of the general freight agent often -contained the only record of the rates made to the different -patrons of the road, and it was in his power to place a man -or a community under an immense obligation by conceding -a special rate on one day, and to nullify the effect of it on -the next by doing even better by a competitor.</p> - -<p class='c007'>“Special favors or rebates to large dealers were not -always given because of any profit which was anticipated -from the business obtained by allowing them; there were -<span class='pageno' id='Page_44'>44</span>other reasons to influence their allowance. It was early -perceived that shares in railroad corporations were an enticing -subject for speculation, and that the ease with which -the hopes and expectations of buyers and holders could be -operated upon pointed out a possible road to speedy wealth -for those who should have the management of the roads. -For speculative purposes an increase in the volume of business -might be as useful as an increase in net returns; for -it might easily be made to look to those who knew nothing -of its cause like the beginning of great and increasing -prosperity to the road. But a temporary increase was -sometimes worked up for still other reasons, such as to -render plausible some demand for an extension of line or for -some other great expenditure, or to assist in making terms -in a consolidation, or to strengthen the demand for a larger -share in a pool.</p> - -<p class='c007'>“Whatever was the motive, the allowance of the special -rate or rebate was essentially unjust and corrupting; it -wronged the smaller dealer oftentimes to an extent that -was ruinous, and it was generally accompanied by an -allowance of free personal transportation to the larger -dealer, which had the effect to emphasize its evils. There -was not the least doubt that had the case been properly -brought to a judicial test these transactions would in -many cases have been held to be illegal at the common -law; but the proof was in general difficult, the remedy -doubtful or obscure, and the very resort to a remedy -against the party which fixed the rates of transportation -at pleasure might prove more injurious than the rebate -itself. Parties affected by it, therefore, instead of seeking -redress in the courts, were more likely to direct their -efforts to the securing of similar favors on their own -behalf. They acquiesced in the supposition that there -must or would be a privileged class in respect to rates, -and they endeavored to secure for themselves a place -in it.</p> - -<p class='c007'><span class='pageno' id='Page_45'>45</span>“Local discriminations, though not at first so unjust and -offensive, have nevertheless been exceedingly mischievous, -and if some towns have grown, others have withered away -under their influence. In some sections of the country if -rates were maintained as they were at the time the interstate -commerce law took effect, it was practically impossible -for a new town, however great its natural advantages, -to acquire the prosperity and the strength which would -make it a rival of the towns which were specially favored -in rates; for the rates themselves would establish for it -indefinitely a condition of subordination and dependence -to ‘trade centres.’ The tendency of railroad competition -has been to press the rates down and still further down -at these trade centres, while the depression at intermediate -points has been rather upon business than upon rates.</p> - -<p class='c007'>“The inevitable result was that this management of -the business had a direct and very decided tendency to -strengthen unjustly the strong among the customers and -to depress the weak. These were very great evils and -the indirect consequences were even greater and more -pernicious than the direct, for they tended to fix in the -public mind a belief that injustice and inequality in the -employment of public agencies were not condemned by -the law, and that success in business was to be sought for -in favoritism rather than in legitimate competition and -enterprise.</p> - -<p class='c007'>“The evils of free transportation of persons were not -less conspicuous than those which have been mentioned. -This, where it extended beyond persons engaged in railroad -service, was actual favoritism in a most unjust and -offensive form. Free transportation was given not only -to secure business, but to gain the favor of localities and -of public bodies; and while it was often demanded by -persons who had, or claimed to have, influence which was -capable of being made use of to the prejudice of the railroads, -it was also accepted by public officers of all grades -<span class='pageno' id='Page_46'>46</span>and of all varieties of service. In this last case the pass -system was particularly obnoxious and baneful. A ticket -entitling one to free passage by rail was even more effective -in enlisting the assistance and support of the holder -than its value in money would have been, and in a great -many cases it would be received and availed of when the -offer of money made to accomplish the same end would -have been spurned as a bribe. Much suspicion of public -men resulted, and some deterioration of the moral sense -of the community traceable to this cause was unavoidable. -The parties most frequently and most largely favored -were those possessing large means and having large business -interests.</p> - -<p class='c007'>“The general fact came to be that in proportion to the -distance they were carried those able to pay the most paid -the least. One without means had seldom any ground -on which to demand free transportation, while one with -wealth was likely to have many grounds on which he -could make it for the interest of the railroad company to -favor him; and he was oftentimes favored with free transportation -not only for himself and family, but for his business -agents also, and even sometimes for his customers. -The demand for free transportation was often in the -nature of blackmail, and was yielded to unwillingly and -through fear of damaging consequences from a refusal. -But the evils were present as much when it was extorted -as when it was freely given.”<a id='r29'></a><a href='#f29' class='c012'><sup>[29]</sup></a></p> - -<p class='c007'>The Commission had plenty to do. Complaints of -unreasonable rates and unjust discriminations between -shippers, commodities, and places poured in upon it, -and vigorous decisions against favoritism and excessive -rates poured out upon the railroads. During 1887 and -1888 the Commission dealt with cases of passes issued -in contravention of law,<a id='r30'></a><a href='#f30' class='c012'><sup>[30]</sup></a> preferential fares for drummers,<a id='r31'></a><a href='#f31' class='c012'><sup>[31]</sup></a> -<span class='pageno' id='Page_47'>47</span>commissions on the sale of tickets,<a id='r32'></a><a href='#f32' class='c012'><sup>[32]</sup></a> discounts on -freight rates to large shippers,<a id='r33'></a><a href='#f33' class='c012'><sup>[33]</sup></a> discrimination by combination -rates,<a id='r34'></a><a href='#f34' class='c012'><sup>[34]</sup></a> by preference of tank shipments of oil,<a id='r35'></a><a href='#f35' class='c012'><sup>[35]</sup></a> by -unfair distribution of cars,<a id='r36'></a><a href='#f36' class='c012'><sup>[36]</sup></a> by underbilling,<a id='r37'></a><a href='#f37' class='c012'><sup>[37]</sup></a> false classifications,<a id='r38'></a><a href='#f38' class='c012'><sup>[38]</sup></a> -commissions to soliciting agents,<a id='r39'></a><a href='#f39' class='c012'><sup>[39]</sup></a> etc. Underbilling, -false classification, false weighing, and commissions to -soliciting agents were investigated by the Commission in -1888 at New York, Buffalo, Detroit, Chicago, Omaha, Lincoln, -and Washington.<a id='r40'></a><a href='#f40' class='c012'><sup>[40]</sup></a> All these methods of discrimination -were found widely prevalent, and new legislation -was asked for imposing a penalty on shippers who fraudulently -obtained reduced rates.</p> - -<p class='c007'>When Congress met for the session of 1889 it was believed -<span class='pageno' id='Page_48'>48</span>that the law had greatly reduced the number of -passes issued, straightened out a part of the long-haul discriminations, -and accomplished a good deal in the way -of suppressing rebates, but it was clear that much remained -to be done. In one way or another all over the -country secret discriminations were still being made for -the benefit of favored shippers. Congress therefore in -March, 1889, amended the Interstate Commerce Act by -adding to the fine a penalty of two years’ imprisonment in -the penitentiary in case of unlawful discrimination, and -pronouncing the same penalties against shippers and their -agents who secure advantage by false billing, false classification, -etc., or by soliciting or otherwise inducing a railway -to discriminate in their favor, or by aiding or abetting any -such discriminations. It was also provided that 3 days’ -notice must be given in case of any reduction of rates, and -that homeless and destitute persons, as well as preachers, -might be favored with low fares.</p> - -<p class='c007'>The stringent provision for imprisonment did not prove -any more effective than the milder law that preceded it, -less so apparently, for the following years were flooded -with unfair discriminations.<a id='r41'></a><a href='#f41' class='c012'><sup>[41]</sup></a></p> - -<div class='chapter'> - <span class='pageno' id='Page_49'>49</span> - <h2 class='c005'>CHAPTER VIII.<br /> <span class='large'>EFFECTS OF THE INTERSTATE ACT.</span></h2> -</div> - -<p class='c006'>An investigation by the Commission in May, 1889, concerning -passes, and covering 27 railroads, showed that -passes were issued freely to expressmen, telegraph men, -press men, managers of excursions, attorneys, persons contracting -with the railroads in consideration of advertising, -shippers, members of legislative bodies, United States, -State, and municipal officers, officials of steamship and -steamboat lines, etc. These passes were chiefly limited to -a State, but to some extent were good for interstate journeys. -Of State passes the larger numbers were issued to -members of legislatures and drovers; “complimentaries” -came next, with United States and municipal officers, -newspapermen, and shippers, in the order named.</p> - -<p class='c007'>The Commission said: “The Interstate Commerce Act -was intended to end all the abuses attending free transportation -of persons, and to a considerable extent it has done -so. But very largely the carriers, especially the strong -systems, where the abuse has been greatest, have tried to -avoid the law by falling back on State protection, and -issuing passes within the limits of each State. Three of -the large railroad systems, when called on by the Commission -to make an exhibit of the passes issued by them, -declined to do so on the ground that the passes were limited -to the bounds of the State, and therefore not within -the jurisdiction of the Commission. If the New York -Central and Pennsylvania railroads can thus issue passes -at discretion it is impracticable to enforce the laws against -<span class='pageno' id='Page_50'>50</span>their competitors.”<a id='r42'></a><a href='#f42' class='c012'><sup>[42]</sup></a> By issuing to a favored individual -a pass good in Pennsylvania, another good in Ohio, another -for Indiana, another for Illinois, etc., the Pennsylvania -Railroad can give the beneficiary as full freedom of its -lines as any interstate pass could give.</p> - -<p class='c007'>Pass making went merrily on all over the country, with -a complaint now and then to let in the light, but no effective -crusade against the disease. The Boston and Maine, -for example, issued passes in Maine, New Hampshire, Vermont, -and Massachusetts, to public officers of the States -and the United States, members of legislatures, and railroad -commissions, agents of ice companies, milk contractors, -newspaper men, etc.<a id='r43'></a><a href='#f43' class='c012'><sup>[43]</sup></a> The Commission recorded its -protest and declared that the “similar circumstances” of -the Interstate Act do not relate to the social or official -position of the passenger;<a id='r44'></a><a href='#f44' class='c012'><sup>[44]</sup></a> but the pestilence is beyond the -reach of the national board, and after eighteen years of -Federal prohibition our railroad business is still honeycombed -with political and commercial passes, as we have -already seen in the second chapter of this book.</p> - -<p class='c007'>Ticket scalping, “an obvious evasion of the law,” and -the payment of commissions on the sale of tickets in addition -to salaries, so that the brokers were tempted to cut -rates dividing their commissions with their customers, -continued in full bloom in spite of the Federal law. The -commissions were $1 from New England points to Chicago; -$1 from Chicago to the Missouri River; and $1 -from the river to Denver. In addition to such definite -amounts some roads paid 10 percent on their receipts for -the passage, making a total commission of $4 or $5 or more -in some cases for the sale of a single ticket.<a id='r45'></a><a href='#f45' class='c012'><sup>[45]</sup></a> “In cases of -<span class='pageno' id='Page_51'>51</span>commissions of only $1 for short distances there may be -little or no inducement for the agent to divide with the -passenger, but in cases of cumulative commissions for long -distances the temptation to divide is stronger, and the -probability of abuse is so great that the impropriety of -putting the opportunity before the agent is manifest. It -is not unusual for a single company to pay a sum of -$100,000 or even more in a year, and the aggregate entailed -reaches millions of dollars. This money is illegitimately -spent; it is paid in excess of salaries to agents for -the purpose of taking business from competitors, and when -competitors all do it, it is difficult to see how any benefit -can accrue from it to any company.”<a id='r46'></a><a href='#f46' class='c012'><sup>[46]</sup></a></p> - -<p class='c007'>In 1890 the Commission reported that scalpers were -supported by the railroads. They found 15 scalping -offices in Chicago, 9 in Cincinnati, 13 in New York, 7 in -Kansas City, etc. In 1895 they found that scalping “was -steadily enlarging in scope and volume.”<a id='r47'></a><a href='#f47' class='c012'><sup>[47]</sup></a> In 1897 the -“vicious practice” was still in full swing, though New -York, New Jersey, and eight other States had passed stringent -laws against it.<a id='r48'></a><a href='#f48' class='c012'><sup>[48]</sup></a> But it has now been largely reduced, -though by no means abolished, and the diminution has -come, not because the law acquired sufficient vigor to get -itself enforced, but because the railroad presidents combined -to stop the practice, which was recognized to be injurious -to railroad interests.<a id='r49'></a><a href='#f49' class='c012'><sup>[49]</sup></a></p> - -<p class='c007'>In respect to other forms of discrimination between passengers -the Commission ordered that rates for groups or -parties must not be lower than the regular fare for one -passenger multiplied by the number of persons in the -party,<a id='r50'></a><a href='#f50' class='c012'><sup>[50]</sup></a> and that although separate cars might be provided -<span class='pageno' id='Page_52'>52</span>for colored persons, they must have equal accommodations -with white people who pay the same fare.<a id='r51'></a><a href='#f51' class='c012'><sup>[51]</sup></a></p> - -<p class='c007'>Turning to freight discriminations, we find that a bewildering -mass of questions and complaints has pressed -upon the Commission. It has shown an earnest desire for -justice, and for the most part good judgment, but it has -accomplished comparatively little in the way of stopping -unjust discriminations. Witnesses refused to testify, on -the ground that testimony in respect to rebates and other -forms of discrimination might be used to convict them of -crime.</p> - -<p class='c007'>In the Counselman case (142 U. S. 547), Jan., 1892, the -U. S. Supreme Court decided that a witness could not be -compelled to testify in regard to discrimination in which -he was involved, since the Federal law made it a criminal -offence to make or benefit by discrimination. Unless the -law exempts the witness from prosecution in consequence -of his answers or in relation to the subject of them, he is -not obliged to answer a question when the answer might -tend to incriminate him.<a id='r52'></a><a href='#f52' class='c012'><sup>[52]</sup></a> Refusal to answer on such a plea -is of course equivalent to confession of guilt. In this case -Counselman, a large grain shipper, had been given rates on -corn some 5 cents less per hundred than the rates paid by -others from Kansas and Nebraska points to Chicago, over -the Rock Island, Burlington, and other railroads. Five -cents a hundred is an enormous profit on corn which the -farmer had sold at 18 to 22 cents per hundred, and such a -margin would enable the favored shipper to drive every one -else out of the trade; and on many western roads it has been -practically the case that only the railway officials and their -<span class='pageno' id='Page_53'>53</span>secret partners can do business. Counselman refused to -tell a United States grand jury whether or no he had had -any rebates from the railroads in 1890. He said he had -received none from Stickney’s road, nor from the Santa Fe, -had had no business with the latter, he thought, but as to -the Rock Island, C. B. & Q., etc., he declined to answer on -the plea that to do so might incriminate him.</p> - -<p class='c007'>Some railroad officials testified freely, but neglected to -tell the truth.<a id='r53'></a><a href='#f53' class='c012'><sup>[53]</sup></a> Discriminations as a rule were secret. -Even when it was clearly known that favoritism was being -shown, shippers were generally afraid to complain, and in -the small percent of cases where complaint and investigation -took place it seemed impossible to get at the truth in -any large way, because the railroad men for the most part -would not “cough up” the facts. Still, something was -done by the Interstate Commission, the courts, and the -Industrial Commission. Some progress was made and some -light secured. The jets of flame that here and there came -up through the cracks from the under-world showed very -clearly what was going on beneath the surface of railway -affairs.</p> - -<h3 class='c013'><em>Direct Rebates.</em></h3> - -<p class='c014'>Direct rebates on interstate traffic appear to have been -checked for a few months after the passage of the Commerce -Act, but the railroads admitted that they still gave -rebates on traffic within a State<a id='r54'></a><a href='#f54' class='c012'><sup>[54]</sup></a> just as they continued to -<span class='pageno' id='Page_54'>54</span>give passes, making them good within one State, insisting -in respect to both rebates and passes that they had a right -to give them because the law did not reach State traffic. -Nevertheless, as the Commission remarked, such rebates -inevitably affect the rates upon interstate traffic, and a competing -road whose traffic is taken a little further, crossing -the state line, may be compelled to give rebates or surrender -important business.</p> - -<p class='c007'>As a matter of fact, discriminating rates and rebates on -interstate as well as State business were soon as much in -fashion as ever.<a id='r55'></a><a href='#f55' class='c012'><sup>[55]</sup></a></p> - -<p class='c007'>In one small town in the Middle West judgments for -nearly $40,000 were recovered against a railroad for illegal -discriminations in that one town. In some cases the discriminations -amount to $40 a car. These cases were all -subsequent to the Interstate Act.</p> - -<p class='c007'>Some years ago the Chief Justice of Kansas declared that -the Santa Fe management preceding the present one was -notorious for giving secret rebates. The president of the -road was asked to resign because the railroad funds were -some millions short, due, it is said, to the secret rebates -the company had paid. An expert went over the books -and discovered that some $7,000,000 had been paid in -rebates by the Santa Fe in a few years.</p> - -<p class='c007'>Shippers who would not or could not get rebates or concessions -were in danger of serious loss and perhaps ruin. -Mr. H. F. Douseman, for many years a grain shipper in -Chicago, and chairman of the board of trade of that city, -had to go out of business because he would not take the -<span class='pageno' id='Page_55'>55</span>rebates he might have had. Before 1887 he took rebates -of 10 or 15 percent (2 or 3 cents on the cwt.), but after that -he refused them. “Virtue is its own reward,” and Mr. -Houseman got his pay in that form. “I feel that I have -been driven out of business because I would not accept a -rebate,” he told the Industrial Commission. “I have never -taken a rebate since the Interstate Law went into effect. -I did not propose to put myself in the shape of a criminal.”<a id='r56'></a><a href='#f56' class='c012'><sup>[56]</sup></a></p> - -<p class='c007'>It may be a matter of surprise to many that even one -man of this kind could be found in Chicago. If such virtue -were prevalent the enforcement of law would be easy. -Mr. Douseman says that for 6 months after the Interstate -Law was passed no rebates were paid; everybody was on -an equality. “After the first six months, rebates began -to be given. At the end of the first year they were quite -frequent, and they have continued ever since. Prior to -1887 the only time when rates were absolutely solid, when -every one was on the same basis, was when the Vanderbilts -were trying to bankrupt the West Shore road, and rates -were down to 12 cents in New York. Everybody then, -as I understand, had the same rates.”</p> - -<p class='c007'>The condition of things in 1890 is shown by the reported -statement of a Chicago railroad manager quoted by the -Commission. “The situation in the West is so bad that it -could hardly be worse. Rates are absolutely demoralized, -and neither shippers, passengers, railways, nor the public in -general make anything by this state of affairs. Take passenger -rates for instance; they are very low; but who -benefits by the reduction? No one but the scalpers.... -In freight matters the case is just the same. Certain -shippers are allowed heavy rebates, while others are made -to pay full rates.... The management is dishonest on all -sides, and there is not a road in the country that can be -accused of living up to the Interstate Law. Of course -when some poor devil comes along and wants a pass to -<span class='pageno' id='Page_56'>56</span>save him from starvation, he has several clauses of the -Interstate Act read to him; but when a rich shipper wants -a pass, why, he gets it at once.”<a id='r57'></a><a href='#f57' class='c012'><sup>[57]</sup></a></p> - -<p class='c007'>Complaints and investigations from time to time in subsequent -years showed the continuance of these conditions. -For one concern a large number of cars of corn were carried -from Kansas City to St. Louis at 6 cents per hundred lbs. -while the tariff was 15 cents.<a id='r58'></a><a href='#f58' class='c012'><sup>[58]</sup></a> In the traffic to Chicago -one firm shipped all the grain over one road, and another -firm “had the rate” on another line. It was clear that -these shippers had advantages that enabled them to keep -other shippers out of the field.<a id='r59'></a><a href='#f59' class='c012'><sup>[59]</sup></a></p> - -<p class='c007'>A wholesale grocery house getting 25 percent rebate -on its shipments established branches in various cities. -Through a disagreement with one of the railroads that -thought it was not getting its share of the business, the -rebate enjoyed by one of the branches was withdrawn, -and the branch in that city went out of business. A -leading dry-goods firm declared that so long as it secured -a rebate of 25 percent it had no objection to existing -methods of rate-making.<a id='r60'></a><a href='#f60' class='c012'><sup>[60]</sup></a></p> - -<p class='c007'>The International Coal Company declared, in a suit -against the Pennsylvania Railroad for damages, that it -was driven out of business by discrimination, its rival -receiving rebates of 20 cents per ton in 1898–9 and 10 -cents per ton in 1899–1900.</p> - -<p class='c007'>The railroads show a disposition to back each other in -disregarding the law. Mr. McCabe, traffic manager for -the Pennsylvania lines west of Pittsburg, said the Pennsylvania -system would stand by any rate made by its -connecting lines.<a id='r61'></a><a href='#f61' class='c012'><sup>[61]</sup></a></p> - -<div class='chapter'> - <span class='pageno' id='Page_57'>57</span> - <h2 class='c005'>CHAPTER IX.<br /> <span class='large'>SUBSTITUTES FOR REBATES.</span></h2> -</div> - -<p class='c006'>Numerous substitutes for the direct rebate were used. In -some cases $10 a car was paid on shipments of flour from -the Northwest under pretence of paying for the cost of -loading the car above the minimum weight.<a id='r62'></a><a href='#f62' class='c012'><sup>[62]</sup></a> Railroads -paid 50 cents for the loading of each private stock car, and -¾ of a cent for every mile the car was hauled, loaded or -empty. Yardage was also paid to the car-line for keeping -the cattle in its charge in its own yards, at the rate of -3½ cents per hundred lbs. for all cattle hauled to its yards. -“The amount of these rebates,” said the Commission, “more -than pays the entire cost of the improved stock cars within -2 years, besides covering operating expenses.”<a id='r63'></a><a href='#f63' class='c012'><sup>[63]</sup></a></p> - -<p class='c007'>Twenty-six railroad companies operating in the territory -extending in different directions from Chicago, and engaged -in the business in which discriminations by allowances of -car-mileage were supposed to exist, were summoned to make -a showing of the allowances paid by each of them for car-mileage -for the different classes of cars furnished by shippers, -car companies, and individuals, or connecting lines. -A single railroad company paid car-mileage to 65 different -companies or firms owning cars, of which number 54 were -<span class='pageno' id='Page_58'>58</span>shippers and the rest fast freights. The Commission found -that the mileage paid on private cars yielded a profit in -many cases of 25 percent, 50 percent, and even more.</p> - -<p class='c007'>“The rates allowed for car-mileage were shown to be as -follows: For ordinary freight cars, a uniform rate of ¾ of a -cent a mile; for Pullman palace cars, 3 cents a mile; for -Pullman tourist sleepers, 1 cent a mile; for ordinary passenger -cars exchanged with other companies, 3 cents a mile; -for baggage, mail, and express cars exchanged with other -companies, 1½ cents a mile by some roads, and 3 cents a mile -by others; for refrigerator cars used for carrying dressed -beef, 1 cent a mile in some cases, and in other cases ¾ of a -cent a mile; for furniture cars, oil-tank cars, palace live-stock -cars, and other cars owned by private individuals and -companies, ¾ of a cent a mile. Some companies pay mileage -on tank cars both loaded and empty, and some only -when loaded. For palace horse-cars no mileage is allowed -on some roads, shippers in such cars paying for the car.</p> - -<p class='c007'>“The cost of the investment in cars, and the amount of -mileage allowed for their use, show that the investment is -very profitable. Refrigerator cars cost from $900 to $1000; -private cattle-cars cost about $650; oil-tank cars about -$610; cars used for the transportation of live hogs about -$500; ordinary freight cars from $450 to $500. Repairs -on the cars are made by the railroad company in whose use -they are when repairs are required. The life of a box car -averages 15 years, and of a refrigerator car 8 years.”<a id='r64'></a><a href='#f64' class='c012'><sup>[64]</sup></a></p> - -<p class='c007'>“Private cars,” owned by the railroads but chartered for -private use, were the subject of discrimination of another -kind. For example, a commercial salesman travelled with -his assistant over the Northern Pacific in a private car -stocked with samples. For the first trip he paid 15 round-trip -fares between St. Paul and Portland, but for subsequent -trips the road charged 15 local fares from point to -point where stoppages were made. As theatrical and other -<span class='pageno' id='Page_59'>59</span>parties in private cars were usually carried for 15 round-trip fares it was alleged to be unfair to charge the drummer -local rates.<a id='r65'></a><a href='#f65' class='c012'><sup>[65]</sup></a></p> - -<p class='c007'>Terminal charges for delivery at certain places were -made a means of discrimination.<a id='r66'></a><a href='#f66' class='c012'><sup>[66]</sup></a> Free cartage for some -shippers and not for others,<a id='r67'></a><a href='#f67' class='c012'><sup>[67]</sup></a> or for one town and not for -another, gave a decided advantage to the favored shippers.</p> - -<p class='c007'>To get the business of B., a Pittsburg dealer in beer, the -B. & O., with the approval of Wight, one of its general officers, -gave B. 3½ cents per hundred for hauling his own -beer from the station, while K., another beer dealer there, -received no such concession, but paid the same freight rates -and hauled his beer at his own expense. Wight was indicted -and convicted before the district court for violation -of Section 2 of the Interstate Act, and the United States -Supreme Court sustained the decision in 167 U. S. 512, -May, 1897, holding that the cartage allowance in one case -and not in the other was a discrimination under the 2d -section of the Commerce Act.</p> - -<p class='c007'>In Grand Rapids, Michigan, free cartage had been in -vogue for 25 years, but in Ionia, near by, no free cartage -was afforded by the railroads, although the station was -nearer the centre or main delivery area of the city than in -Grand Rapids. This had the effect of a discrimination -against the merchants of Ionia amounting to about 2 cents -per hundred lbs.<a id='r68'></a><a href='#f68' class='c012'><sup>[68]</sup></a></p> - -<p class='c007'><span class='pageno' id='Page_60'>60</span>In June, 1889, the Commission asked most of the leading -roads, 585 in number, for information about free cartage -delivery. From the answers it appears “that 65 railroads -allowed free cartage delivery or equalizing cartage allowances, -and 389 railroads do neither; 200 companies only -switch cars over to mills and manufacturers. No company -furnishes free cartage delivery at all stations, but as a rule, -only at a few stations. The estimated cost of free cartage -delivery will average about 2½ cents per hundred pounds. -Where an allowance is made for switching or for equalizing -distances from shippers, the average cost is about $2 per -car or $2.50.”<a id='r69'></a><a href='#f69' class='c012'><sup>[69]</sup></a></p> - -<p class='c007'>Denial of the stoppage-in-transit privilege at one locality -while allowing it to others is unlawful.<a id='r70'></a><a href='#f70' class='c012'><sup>[70]</sup></a> Differences in the -time allowed for unloading may amount to a substantial -preference. At Philadelphia 96 hours was allowed for unloading, -against 72 hours at interior points, for coal, coke, -or iron, and 48 hours for other goods. With demurrage -charges of $1 for each day’s delay in unloading beyond the -allotted time, the difference between 48 and 96 hours would -mean $2 a car.<a id='r71'></a><a href='#f71' class='c012'><sup>[71]</sup></a></p> - -<p class='c007'>Free storage is another method of favoritism, sometimes -<span class='pageno' id='Page_61'>61</span>used systematically and extensively, as described by the -Commission. “A shipper sends a carload of freight to a -specific destination consigned to his order by arrangement -with the carrier. The freight is kept in the car or freight -house or some warehouse which the carrier controls, and on -orders of the shipper or his agent issued from time to time -the freight is delivered in small lots to designated persons. -These persons are the actual consignees, and the shipper is -enabled by this means to avoid paying the higher less-than-carload -rate and to reap other advantages through this privilege -of storage. Such special facilities as storage, handling, -cartage, distribution, and reshipment of less quantities, either -without charge or at extremely low compensation for the -character of the service, amounted substantially to providing -a shipper with branch business houses.”<a id='r72'></a><a href='#f72' class='c012'><sup>[72]</sup></a></p> - -<p class='c007'>Overbilling and underbilling have been found to be very -convenient substitutes for the rebate. A bill of lading may -acknowledge the receipt of 70 barrels of flour; 65 only are -shipped, and the railway pays damages for the loss of the -5 non-existent barrels. On the other hand railroads have -been known to suggest to millers that they ship flour on -the generous plan of shipping 200 barrels and billing 125.<a id='r73'></a><a href='#f73' class='c012'><sup>[73]</sup></a> -Some shippers have been allowed to ship only 4 boxes of -peaches to the hundred lbs., while others were permitted to -ship 6 boxes to the hundred lbs. “That is the billing. -Sometimes peaches are billed 4 boxes to the hundred lbs. to -one point, and 6 boxes to the hundred lbs. to a point 350 -miles farther on.”<a id='r74'></a><a href='#f74' class='c012'><sup>[74]</sup></a> At another time the cashier of an -important firm is made a nominal agent for the railway -company, and under the name of commission to him an -enormous rebate is allowed for all the business his employers -<span class='pageno' id='Page_62'>62</span>send over the line. Or again, the railway company -purchases from a favored trader its supplies of the goods in -which he deals, at a fancy price.</p> - -<p class='c007'>The “expense bill system” has proved to be an instrument -of preference and fraud. On presentation of an -“expense bill” showing payment for shipments into Kansas -City the railroads would allow reshipment of an equal -weight from Kansas City to Chicago at the balance of the -through rate from the point of origin to Chicago.<a id='r75'></a><a href='#f75' class='c012'><sup>[75]</sup></a> This -gave grain from the West an advantage over grain grown -near Kansas City. When the rate from Kansas City to -Chicago was 20 cents on wheat and 17 cents on corn the -grain carried on the balance of the through rate under the -expense bill system was carried 8 to 10 cents less than grain -grown in Missouri and Iowa.<a id='r76'></a><a href='#f76' class='c012'><sup>[76]</sup></a></p> - -<p class='c007'>Not satisfied with the discounts obtained on actual expense -bills, shippers altered bills and forged new ones to -enlarge their traffic at the cut rates. In this way “expense -bills showing a high balance were constantly substituted -for those showing a low balance.”<a id='r77'></a><a href='#f77' class='c012'><sup>[77]</sup></a></p> - -<p class='c007'>Rebate equivalents were given in the form of elevator -rebates and allowances. Elevators owned or controlled by -railroad companies were leased at nominal charges to favored -shippers, or secret commissions were paid to favored parties -for all grain consigned to specified elevators. One railroad -for example paid a concern, holding a line of elevators on -the railroad, 1¼ cents per 100 on all grain consigned to -those elevators.<a id='r78'></a><a href='#f78' class='c012'><sup>[78]</sup></a></p> - -<p class='c007'><span class='pageno' id='Page_63'>63</span>In this case the consignment was 150 cars a day from -November to May, averaging 32,000 to 34,000 lbs. a car. -The commissions therefore amounted to $4 a car, $600 a -day, $120,000 a year.</p> - -<p class='c007'>The United States Industrial Commission says, under the -head of “Freight discriminations and allowances to elevators:” -“On each of the leading railways from grain-producing -sections to Chicago, allowances, ranging from -one-half to 1½ cents per bushel, are made on grain to -one or two favored firms.... The favored elevators are -thus enabled to pay higher prices for grain. The average -profit in handling grain is less than 1½ cents per bushel, -and smaller buyers can thus easily be driven out of business.... -The small shipper being driven out of business, -the large dealer is then in a position to depress the price of -grain to the producer.”<a id='r79'></a><a href='#f79' class='c012'><sup>[79]</sup></a></p> - -<p class='c007'>The railroads deny equal rights in the building of elevators. -A railroad which had granted the right for two elevators -at Elmwood on the company’s right of way refused -to give H. & Co. the same privilege. The State Board of -Transportation ordered the railroad to discontinue the discrimination -against H. & Co., and give them the same privileges -as others. But the United States Supreme Court -held that the road could not be forced to grant its property -for private use.<a id='r80'></a><a href='#f80' class='c012'><sup>[80]</sup></a></p> - -<p class='c007'>One method of discrimination I learned of in the West a -few years ago is not adequately described in any report.<a id='r81'></a><a href='#f81' class='c012'><sup>[81]</sup></a></p> - -<p class='c007'>The head of a road running into Chicago from Missouri -River points formed a grain company to buy grain in -Kansas City and sell it in Chicago. The railway guaranteed -the grain company against loss. When wheat was 50 -cents in Kansas City and 60 cents in Chicago, the grain -<span class='pageno' id='Page_64'>64</span>company paid 51 cents in Kansas City to get the grain. -The railroad charged the regular 10 cent tariff. The -grain was sold at 60. The railroad paid back 1 cent on -the guarantee and still made 9 cents. And the railroad-grain-company-combine -was able to drive other buyers out -of the market and other railroads out of the traffic. The -Santa Fe, for example, carried 28 percent of the grain -going into Kansas City, but only hauled 3 percent out to -Chicago.</p> - -<p class='c007'>Railroads sometimes seek to evade the law by contracting -to deliver goods at a certain price including the freight -and the payment for the goods in one lump sum, so that -the freight charge is merged and cannot be ascertained. -Nine years ago, in 1896, the Chesapeake and Ohio Railroad -contracted with the New York, New Haven and Hartford -to deliver 2,000,000 tons of coal at New Haven at $2.75 a -ton. The published freight rate at that time was $1.15 -and the price of the coal at the mines $2 a ton. The Interstate -Commerce Commission held that this was a discrimination -by the Chesapeake and Ohio Railroad against -every independent mine owner in its territory, and that the -railroad had no right to contract to sell coal at any price. -The Federal Court sustained this view, and it is stated that -the Department of Justice will ask the Supreme Court for -a blanket injunction against the two railroads, restraining -them from carrying freight at less than the published rates. -It is said that J. Pierpont Morgan guaranteed that the -Chesapeake and Ohio would perform the contract.</p> - -<p class='c007'>Action <em>against</em> an individual or company is quite as -effective a form of discrimination as action in favor of a -rival. Shippers at a certain place on the Chicago and -Northwestern were handicapped by refusal of through -rates on asbestos, compelling them to pay higher rates than -their competitors.<a id='r82'></a><a href='#f82' class='c012'><sup>[82]</sup></a> A Southern railroad charged the Bigby -Packet Company a much higher rate on cotton from Mobile -<span class='pageno' id='Page_65'>65</span>to New Orleans than the established rate on local shipments -of cotton, in order to discourage shipments by way -of the Packet Company from the point of origin in Alabama, -and compel the cotton to travel all the way by -rail.<a id='r83'></a><a href='#f83' class='c012'><sup>[83]</sup></a></p> - -<div class='chapter'> - <span class='pageno' id='Page_66'>66</span> - <h2 class='c005'>CHAPTER X.<br /> <span class='large'>DENIAL OF FAIR FACILITIES.</span></h2> -</div> - -<p class='c006'>The refusal to furnish cars in fair proportion is a familiar -form of discrimination all through this period, usually in -combination with other forms of preference. In Kansas, -on the line of the St. Louis and San Francisco Railway, -were two coal companies whose plants were of about equal -capacity, and several individual shippers. The railway and -its officials became interested in one of the coal companies, -and by rebate and other process it was given rates which -averaged only forty percent of the rates charged other -shippers. The result was that all the other shippers were -driven out of business, part of them being hopelessly ruined -before giving up the struggle. In addition to rate discrimination -the railway practised gross favoritism in the distribution -of cars. For example, during one period of 564 -days, as was proven in court, the road delivered to the -Pittsburg Coal Company 2,371 empty cars to be loaded -with coal, although such company had sale for, and capacity -to produce and load, during the same period, more than -15,000 cars. During the same time this railway company -delivered to the Rogers Coal Company, in which the railway -company and C. W. Rogers, its vice-president and -general manager, were interested, no less than 15,483 coal -cars, while 466 were delivered to individual shippers. In -other words, the coal company owned in large part by the -railway and its officials, was given 82 percent of all the -facilities to get coal to market, although the other shippers -<span class='pageno' id='Page_67'>67</span>had much greater combined capacity than the Rogers Coal -Company.</p> - -<p class='c007'>During the last four months of the period named, and -when the Pittsburg Coal Company had the plant, force, -and capacity to load thirty cars per day, they received an -average of one and one-fourth cars per day, resulting as -was intended, in the utter ruin of a prosperous business -and the involuntary sale of the property, while the railway -coal company, the railway officials, and the accommodating -friends who operated the Rogers Coal Company, made vast -sums of money; and when all other shippers had thus been -driven off the line the price of coal was advanced to the -consumer.</p> - -<p class='c007'>Another railway interested in a coal mine furnished cars -in abundance to that mine and to others that would sell -their product to the mining company in which the railway -was interested, but systematically failed to furnish cars to -other operators.<a id='r84'></a><a href='#f84' class='c012'><sup>[84]</sup></a> One operator, after being forced for years -in this way to sell his product to the railway mining company -at a very low price, was obliged to build a railway of -his own in order to reach other lines of railroad and so -have a fighting chance for cars.</p> - -<p class='c007'>In Arkansas a coal mine owned by the Gould interests -was able to ship its product to market at very low rates, -while the owners of an adjoining mine were forced to haul -their coal to the same market in wagons because the rates -charged them from the coal railway were so high as to -absorb the whole value of the coal at destination.</p> - -<p class='c007'>A big capitalist in the West got hold of great oil fields -on the Pacific slope, wonderful prospects, contracts to -supply big cities, etc. Some one told him he had better -see the railroads before he made his contracts. He thought -<span class='pageno' id='Page_68'>68</span>the transportation question would be all right and went -ahead. When he got his contracts made and wanted to -ship the oil, he asked for cars, and then he found the transportation -question was not all right. He could not get -the cars.</p> - -<p class='c007'>Sometimes a railroad has arbitrarily refused to haul -goods to certain consignees. A case of this kind came -before the Texas Railway Commission in the case of the -Independent Compress <em>v.</em> Chicago, Rock Island and Texas -Railway Company. The Bowie Compress, located at the -same station with the Independent, had some sort of pull -which caused the railroad to refuse to haul cotton to that -station unless consigned to the Bowie Compress. The -railway also allowed compression charges out of the through -rate on cotton shipped to the Bowie Compress, refused -freight from points of origin, and reshipped the cotton -from the Bowie press at through rates, while refusing such -concessions to others.<a id='r85'></a><a href='#f85' class='c012'><sup>[85]</sup></a></p> - -<p class='c007'>The refusal to deliver at a certain place may be as effective -sometimes as the refusal to deliver at all. When in -1890 Mr. Nelson Morris tried to establish competitive stock -yards in Chicago to get rid of the graft of the Union Stock -Yards owned largely by railway interests, the Vanderbilts -being in the lead, his enterprise was loudly applauded by -the stock raisers of the West; but the railroads made short -work of Morris. They simply refused to deliver to his -yards the cars shipped there. They did not recognize any -such place as the Morris yards and calmly hauled all cars -to the old terminal. If Mr. Morris wanted them he must -come and get them and pay switching charges. This -ruined the venture.</p> - -<p class='c007'>Big shippers may be given an undue advantage by -excessive difference between the rates on carloads and less than carloads.<a id='r86'></a><a href='#f86' class='c012'><sup>[86]</sup></a> -On June 29, 1898, the Western railroads -<span class='pageno' id='Page_69'>69</span>advanced their less-than-carload rates to the Pacific Coast -to a minimum difference of 50 cents a cwt. above the -carload rate; and “on a great many commodities the difference -is greater than the profit on the goods.”<a id='r87'></a><a href='#f87' class='c012'><sup>[87]</sup></a> The -Interstate Commission regards a moderate reduction on -carload shipments as fair, but will not sanction lower rates -for cargo or train-load quantities than for carloads.<a id='r88'></a><a href='#f88' class='c012'><sup>[88]</sup></a></p> - -<div class='chapter'> - <span class='pageno' id='Page_70'>70</span> - <h2 class='c005'>CHAPTER XI.<br /> <span class='large'>CLASSIFICATION AND COMMODITY RATES.</span></h2> -</div> - -<p class='c006'>Classification and commodity rates afford many examples -of discrimination in the period we are studying. -We find furs and fur scraps classed as double first-class, -while hats and fancy products, for which these commodities -constitute raw material, were first-class.<a id='r89'></a><a href='#f89' class='c012'><sup>[89]</sup></a> Celery was classed -with peaches and grapes, instead of with cauliflower and -asparagus, lettuce and peas.<a id='r90'></a><a href='#f90' class='c012'><sup>[90]</sup></a> The charge for beans and -peas (70 cents) was almost double the charge on tomatoes -(44 cents).<a id='r91'></a><a href='#f91' class='c012'><sup>[91]</sup></a> Flour for export was carried at much lower -rates than wheat. Before 1886 wheat was carried from -Texas, Missouri, and Kansas at 15 cents per hundred lbs. -less than flour, without regard to distance. From 1886 -to the end of this middle period the rates on wheat for -export show a difference of 4 to 11 cents per hundred below -the rates on flour. As the profit to American millers -on flour for export is from 1 to 3 cents per hundred it is -clear that such discrimination is prohibitive upon American -millers in favor of English and other foreign millers. The -public policy and good railway policy seem to require the -same rate on export wheat and export flour.<a id='r92'></a><a href='#f92' class='c012'><sup>[92]</sup></a> Corn was -carried between Kansas points and Texas points for 7 cents -<span class='pageno' id='Page_71'>71</span>per hundred less than corn meal,—a strong discrimination -against Kansas millers.<a id='r93'></a><a href='#f93' class='c012'><sup>[93]</sup></a> The Eastern railways also carried -corn at lower rates than corn meal to Eastern mills, and -carried the meal, hominy, ground corn, etc., back to Indiana. -This gave the railways more traffic, but it was a tremendous -waste of industrial force and injured the Western mills, since -a discrimination of 5 percent was sufficient to eat up three -or four times the profit of any miller.</p> - -<p class='c007'>The Southern Railway put soap in the sixth class with a -rate of 49 cents a hundred, or 33 cents when shipped by -large manufacturers, while Pearline was put in the fourth -class with a rate of 73 cents a hundred. Pearline and soap -are competitors. There is no appreciable difference in the -cost of transportation. But Pearline commands a higher -price, so the railways charged more than double the rate -they got for soap from the manufacturers. In another case -brought before the Commission in 1889, soap in carload lots -was put in class V, while sugar, cerealine, cracked wheat, -starch, rice, coffee, pickles, etc., were in class VI. One -make of soap was put by many railroads in the second class, -while other soaps of similar use and value were in the -fourth class.<a id='r94'></a><a href='#f94' class='c012'><sup>[94]</sup></a></p> - -<p class='c007'>One of the strangest anomalies of classification is the -rating of patent medicines as first-class, while ale and beer -are third class. In a complaint on the latter score by a -prominent manufacturer of patent medicines against the -New York Central and other railroads, it was shown that -the medicines were similar in bulk and intrinsic value to -the liquors, and it is possible that the similarity went much -farther than this.</p> - -<p class='c007'>Blocks intended for wagon-hubs took one rate on the -Lake Shore and Michigan Southern and boards for wagon -boxes another rate.</p> - -<p class='c007'><span class='pageno' id='Page_72'>72</span>Railroad ties have been charged a higher rate than -lumber. A high rate on railroad ties prevents their being -shipped and depreciates their value at home, so that the -discriminating company is able to buy them at a low price.</p> - -<p class='c007'>The Union Pacific years ago made prohibitory rates on -steel rails in order to hinder or prevent the construction of -a road that promised to become a competitor of one of the -Union Pacific’s connecting lines. Prohibitory rates on -rails, ties, etc., have often been maintained to obstruct the -building of competing lines, and to render them more -costly.</p> - -<div class='chapter'> - <span class='pageno' id='Page_73'>73</span> - <h2 class='c005'>CHAPTER XII.<br /> <span class='large'>OIL AND BEEF.</span></h2> -</div> - -<p class='c006'>Oil in Standard hands continued to receive favorable -attention from the railroads throughout the middle period. -The Combine was preferred by an “unreasonable mileage” -payment of ¾ of a cent a mile on its tank cars, loaded or -empty,<a id='r95'></a><a href='#f95' class='c012'><sup>[95]</sup></a> while others who attempted to ship in tank cars -had to pay mileage to the railroads for the return of their -empties; by practically compelling independents to ship in -barrels, and charging for the weight of the barrel; and by -making an arbitrary allowance of 42 gallons for leakage on -tank shipments with no allowance for waste in barrel -shipments.<a id='r96'></a><a href='#f96' class='c012'><sup>[96]</sup></a></p> - -<p class='c007'>The Commission held it unjust to allow for leakage on -tank shipments and not on barrel shipments; that the -weight of the barrel must not be charged for if the weight -of the tank is not, the same quantity of oil must have the -same rate no matter what the package might be, unless the -shippers were offered facilities for shipment by tank as well -as barrels so that the option was theirs. The representative -of the oil combination was questioned by the Interstate -Commerce Commissioners, in relation to the mileage, etc.</p> - -<p class='c007'><span class='pageno' id='Page_74'>74</span>“Are you allowed mileage on tank cars?”</p> - -<p class='c007'>“No, sir.”</p> - -<p class='c007'>“Neither way?”</p> - -<p class='c007'>“Neither way.”</p> - -<p class='c007'>But the railroad officials in this case refused to commit -oil-perjury. Asked what mileage they paid the Combine -they replied: “Three-quarters of a cent a mile.”</p> - -<p class='c007'>When Rice asked what the railroads would charge him -for bringing back his empty cars if he shipped in tanks, he -was told he would have to pay 1½ cents or more a mile. -He found that if he tried to sell his oil in California it -would cost him $95 to get the empty tank car back, while -the railroads paid the Standard for the privilege of hauling -its empties back. Rice saw that from the South he could -get return loads of turpentine, but the railroads absolutely -refused to give him rates.<a id='r97'></a><a href='#f97' class='c012'><sup>[97]</sup></a></p> - -<p class='c007'>Besides all this the Standard was accorded the privilege -of systematic underbilling. According to the testimony -before the Commission in 1898 by the Boston & Albany -agent in East Boston, the centre of the Standard Oil -business in New England, the Combine’s tank cars, -which usually weigh from 35,000 to 50,000 lbs., were -ordinarily billed at 24,000 lbs. Out of 14 cars sent -over another road from East Boston to Newport, R. I., -at least half were billed and paid for on the basis of -24,000 lbs. to the car, although their average weight was -shown to be 48,550 lbs. per car. It was claimed that -these underbillings were clerical errors. In considering -the motives and reliability of such a claim we must not -forget the curious habit shown by these clerical errors -of piling up in great bunches in the Standard Oil business, -and the still more curious fact that all the errors -are in favor of the Trust—none against it. Long before -the Commission had found that the railroads leading -from the oil fields were in the habit of “blind billing” -<span class='pageno' id='Page_75'>75</span>the Standard cars at 20,000 lbs., though the actual -weight was frequently 30,000, 40,000, 44,000 or more.<a id='r98'></a><a href='#f98' class='c012'><sup>[98]</sup></a> -Rice complained of this to the Commission in July, -1887. Immediately all the old numbers on the 3000 -tank cars of the Oil Trust were painted out and new -numbers painted on, so that the cars mentioned in the -railroad accounts could no longer be identified with the -cars on the tracks.<a id='r99'></a><a href='#f99' class='c012'><sup>[99]</sup></a> The Standard has some very oily -ways, and knows how to use a pot of paint and a brush -as well as a rebate.</p> - -<p class='c007'>The Standard desired to fix the rates on oil to New -England, the South, and the West, and as usual the railroads -let it have its way. The result was a practice of -adding the Boston rate to the local rate on shipments of -oil into New England, which puts the independent refiners -at a great disadvantage. The rate on corn from Cleveland -to Boston is 15 cents per hundred lbs., and to New Haven -the same, but the rate on petroleum from Cleveland to -Boston is 24 cents, and to New Haven it is the Boston -rate, 24 cents, plus the local rate, or a total of 36 cents -from Cleveland to New Haven. Now the Standard Oil -has got large warehouses in East Boston, and they bring -their oil by boat and store it there, and then they get the -freight rates simply from Boston down to the Connecticut -point, whereas the Western refiner who has no storehouse -has to pay first the Boston rate, and then this local rate -also to the other point, even though the oil may go direct, -so that the rates are practically prohibitive to the Western -refiners.<a id='r100'></a><a href='#f100' class='c012'><sup>[100]</sup></a></p> - -<p class='c007'>To shut out the oil fields and independent refineries of -Colorado and Wyoming, the Standard resorted to terrific -discrimination in rates. The Chicago and Northwestern -Road would bring a carload of cattle from Wyoming to -<span class='pageno' id='Page_76'>76</span>Chicago for $105, but for a car of 75 barrels of oil the -freight was lifted to $348. The rates from the Western -fields to San Francisco were also put very high, and the -Standard built great storehouses on the Pacific Coast, which -it fills from the Eastern fields, the freight rates from the -East being suddenly lowered when it wishes to refill the -said storehouses, and put back again as soon as they are -full. The people of California are compelled to buy Eastern -oil for the profit of the Trust, instead of buying Colorado -oil, because the freight on the latter is prohibitive.</p> - -<p class='c007'>Aside from these sudden fainting spells of the oil tariff -at convenient seasons for the Standard, the ordinary arrangements -showed thoughtful care for its comfort. The -regular rate on oil from the Colorado oil wells to the Pacific -Coast was made 96 cents per hundred, while the rate from -Chicago through Colorado is only 78½ cents per hundred.<a id='r101'></a><a href='#f101' class='c012'><sup>[101]</sup></a></p> - -<p class='c007'>The Chicago pork-packers generally had things their -own way in this period, but apparently not always. In -1890 the Commission decided that the railroads were discriminating -against the Chicago packers by lower rates -from the Missouri River on hog products than on live -hogs.<a id='r102'></a><a href='#f102' class='c012'><sup>[102]</sup></a> Even then, however, they were receiving rebates -from the railroads which made questions of tariff rates -comparatively insignificant.</p> - -<p class='c007'>In 1891 the Federal Grand Jury indicted Swift & Co., -the Chicago packers, for having received $5,000 a month -in rebates from one road alone, the Nickel Plate. Compared -to the train loads of their cars passing east and west -on other lines, their traffic on the Nickel Plate was light.</p> - -<p class='c007'>In his testimony to the Senate Committee this spring, -Mr. Davis said: “A few years ago one of the Chicago -packers was a director on a Western railroad. He was a -large receiver of live-stock from Kansas City, upon which -the freight rate was $54 per car. A rebate of $25 was -<span class='pageno' id='Page_77'>77</span>paid to the packer at the time of shipment, and it was the -custom to file claims for the remaining $29, which were -allowed on the grounds of some imaginary loss or damage -to the stock in transit. The same party paid rebates -amounting to from $30,000 to $50,000 a month for every -month in the year. On putting down on a piece of paper -the amount of $10,000, and after placing this under the -eyes of a superior officer, he would leave and subsequently -look for that amount in currency by express, -and would then proceed to divide it among certain favored -shippers.”<a id='r103'></a><a href='#f103' class='c012'><sup>[103]</sup></a></p> - -<p class='c007'>A few years ago, in proceedings before Judge Grosscup -of Chicago, it appeared that while the published rate on -packing-house products was 23½ cents, the favored packers -were given a rate as low as 15 cents.</p> - -<p class='c007'>Investigations by the Commission in December, 1901, and -January, 1902, took the lid off of the dressed-meat business -and discovered a large congregation of secret rebates. The -Pennsylvania system was cutting the rate on packing-house -products 5 to 7 cents below the published rate, making it -25 cents and sometimes 22 cents, in place of 30 cents, from -Chicago to New York. Rates from Indianapolis, Cincinnati, -and other points were also cut.<a id='r104'></a><a href='#f104' class='c012'><sup>[104]</sup></a></p> - -<p class='c007'>The examination brought out the fact that President -Cassatt and other officers above the traffic manager knew -what he was doing and authorized or permitted the rate -cutting.<a id='r105'></a><a href='#f105' class='c012'><sup>[105]</sup></a></p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> Who takes the responsibility -for doing these things, for making these serious -departures and cuts, in regard to the Pennsylvania Railroad? -Is it you? Do you do it without any authority -from the officers of that road above you, or do you have -their approval of it?</p> - -<p class='c007'><span class='pageno' id='Page_78'>78</span>“<span class='sc'>Mr. McCabe.</span> I am in charge of the freight traffic, -and I do the best I can under the circumstances.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> Do you act independently -of them, or do you have to have their approval?</p> - -<p class='c007'>“<span class='sc'>Mr. McCabe.</span> I assume to do what I think is proper, -being governed by the competitive conditions.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> Do you have reason to -know that the officers above you in the management of -that company’s affairs knew of it?</p> - -<p class='c007'>“<span class='sc'>Mr. McCabe.</span> Not in detail.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> I do not mean the details. -I could have answered that myself. But as to the general -fact that the Pennsylvania Railroad was cutting the rate -in this serious way, was it known to the president of that -company and other officers?</p> - -<p class='c007'>“<span class='sc'>Mr. McCabe.</span> I do not know.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> Have you ever had any -conference with the officers above you in the management -of that company’s affairs in which you disclosed this condition -of things?</p> - -<p class='c007'>“<span class='sc'>Mr. McCabe.</span> I have said to them from time to time -that rate conditions were so and so; that rates were not -being maintained, and that our competitors were cutting -the rates.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> And that you must cut -the rates? Did they sanction it, or approve it, or tell you -to stop it?</p> - -<p class='c007'>“<span class='sc'>Mr. McCabe.</span> I think they left it to my discretion.”</p> - -<p class='c007'>The Big Four, a Vanderbilt line, cut rates 6 cents below -the 30 cent tariff from St. Louis.<a id='r106'></a><a href='#f106' class='c012'><sup>[106]</sup></a></p> - -<p class='c007'>Mr. Mitchell, traffic manager of the Michigan Central, -says his road carried dressed meats at 40 cents, or 5 cents -below the published rate.</p> - -<p class='c007'><span class='pageno' id='Page_79'>79</span>“<span class='sc'>Chairman of the Commission.</span> Did you carry any -considerable amount of dressed meats during 1901 that -paid the tariff rate?</p> - -<p class='c007'>“<span class='sc'>Mitchell.</span> I think not.</p> - -<p class='c007'>“<span class='sc'>Chairman.</span> Practically all of it went at some secret -rate?</p> - -<p class='c007'>“<span class='sc'>Mitchell.</span> Yes, sir.”</p> - -<p class='c007'>This man thought his road paid the four Beef Trust -houses $200,000 or $240,000 a year in rebates.<a id='r107'></a><a href='#f107' class='c012'><sup>[107]</sup></a></p> - -<p class='c007'>Mr. Mitchell said rebates were paid indirectly by means -of bank drafts. The railroad makes a deposit in bank. -The traffic manager checks against it, and the bank supplies -drafts on New York or cashier’s checks which are sent to -the persons who are to receive rebates.<a id='r108'></a><a href='#f108' class='c012'><sup>[108]</sup></a></p> - -<p class='c007'>The railroads try to be good sometimes, make New Year’s -resolutions, and stop the rebates; but some naughty boy -breaks his vows in two or three weeks, and then the rest -follow suit. Here is the testimony of a Western traffic -manager on this point.<a id='r109'></a><a href='#f109' class='c012'><sup>[109]</sup></a></p> - -<p class='c007'>“<span class='sc'>Commissioner.</span> What proportion of the traffic (in provisions) -have you carried at the tariff rate?</p> - -<p class='c007'>“<span class='sc'>Traffic Manager.</span> It was a very small proportion -of the total, and it was probably along about the first of -last year.</p> - -<p class='c007'>“<span class='sc'>Commissioner.</span> You are accustomed to indulge in -New Year’s resolutions?</p> - -<p class='c007'>“<span class='sc'>Manager.</span> Yes, sir; we all swear off on New Year’s, -and begin again.</p> - -<p class='c007'>“<span class='sc'>Commissioner.</span> Is it a fact that from Jan. 1, 1901, -there was a period when the tariff rate (on provisions) -was actually applied by all the roads?</p> - -<p class='c007'>“<span class='sc'>Manager.</span> Yes, sir; I think it was.</p> - -<p class='c007'>“<span class='sc'>Commissioner.</span> How long did it last?</p> - -<p class='c007'><span class='pageno' id='Page_80'>80</span>“<span class='sc'>Manager.</span> I think it lasted probably two weeks.</p> - -<p class='c007'>“<span class='sc'>Commissioner.</span> What led you, then, to cut your rate -through St. Louis?</p> - -<p class='c007'>“<span class='sc'>Manager.</span> Our agent in Kansas City discovered about -January 20 that provisions were moving through Chicago -at less than tariff rate.”</p> - -<p class='c007'>The Commission found that all the railroads made low -rates for the Beef Trust, but they could not find any railroad -that led off in the business of cutting rates. Each -one said it cut rates because it found the others were -cutting. They were all followers.<a id='r110'></a><a href='#f110' class='c012'><sup>[110]</sup></a></p> - -<p class='c007'>The Chairman of the Commission said to the Vanderbilt -traffic man: “I observed that you spoke of your road as -following the others.</p> - -<p class='c007'>“<span class='sc'>Mr. Cost.</span> Yes, sir.</p> - -<p class='c007'>“<span class='sc'>The Chairman.</span> I have heard a similar statement -from other gentlemen. Have you any idea who is the -leader?</p> - -<p class='c007'>“<span class='sc'>Mr. Cost.</span> No; I have not. I could not give you -that information.</p> - -<p class='c007'>“<span class='sc'>The Chairman.</span> You have never heard of the -leader?</p> - -<p class='c007'>“<span class='sc'>Mr. Cost.</span> No, sir.</p> - -<p class='c007'>“<span class='sc'>The Chairman.</span> They are all followers.</p> - -<p class='c007'>“<span class='sc'>Mr. Cost.</span> That does really seem to be the case.”</p> - -<p class='c007'>Mr. Grammer, general traffic manager of the Lake Shore, -testified in 1902 in respect to “provisions,” cut meats, lard, -etc., from Chicago to New York: “The minimum weight -on a car of provisions is 28,000 lbs. The rate is 25 cents. -That is about the maximum rate obtained this last year, -1901, and that means $70 a car. We pay out of that to -the stockyards $2.40 a car for switching, we pay $15 car-mileage -for a round trip of the car, and at New York we pay -3 cents a hundred lighterage; that is, $2.40 and $15, $17.40, -<span class='pageno' id='Page_81'>81</span>and $8.40—$25.80 which we pay out of that rate as absolute -arbitraries. That leaves the Lake Shore $16 or $17 net for -hauling that car to Buffalo, with the return car empty, and -we have to give practically passenger service to that traffic. -I think it is unremunerative business, and I have always -taken the position that we do not want any provisions on -the Lake Shore road at less than the full tariff rate, whatever -that might be. The dressed-beef minimum will average -22,000 lbs. That car is subject to the same arbitraries -and mileage. The lighterage is 3 cents a hundred, which -would be $6.60 instead of $8.40, and it is subject to the -same service eastbound and westbound as to movement; -and there is not 1 percent of those cars loaded east with -dressed beef that are loaded with any freight coming west.” -In spite of the unremunerative character of the business -Manager Grammer says they cut the rate 5 cents a -hundred.<a id='r111'></a><a href='#f111' class='c012'><sup>[111]</sup></a></p> - -<p class='c007'>Mr. Paul Morton, at the head of the traffic department -of the Santa Fe, testified in 1902<a id='r112'></a><a href='#f112' class='c012'><sup>[112]</sup></a> that his road carried -dressed meats and packing-house products below the published -rates in violation of law.</p> - -<p class='c007'>“<span class='sc'>Mr. Morton.</span> We have carried the business from -Kansas City to Chicago for 5 cents less than the published -tariff to Chicago and Chicago junction points.</p> - -<p class='c007'>“<span class='sc'>Mr. Day.</span> Domestic as well as export?</p> - -<p class='c007'>“<span class='sc'>Mr. Morton.</span> Both.”</p> - -<p class='c007'>“The Santa Fe,” he said, “at the beginning of 1901 -joined with the other roads in a general declaration of good -faith and intention of an absolute maintenance of rates. -We maintained the rate until about April 1.” The Santa -Fe found that they were only carrying 2 percent of the -packing-house business out of Kansas City, although they -<span class='pageno' id='Page_82'>82</span>brought in 33⅓ percent of all the live-stock that entered -the city. So “we told one of the largest shippers in Kansas -City that if they would come and ship with us we would -give them 5 cents reduction from the tariff, and in order -to get them we had to promise to do it for a year—I think -until the first of July of this year, 1902.”</p> - -<p class='c007'>Continuing, the witness admitted the illegality of the -transaction.</p> - -<p class='c007'>“<span class='sc'>Mr. Morton.</span> Yes, sir; it is an illegal contract. It -was illegal when we made it, and we knew that.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> Can you tell how much -you paid out in a year?</p> - -<p class='c007'>“<span class='sc'>Morton.</span> On this business?</p> - -<p class='c007'>“<span class='sc'>Clements.</span> Yes, sir. Have you any idea whether it -is $50,000 or $100,000 or $10,000—anything definite? -Of course it is a mere guess and you do not know—</p> - -<p class='c007'>“<span class='sc'>Morton.</span> Well, I think there was a great deal more -than any sum you mention paid out.</p> - -<p class='c007'>“<span class='sc'>Clements.</span> By your company?</p> - -<p class='c007'>“<span class='sc'>Morton.</span> By all the companies. I think we paid out -$50,000 a year or more.</p> - -<p class='c007'>“<span class='sc'>Clements.</span> Who would have the direction of that? -Who would see that it was paid? Who would direct it to -be done?</p> - -<p class='c007'>“<span class='sc'>Morton.</span> I would.</p> - -<p class='c007'>“<span class='sc'>Commissioner Prouty.</span> How much does it cost your -company on all its business in any one year to deviate from -the published rates?</p> - -<p class='c007'>“<span class='sc'>Morton.</span> I should think between $500,000 and -$1,000,000 a year.”</p> - -<p class='c007'>By means of private cars, mileage payments, rebates, and -control of rates, the big packers had advantages which -enabled them to ruin the smaller packers all over the -country. The Lincoln, Neb., Packing Company, for example, -was “driven out of business,” the manager says, -“by freight discrimination, rebates, and the private car. -<span class='pageno' id='Page_83'>83</span>After doing a losing business for 5 or 6 years against these -odds, the company closed down with a loss of 75 percent -of the investment.” And this is a fair sample of what has -happened to many, many of the competitors of the Beef -Trust.</p> - -<div class='chapter'> - <span class='pageno' id='Page_84'>84</span> - <h2 class='c005'>CHAPTER XIII.<br /> <span class='large'>IMPORTS AND EXPORTS.</span></h2> -</div> - -<p class='c006'>The low rates in favor of foreign goods and of domestic -goods intended for export amount to a serious discrimination. -Paul Morton told the United States Industrial Commission -that goods were carried from Hamburg to Denver -for less than the rates from Chicago to Denver.<a id='r113'></a><a href='#f113' class='c012'><sup>[113]</sup></a> Complaint -was made many years ago that the Pennsylvania -Railroad and other roads charged lower rates, even 50 percent -lower, on goods shipped in from foreign countries -than on domestic traffic of the same sort. Investigation -revealed in some cases a far greater difference than 50 -percent.</p> - -<p class='c007'>At one time the rate on tin plate from Liverpool via -Philadelphia and the Pennsylvania Railroad to Chicago -was 24 cents a hundred, while the rate from Philadelphia -over the same road was 28 cents.</p> - -<p class='c007'>In the Texas and Pacific Case the record showed that -books, buttons, carpets, clothing, etc., were carried from -England, via New Orleans to San Francisco for $1.07 a -hundred, while the same articles of domestic manufacture -paid $2.88 on the same trains from New Orleans to Frisco. -Boots and shoes, cashmere, confectionery, cutlery, gloves, -hats and caps, laces and linens, etc., took the same blanket -rate of $1.07 from Liverpool and London to San Francisco, -while similar American goods paid the railroads $3.70 a -hundred from New Orleans to California. In some cases -<span class='pageno' id='Page_85'>85</span>the railroads received only ⅙ as much for the transportation -of foreign goods as for domestic goods. The Interstate -Commission held that “any difference in charge between -foreign and domestic traffic is unlawful,” and ordered the -discrimination to cease, but after long litigation the United -States Supreme Court decided that among the circumstances -and conditions to be considered in judging rates are -the conditions of ocean traffic and water competition to -interior ports in the United States, etc., so that a carrier -may be justified in making low rates to secure foreign -freights which would otherwise go by competitive routes or -not go at all.<a id='r114'></a><a href='#f114' class='c012'><sup>[114]</sup></a> The practical result appears to be that railroads -may nullify the protective tariff and discriminate in -favor of foreign shipments to any extent that is necessary -to make them move, regardless of the question whether or -no they ought to move under such conditions.</p> - -<p class='c007'>Foreign manufacturers cannot only ship their goods -across the country more cheaply than our manufacturers -can, or at least such of them as pay schedule rates, but can -also get special rates on all raw materials they buy here -<span class='pageno' id='Page_86'>86</span>and ship over our lines for export. For example, a Chicago -miller pays 21 cents per one hundred lbs. to get either -wheat or flour to New York, while the English miller can -buy wheat in Chicago and take it to New York for 13 cents. -In some cases the rate on flour has been as much as 11 -cents more than the rate on wheat. Since 2 or 3 cents a -hundred lbs. is a good profit, our millers cannot grind for -export against the English millers.<a id='r115'></a><a href='#f115' class='c012'><sup>[115]</sup></a> The railroads turn -down our millers and establish a protective tariff for free -trade England, protecting her millers against competition.</p> - -<p class='c007'>American shippers take such advantage of the low export -rates as they can, but sometimes these concessions are made -to the shippers in one city and not to those of other cities; -for example, the railroads carrying export flour from Minneapolis -at a discount refused similar concessions to shippers -at intermediate points.<a id='r116'></a><a href='#f116' class='c012'><sup>[116]</sup></a></p> - -<div class='chapter'> - <span class='pageno' id='Page_87'>87</span> - <h2 class='c005'>CHAPTER XIV.<br /> <span class='large'>LOCALITY DISCRIMINATIONS.</span></h2> -</div> - -<p class='c006'>Discriminations between localities, though less pronounced -in this period than in the first, were nevertheless -multitudinous and vital.</p> - -<p class='c007'>In 1896 the railroads carried Minneapolis flour to New -York for 10 cents a hundred, while charging New York -State millers 18 cents a hundred to New York City.</p> - -<p class='c007'>President Stickney of the Chicago and Great Western -Railroad, in a discussion the same year with the representatives -of other western roads before the I. C. C., said: -“You charge the Kansas and Nebraska farmer 13 cents -to haul his grain 200 miles while you charge the grain -dealer 6 cents to haul that same grain twice as far to -Chicago.... I have been acquainted with this northwestern -country for thirty-five years. In all that time there -has never been a year that the corn crop was moved until -after the corn was in the hands of dealers who had the rate. -Once the farmer is compelled to sell his grain, then you -fellows cut the rate for the dealer.” That is, the railroads -charge the farmer shipping to the Missouri River a mileage -rate 4 times as high as the rate to the dealers shipping to -Chicago, and freeze out the small dealers from shipping to -Chicago by making secret rates in favor of the big dealers.</p> - -<p class='c007'>Coal was shipped from Chicago to Omaha and then -reshipped to Grinnell, Ia., 225 miles back toward Chicago, -more cheaply than it could be got direct from Chicago.</p> - -<p class='c007'>“A large manufacturing establishment located in the -latter town, making agricultural implements which were -<span class='pageno' id='Page_88'>88</span>sold principally on the Pacific Coast, found it advantageous -to abandon its plant and transfer its machinery and -employees to Chicago on account of the unfavorable rates.</p> - -<p class='c007'>“A large factory for making barbed wire, located in the -city of Des Moines, in like manner abandoned its buildings -and transferred its establishment to Chicago, finding that -it saved a large sum on every carload of wire it shipped, -although the wire was mainly carried directly by or -through its old location, 300 miles nearer the Pacific Coast -than Chicago.”<a id='r117'></a><a href='#f117' class='c012'><sup>[117]</sup></a></p> - -<p class='c007'>To certain towns in Nebraska and other States the railways -have extended the same rates that apply to Missouri -River points, where the rates to Chicago are very low, while -other towns in the same region have to pay the Missouri -River rates to and from Chicago, plus the local rate from -the river point.<a id='r118'></a><a href='#f118' class='c012'><sup>[118]</sup></a></p> - -<p class='c007'>The extent to which railroads sometimes go in place -discriminations is shown by cases cited in Cator and Lewis. -One of the towns on the route of the Northern Pacific in -Montana incurred the displeasure of the railway authorities, -and they determined to ruin it and build up a new -town. So they refused to stop their trains in the town or -have a depot there. The railroad built a new depot on -lands of its own, 3 miles beyond, and ran its trains through -the old town to the new site, thereby feeding its revenge -and enhancing the value of its own land at the same time, -<span class='pageno' id='Page_89'>89</span>at the cost of ruining the town already established. The -courts sustained the railroad’s claim that it had a right to -run through to the new depot, though some of the judges -dissented, regarding such favor as despotic and destructive -of public rights.<a id='r119'></a><a href='#f119' class='c012'><sup>[119]</sup></a></p> - -<p class='c007'>“A town in the State of Iowa, which had thriven under -reasonable railroad facilities, was almost depopulated by a -change of ownership of the railroad line upon which it -depended.</p> - -<p class='c007'>“As the result of discrimination forty American families -were driven out of this small town in a single year. Their -property was rendered almost worthless, and with great -pecuniary loss from no fault of their own they were obliged -to abandon their homes and seek new habitations and new -avocations. Cases like this were abundant throughout the -West. This merely illustrates what was going on in a -dozen great States where cities, towns, and villages were -being depopulated or their business establishments placed -at great disadvantage by reason of iniquitous discriminations.”<a id='r120'></a><a href='#f120' class='c012'><sup>[120]</sup></a></p> - -<p class='c007'>Peopled flocked into the towns and cities favored with -the low rates, and when the competitive rates were removed, -as they have been in many cases, the boom towns collapsed, -and the inflated building and business interests shrunk to -skin and bone.</p> - -<p class='c007'>Better accommodations are frequently accorded to places -in which the railway or its officers are interested than to -other places. When a new road is projected there are -usually town-lot and land companies along the lines, in -which prominent officials of the road may be directly or -indirectly interested. Their knowledge of the future location -of the road is utilized in purchasing tracts of land at -low values to be used for town sites and sold at high prices -after the railway is built.</p> - -<p class='c007'><span class='pageno' id='Page_90'>90</span>“Sometimes the entire road becomes a land-grabbing -scheme with a town-lot speculation attachment. The -western half of one of the principal roads in Iowa was -built mainly on this plan. Its natural route was along -one of the old stage roads running through the county -seats of the counties through which it must pass. About -these towns was a well-settled country, with rich farms -well improved for that early day. The towns were moderate -in size, but had been established as trading points for -many years, and stores, schools, and churches had grown up.</p> - -<p class='c007'>“But there was a belt of government land lying between -the two belts of settlement about the respective county -seats, which the road coveted, and if the line passed -through the old towns there would be little chance for the -speculative directors to profit by laying out town sites. So -the road was laid out and built through the unsettled lands, -avoiding every old town on its route.”<a id='r121'></a><a href='#f121' class='c012'><sup>[121]</sup></a></p> - -<p class='c007'>Sometimes discriminations are made by the use of different -classifications for local and through traffic.<a id='r122'></a><a href='#f122' class='c012'><sup>[122]</sup></a> The rate -on sugar from San Francisco to Kearney, Neb., was 77 -cents per hundred lbs., against 50 cents, clear through to -Omaha.<a id='r123'></a><a href='#f123' class='c012'><sup>[123]</sup></a> The rate on lumber from Wilmington to Philadelphia -and Boston was higher than the local rate from -Wilmington to Portsmouth or Norfolk plus the rate from -Portsmouth or Norfolk to Philadelphia or Boston.<a id='r124'></a><a href='#f124' class='c012'><sup>[124]</sup></a></p> - -<p class='c007'>The rates from the East to St. Cloud, Minn., were -higher than to St. Paul and other more distant points. -The difference against St. Cloud was 7 cents per hundred -on flour and 75 to 85 per ton on coal. This difference was -<span class='pageno' id='Page_91'>91</span>two or three times the profit made by the miller, so that -the price of wheat in St. Cloud was 6 cents below the price -in Minneapolis or Princeton or Elk River, and the value -of land about St. Cloud was thereby greatly lessened.<a id='r125'></a><a href='#f125' class='c012'><sup>[125]</sup></a></p> - -<p class='c007'>A canning factory in Emporia, Kansas, had good natural -advantages and an excellent trade in Kansas, Colorado, -Texas, etc., when in 1891 the freight rates were changed -on the basis of water and rail competition via Galveston so -that canned goods could be shipped into this territory from -New York at rates that drove the Emporia factory out of -business with a loss of $50,000 and the ruin of the owner -who had been the heaviest tax payer in the county.</p> - -<p class='c007'>The Emporia furniture factory, and the Emporia stockyards -have also been ruined, it is said, by freight discriminations. -In the Spokane case the rate to Portland, 2056 -miles from the East, was $30 a ton, while the rate to Spokane, -only 1512 miles, was $52 per ton. The Commission -said this was unreasonable. “If a rate of 1½ cents per ton-mile -yielded a desirable margin over the cost, a rate of 3½ -cents pays an unwarranted return.” In a Georgia case it -appeared that the rate from Cincinnati to a non-competitive -town, Marietta, was 6 times as much per ton-mile as -the rate to Atlanta. The business men of Spokane paid -2 or 3 times as much for haulage as the men of Portland, -and the business men of Marietta paid 6 times as much in -proportion as those in Atlanta.</p> - -<p class='c007'>The Spokane merchants combined and put their freight -business in the hands of one agent, who could swing every -pound of freight to the Northern Pacific or to the Oregon -Navigation Co., or to the Great Northern, etc. Then the -railways pooled against the merchants. The latter adopted -the policy of tendering a reasonable sum for freight, and if -the railways wouldn’t take it, the merchants replevied the -goods and left the companies to sue for the freight. The -<span class='pageno' id='Page_92'>92</span>companies got tired of that and made some concessions. -But Spokane still suffers from severe discrimination, as we -shall see hereafter. Coal hauled fifty miles to Leadville -sold there for $7 a ton, while in Denver, after an additional -haul of 150 miles, the same coal was sold for $5.50 -a ton. The Michigan Central and other roads charged -higher rates on carriages and buggies to San Bernardino -than to Los Angeles, some distance further on.<a id='r126'></a><a href='#f126' class='c012'><sup>[126]</sup></a></p> - -<p class='c007'>From Pittsburg to Colorado the rate on rails was $1.60, -while the rate all the way through to San Francisco was -only 66 cents. From Pueblo to San Francisco, 1,559 miles, -the rate on bar iron and on rails was $1.60 per hundred, -while from Chicago to San Francisco, 2,418 miles, the rates -were 50 cents on bar iron and 60 cents on rails; and even -from New York to San Francisco the same rate of 60 cents -was made for rails.<a id='r127'></a><a href='#f127' class='c012'><sup>[127]</sup></a></p> - -<p class='c007'>Sometimes the charge is much greater going one way -between two given points than it is going the other way -between the same points. For instance, “Gloves from San -Francisco to Denver pay $2 a hundred. You ship the -same packages back from Denver, which has 5,000 feet of -elevation, to San Francisco at the sea level, downhill, like a -toboggan slide, and it is $3 a hundred downhill to $2 up.”<a id='r128'></a><a href='#f128' class='c012'><sup>[128]</sup></a> -<span class='pageno' id='Page_93'>93</span>The discriminations against Denver are severe both from -Eastern and Western points. Sugar is carried from San -Francisco to Denver at 75 cents; to Loveland it is 93 cents; -but hundreds of miles further on, to Omaha, it is only 50 -cents.<a id='r129'></a><a href='#f129' class='c012'><sup>[129]</sup></a> “Mr. Kindel has been driven out of the manufacture -of upholstering goods and of spring beds in Denver -because of similar differences. He wished to manufacture -albums in Denver, but was forced to locate in Chicago -because the freight rate on books from Chicago to San Francisco -was $1.75 per hundred and from Denver to San Francisco -$3, while the Denver manufacturer had to pay 97 cents -freight on his raw material (paper, etc.) from Chicago to -Denver, $3.97 against $1.75. So too, the freight rate on -books from Chicago to New York is 75 cents, from Denver -to New York $2.72.”<a id='r130'></a><a href='#f130' class='c012'><sup>[130]</sup></a></p> - -<p class='c007'>“The difference in rates on coal oil has been so great -that oil has sometimes been shipped from Chicago to San -Francisco and back again to Denver.”</p> - -<p class='c007'>“Boots and shoes are carried from Chicago to Colorado -common points at $2.05 per hundred, from Chicago to California -at $1.50 per hundred. If a jobber in Colorado wishes -to ship boots and shoes to California he must pay $3, -making a total freight rate of $5.05 from Chicago to California -in this way. Cotton-piece goods under commodity -rates are shipped from Boston to the Missouri River for 52 -cents per hundred, while the rate from the Missouri River -to Denver is $1.25 for a haul of one-third the distance. -The rate from the Missouri River through Denver to California -is only $1.”<a id='r131'></a><a href='#f131' class='c012'><sup>[131]</sup></a></p> - -<p class='c007'>No wonder a Denver manufacturer said to the Industrial -Commission: “My city, Denver, and State, Colorado, and -all the territory embraced in the one hundred and fifth -meridian section, are violently discriminated against by the -<span class='pageno' id='Page_94'>94</span>railroads and express company. We are denied commercial -equality, which forbids the development of our resources. -Our freight rates are anywhere from 100 to 300 percent -higher per ton per mile than those of our Eastern and -Western competitors.”<a id='r132'></a><a href='#f132' class='c012'><sup>[132]</sup></a></p> - -<p class='c007'>Such conditions tend to force dealers to points on the -Missouri River or east of it. The shipper at St. Joseph on -the Missouri River, for example, can get goods from Chicago -at 80 cents and reship to San Francisco for $1.50, while the -Denver shipper must pay $2 from Chicago to Denver and -$3 from Denver to San Francisco,—$5 for the Denver -shipper against $2.30 for the St. Joseph man.<a id='r133'></a><a href='#f133' class='c012'><sup>[133]</sup></a></p> - -<div class='chapter'> - <span class='pageno' id='Page_95'>95</span> - <h2 class='c005'>CHAPTER XV.<br /> <span class='large'>LONG-HAUL DECISIONS OF THE SUPREME COURT.</span></h2> -</div> - -<p class='c006'>The long-haul clause did not realize the intent of its -framers. It received a series of shocks from the United -States Supreme Court, which produced, if not paralysis, at -least a bad case of nervous prostration.<a id='r134'></a><a href='#f134' class='c012'><sup>[134]</sup></a></p> - -<p class='c007'>At first, believing that the law would be enforced in -accordance with its purpose and intent to get rid of unjust -and needless discrimination between localities, the Northern -and Western roads revised their tariffs in good faith in -reference to long and short haul rates, but, later, when they -found that the Supreme Court did not intend to enforce -the 4th section, they joined the Southern roads in practical -disregard of it wherever they found it convenient to do so, -and only in a few cases has their disregard been checked.</p> - -<p class='c007'>Within 5 days after the Commission was appointed a -large number of railroads applied for relief from the long -and short haul clause; and in many cases, on the ground of -<span class='pageno' id='Page_96'>96</span>water competition, etc., relief was given.<a id='r135'></a><a href='#f135' class='c012'><sup>[135]</sup></a> The Commission -held that dissimilar circumstances existed under the 4th -section in case of competition with water carriers, or railroads -not under the Act (foreign railroads and railroads -lying wholly within a single State), and in “rare and peculiar -cases of competition between interstate railroads, when -a strict application of the rule would be destructive of -legitimate competition,”<a id='r136'></a><a href='#f136' class='c012'><sup>[136]</sup></a> but ordinarily competition between -interstate roads was not regarded as sufficient to -relieve them from the 4th section.</p> - -<p class='c007'>In November, 1892, the Commission decided the famous -Alabama Midland Case. The complaint was that rates -from the East and Northeast to Troy, Ala., were higher than -to Montgomery, a longer haul passing through Troy. The -railroads pleaded competition at Montgomery. The Commission -held that railway competition would not justify -departure from the rule of Section 4 of the Interstate Act. -Five years later, in November, 1897, the United States -Supreme Court sustained the judgment of the Circuit Court -and Circuit Appeals Court, overruling the Commission, and -held that the existence of railway competition at Montgomery -made a substantial difference of circumstances -within the meaning of the exception in Section 4.<a id='r137'></a><a href='#f137' class='c012'><sup>[137]</sup></a></p> - -<p class='c007'>The Court held that competition even of interstate lines -is a substantial difference of conditions which may justify -a greater charge for a short than for a long haul, but said, -“We do not hold that the mere fact of competition, -<span class='pageno' id='Page_97'>97</span>no matter what its character or extent, necessarily relieves -the carrier from the restraints of the 3rd and 4th -sections.”</p> - -<p class='c007'>In the 2d section, which prohibits any rebate or discrimination -and is intended to enforce equality of shippers -over the same line, “‘similar circumstances and conditions’ -refers to matters of carriage, and does not include competition -between rival routes;” but in the 3d and 4th -sections “similar circumstances and conditions” includes -competition, which “is one of the most obvious and effective -circumstances that make the conditions under which -a long and short haul is performed, and substantially dissimilar.” -The railroad people think the circumstances are -very dissimilar also when the Oil Trust or the Beef Combine -threatens to take hundreds of thousands of dollars -worth of business if they don’t get the rates and facilities -they want, while Messrs. A. B. C., etc., ship their goods and -pay the schedule rates without suggesting any reduction. -This dissimilarity is harder for the railroads to deal with -than the other. They can stop competing among themselves -on long-haul schedule rates more easily than they can -enforce equal rates on the big shippers.</p> - -<p class='c007'>In the Chattanooga Case it appeared that rates from New -York and other points via South Atlantic points to Chattanooga -were higher than to Nashville, 152 miles further on. -The Commission in December, 1892, ordered this discrimination -to cease. The order was not obeyed. Suit to enforce -it was brought in the Circuit Court, and a decision sustaining -the Commission was rendered in February, 1898. And -in November, 1899, the Court of Appeals confirmed the -decision, holding that the ruling of the Supreme Court in -the Midland Case did not apply, because “normal competition” -would give Chattanooga the same rates as Nashville.<a id='r138'></a><a href='#f138' class='c012'><sup>[138]</sup></a> -<span class='pageno' id='Page_98'>98</span>But the Supreme Court in 1901 reversed the lower courts -and decided against the Commission.<a id='r139'></a><a href='#f139' class='c012'><sup>[139]</sup></a></p> - -<p class='c007'>The Georgia Railroad Commission Cases, also decided by -the Interstate Commission in 1892, went the same way, the -United States Supreme Court again deciding against the -Interstate Commission on the long and short haul clause, -holding that any substantial competition of markets or railways -creates dissimilar conditions within the 4th section.<a id='r140'></a><a href='#f140' class='c012'><sup>[140]</sup></a></p> - -<p class='c007'>The result is that dissimilarity of conditions created by -the railroads themselves becomes the means of freeing them -from the long-haul rule of the 4th section of the Interstate -Act.</p> - -<p class='c007'>In the South a method called the “basing-point system” -is in vogue. The railroads name certain towns as distributing -centres and competing points, fix the rates to and from -these points, and make rates to and from other localities by -adding to such through rates the local charges in force -between the distributing centres, or “basing-points” and -the said other localities.</p> - -<p class='c007'>The Commission says: “Our annual reports to Congress -and reported decisions in cases have uniformly condemned -this distributing centre theory of rate-making, but the -Southern carriers have resisted our efforts to correct the -practice.”<a id='r141'></a><a href='#f141' class='c012'><sup>[141]</sup></a></p> - -<p class='c007'>A thoughtful writer in the <cite>Popular Science Monthly</cite> -says: “The most serious class of unjust discriminations -includes those which have for their victims the entire populations -of towns, cities, and even extensive districts, which -are made to suffer from the unfair adjustment of railway -rates. Practically the whole region south of the Potomac -and Ohio and east of the Mississippi has continuously -<span class='pageno' id='Page_99'>99</span>suffered from discriminations of this kind through the -system of making charges to a few selected cities the basis -for through rates to all other points. Through rates are -made to and from about two hundred of the larger towns, -including Atlanta, Birmingham, Chattanooga, Vicksburg, -New Orleans, and Mobile, and traffic shipped from or to -all other points is charged the rate to one of these basing-points -plus the local rate from such basing-points to final -destination. In practice it is common to make the combination -by the use of rates to and beyond whatever -basing-point will give the lowest total, whether on the line -traversed by the shipment or not. Thus a shipment from -Cincinnati to a point on the line from that city to New -Orleans may be charged the full rate to New Orleans plus -that from the latter back to the local point. The condemnation -of such a system cannot be too severe. It not only -limits the commercial activities of the towns unjustly discriminated -against and restricts the sources from which -they can directly draw supplies, but by hindering their -growth it retards the development of the entire section, -including the cities supposed to be favored.”<a id='r142'></a><a href='#f142' class='c012'><sup>[142]</sup></a></p> - -<p class='c007'>In a case decided in 1894 it was found that hay was -being carried from Memphis through Summerville to -Charleston for 19 cents a hundred, against 28 cents a hundred -from Memphis to Summerville, the 9 cents difference -being equal to the local rate from Charleston back to Summerville. -“The difference of $1.80 per ton was sufficient -to preclude the Summerville dealer from selling in neighboring -towns in competition with Charleston dealers. The -Summerville dealer was thus practically confined to Summerville -for a market, and even there had to compete with -dealers doing business at Charleston 19 miles away. If -$3.80 per ton is profitable to the carriers for bringing hay -in carloads from Memphis to Charleston, then $5.60 per -<span class='pageno' id='Page_100'>100</span>ton, nearly 50 percent more, from Memphis to Summerville, -which is nearer than Charleston is to Memphis, represents -an extra profit of $1.80, which the carrier did not -and could not show to be equalled by extra cost of transporting -a car of hay and delivering the same at Memphis.” -The Commission (June 1894) ordered the carriers not to -charge more from Memphis to Summerville than from -Memphis to Charleston, holding that competition of markets -or of railways would not justify a higher charge for a -shorter than for a longer haul. The order was made in -September. In its report to Congress in December the -Commission said, “The order has not been obeyed.”<a id='r143'></a><a href='#f143' class='c012'><sup>[143]</sup></a></p> - -<p class='c007'>Social Circle, situated between Atlanta and Augusta in -Georgia, was required to pay a rate from Cincinnati made -up of the rate to Atlanta plus the local rate from Atlanta -to Social Circle, while Augusta, considerably more distant, -had rates from Cincinnati no higher than those to Atlanta. -The Commission in June, 1891, ordered the railroad to cease -charging more from Cincinnati to Social Circle than for the -longer distance to Augusta.<a id='r144'></a><a href='#f144' class='c012'><sup>[144]</sup></a></p> - -<p class='c007'>Hill and Brother, in the wholesale grain, flour, and hay -business at Cordele, Ga., were in competition with dealers -at Albany, Americus, and Macon, which were made basing-points -<span class='pageno' id='Page_101'>101</span>and had lower rates than Cordele from the common -source of supply. Cordele was shown to be nearer the -coast than the other points, and to have several railway -routes from Nashville, so that it could not be excluded -from the low rate list on competitive grounds. The railroad -men said it was excluded because it was not so large a -distributing point as the other places, but admitted that if it -had equally low rates it would largely increase as a distributing -centre; so that the case stood thus: The railroads did -not give Cordele equally low rates because it was not a -sufficiently large distributing centre, and it was not a sufficiently -large distributing centre because it was denied -equally low rates; <em>i. e.</em>, the railroads sought to excuse themselves -for wrongdoing by offering the results of the wrong -in justification. The Commission refused to allow the -railroads to take advantage of their own wrong and condemned -the Cordele rates.<a id='r145'></a><a href='#f145' class='c012'><sup>[145]</sup></a></p> - -<p class='c007'>The Louisville and Nashville charged $3.69 per ton on -pig iron from Birmingham, Ala., to Cordele, Ga., 267 -miles, and only $1.80 a ton from Birmingham to Macon, -332 miles. On coal the rate was $2.60 to Cordele and -$1.60 to Macon. The Commission decided that the rates -to Cordele should be no higher than to Macon.<a id='r146'></a><a href='#f146' class='c012'><sup>[146]</sup></a></p> - -<p class='c007'>La Grange is 71 miles nearer New Orleans than Atlanta, -yet the rates to La Grange were made so much higher -than to Atlanta that an Atlanta dealer could ship goods -from New Orleans through to Atlanta and then back to -La Grange as cheaply as the goods could be shipped direct -to La Grange.<a id='r147'></a><a href='#f147' class='c012'><sup>[147]</sup></a></p> - -<p class='c007'><span class='pageno' id='Page_102'>102</span>To keep traffic from going to Savannah and make it go -to the Northwest or to Pensacola, the Louisville and Nashville -made very high rates on shipments to Savannah. On -Savannah traffic the Nashville haul was short and the receipts -small; on shipments to the Northwest the Nashville -receipts were much larger, and in Pensacola it had a special -interest. So the Savannah cotton rate was advanced from -$2.75 to $3.30 a bale, and the rates on naval stores were -also made much higher than to Pensacola or to the Northwest.<a id='r148'></a><a href='#f148' class='c012'><sup>[148]</sup></a> -The Commission ordered the railroad to discontinue -the discrimination against Savannah, January, 1900, -and the Circuit Court sustained the decision, July, 1902.</p> - -<p class='c007'>The Commission has condemned the rates from New -Orleans to Danville, Va., as excessive in comparison with -the rates on the longer haul to Lynchburg;<a id='r149'></a><a href='#f149' class='c012'><sup>[149]</sup></a> also the -rates on sugar and molasses from New Orleans to Nashville -as higher than on the long haul to Louisville;<a id='r150'></a><a href='#f150' class='c012'><sup>[150]</sup></a> the -rates from New York, Cincinnati, Chattanooga, Nashville, -and New Orleans, as discriminating against Dawson and -in favor of Americus, Eufaula, and Albany;<a id='r151'></a><a href='#f151' class='c012'><sup>[151]</sup></a> undue -preference to Sioux City against Sioux Falls, in the rates -from Chicago and Duluth;<a id='r152'></a><a href='#f152' class='c012'><sup>[152]</sup></a> and many other discriminations -between localities, and violations of the long and -short haul clause;<a id='r153'></a><a href='#f153' class='c012'><sup>[153]</sup></a> yet all the complaints and decisions, -<span class='pageno' id='Page_103'>103</span>numerous as they have been, are but a cupful from the -sea; and the evils removed in pursuance of orders of the -Commission which the Courts neglected to overrule form -an insignificant group compared to the mass that remained -untouched.</p> - -<div class='chapter'> - <span class='pageno' id='Page_104'>104</span> - <h2 class='c005'>CHAPTER XVI.<br /> <span class='large'>TEN YEARS OF FEDERAL REGULATION.</span></h2> -</div> - -<p class='c006'>In “A Decade of Federal Railway Regulation,” after -describing various forms of discrimination, H. T. Newcomb -says: “The conditions described are fairly typical of those -existing all over the United States. The Interstate Commerce -Law has mitigated but slightly, if at all, the evil -of unjust discrimination between individuals, has in but -few and relatively insignificant instances moderated unjust -discriminations between articles or classes of traffic, and -has almost wholly failed to remedy the far more serious -inequities in rate-making, which operate to the disadvantage -of towns, cities, or districts.”<a id='r154'></a><a href='#f154' class='c012'><sup>[154]</sup></a></p> - -<p class='c007'>In 1897 the President of the Big Four Railway said: -“Never in the history of railways have tariffs been so little -respected as to-day. Private arrangements and understandings -are more plentiful than regular rates. The larger -shippers, the irresponsible shippers, are obtaining advantages -which must sooner or later prove the ruin of smaller -and more conservative traders, and in the end will break -up many of the commercial houses in this country and -ruin the railways. A madness seems to have seized upon -some railway managers, and a large portion of the freight -of the country is being carried at prices far below cost.... -There is a much more dangerous view, and that is the demoralization -of the men conducting these numerous enterprises -and the want of respect for the law which is being -<span class='pageno' id='Page_105'>105</span>developed by the present situation.... There is less faith -to-day between railway managers, with reference to their -agreements to maintain tariffs, than was probably ever -known on earth in any other business. Men managing -large corporations who would trust their opponent with -their pocket-book with untold thousands in it, will hardly -trust his agreement for the maintenance of tariffs while -they are in the room together. Good faith seems to have -departed from the railway world, so far as traffic agreements -are concerned.”<a id='r155'></a><a href='#f155' class='c012'><sup>[155]</sup></a></p> - -<p class='c007'>The Texas Railway Commission in 1897 started suits -against several railways for discriminations, and before -the end of the year three railways pleaded guilty in -95 cases and paid fines amounting to $47,500, promising -to “be good.” The next year $20,000 more were -paid by the railways as fines in 20 cases for violation -of this law in Texas. Many other cases pending.<a id='r156'></a><a href='#f156' class='c012'><sup>[156]</sup></a> In the -1898 Report the Commission says that express and railway -agents do a business as shippers of fruit, etc., and -discriminate against the business of other shippers by -underbilling their own shipments and by delaying the -other shipments.</p> - -<p class='c007'>One of the most striking illustrations of the effectiveness -of the Interstate Act is to be found in the results of the -Boston and Albany investigation in 1900, during the consideration -of the question of leasing the road to the New -York Central. The Interstate Act made it a misdemeanor -to depart from the published rates, but the railroad followed -the law only when it was convenient to do so, and most of -the rates in actual use constituted misdemeanors.</p> - -<p class='c007'>“Various shippers, merchants, manufacturers, etc., were -visited, and it was found that the local rates were not followed, -that shippers were receiving widely varying discounts -<span class='pageno' id='Page_106'>106</span>from the published rates, and that shippers did -not know at all what rates their competitors and neighbors -were getting. They were not satisfied with the -system, but they were afraid to complain, for if they -made complaint they would lose whatever advantages -they possess and become marked men for railway persecution. -The Railroad Commission of Massachusetts advertised -for shippers who were not satisfied to come and -make complaint; but they did not do so, for the reason -that any shipper who complained of a railroad would be -apt to fare a good deal worse afterwards than before; his -goods would be delayed, his facilities would be cut off -and whatever reductions he was getting would be stopped, -and he would have to pay the full published rates. He -might also be involved in costly litigation, and he did not -dare to say anything.</p> - -<p class='c007'>“The Railroad Commission was asked by the legislature -about these discriminations on the Boston and Albany, and -a report was handed in by the Commission (1900) saying -that the reductions from the published rates averaged 40 -percent, and that in different cases they ran from 10 to -about 73 percent—fully confirming what the shippers had -said. It was admitted, however, that this report was not -written by the Railroad Commission. They had passed the -question over to the Boston and Albany, and a high official -of the road had written the reply. The Railroad Commission -admitted that they did not know anything about it. -They, however, handed in the report of the railroad official -as being true, and it was admitted, both by the railroad, and -by the Commission, that these discounts on local rates were -being given. The railroad official claimed that the special -rates were ‘open to all shippers sending freight under similar -circumstances and conditions,’ which may be true if we -understand circumstances and conditions’ to include the -relations of the shipper to the managers, and his pull with -the railroad, but cannot in any other way be made to square -<span class='pageno' id='Page_107'>107</span>with the statements of shippers and the other evidences in -the case.”</p> - -<p class='c007'>While favored shippers were receiving discounts of 10 -percent to 73 percent from the published rates, other shippers, -and some doing considerable business, declared that -they got no discount at all. During the legislative investigation -the matter was put to Samuel Hoar, attorney and -director of the Boston and Albany, and he said: “I suppose -it is true that no shipper knows what his rival is getting. I -suppose it is true. But what of it? What has that to do -with the lease?”</p> - -<p class='c007'>The receipts per ton-mile on all classes of freight were -less than one-half the average of the published rates to the -various stations on the road for the cheapest class of freight, -viz., coal. And the lowest published local rate on coal was -higher than the average rate on all commodities.</p> - -<p class='c007'>“The interstate-commerce law was passed in 1887 and -the Interstate Commerce Commission was established to -abolish the evils of unjust discrimination, but the work has -not been accomplished. The Interstate Commerce Commission -has told us year after year that the discriminations -are still going on; and that they cannot be stopped under -present laws at least.”<a id='r157'></a><a href='#f157' class='c012'><sup>[157]</sup></a></p> - -<p class='c007'>Mr. George R. Blanchard of New York, former commissioner -of the Joint Traffic Association told the Industrial -Commission<a id='r158'></a><a href='#f158' class='c012'><sup>[158]</sup></a> that “Discriminations against persons result -from secret rebates, combination of rates on inward material -and outward products, so as to affect the through charges; -favoritisms in terminal facilities; quicker time in transit; -unequal or hidden allowances in weights; dissimilar storage -<span class='pageno' id='Page_108'>108</span>periods in cars or warehouses; preferences in supplying -cars; differences in special charges, such as switching, -loading or unloading, or in cartage allowances; the leasing -of elevators to or making elevator contracts with large -handlers of grain, to their exceptional advantage; the -grant of undue allowances under the fictitious guise of -commissions, etc.”</p> - -<p class='c007'>Summing up the evidence gathered in its great investigation, -1900–1901, the United States Industrial Commission -concludes that the main effect of the Interstate Act has -been to concentrate the benefits of discrimination in fewer -hands,<a id='r159'></a><a href='#f159' class='c012'><sup>[159]</sup></a> which tends to build up trusts and combines. It -found discriminations everywhere prevailing. It says: -“There is a general consensus of opinion among practically -all witnesses, including members of the Interstate Commerce -Commission, representatives of shippers, and railway -officers, that the railways still make discriminations between -individuals, and perhaps to as great an extent as before. -In fact, it is stated by numerous witnesses that discriminations -were probably worse during the year 1898 than at -any previous time.</p> - -<p class='c007'>“It is claimed that direct rebates and secret rates are -still frequently granted; commissions are paid for securing -freight; goods are billed at less than the actual weight; -traffic within a State not subject to the Interstate Commerce -Act is carried at lower rates; allowances and advantages -are made in handling and storing, etc. Several -witnesses refer to the practice of shipping goods under a -false classification. Sometimes this is done without the -knowledge of the railways, but in other cases they apparently -connive. Thus fine hardware may be shipped as -some low-class kind of iron.</p> - -<p class='c007'>“The representatives of the railways declare that so long -as competition exists the attempt to get traffic by secret -<span class='pageno' id='Page_109'>109</span>rates must continue. It is thought generally that there -has been a considerable improvement in the situation during -the year 1899.... In the latter part of 1898, Messrs. -Cowen and Murray, receivers of the Baltimore and Ohio -Railroad, addressed a letter to the Interstate Commerce -Commission declaring that the practice of granting rates -below the published tariffs was so general as seriously to -reduce the revenue of the railroads. More than 50 percent -of the traffic, at least on certain roads, was affected. The -receivers expressed a determination to coöperate in the -enforcement of the law. Later, conferences were held -between the Interstate Commerce Commission and railway -officers, which led to a general attempt to reduce the extent -of the evil. Many witnesses, however, including representatives -of the railroads, think that the improvement is only -temporary, and that when the present rush of traffic has -ceased discriminating rates will be granted more and -more.”</p> - -<p class='c007'>The investigations of the last five years show that these -witnesses were right in thinking the cessation of hostilities -to be only a temporary truce.</p> - -<div class='chapter'> - <span class='pageno' id='Page_110'>110</span> - <h2 class='c005'>CHAPTER XVII.<br /> <span class='large'>THE ELKINS ACT AND ITS EFFECTS.</span></h2> -</div> - -<p class='c006'>The “Elkins Act,” approved Feb. 19, 1903, amended -the Interstate Act in some important particulars. It provides -that any failure to publish rates and charges, or any -departure from the published tariffs, or any offer or grant -of any discrimination, rebate, concession, or device of any -kind whereby transportation is obtained at a less rate than -the tariffs published and filed with the Commission, shall -be a misdemeanor of the corporation as well as of the -officers or agents concerned. Every shipper also who solicits -or accepts any such rebate, concession, or discrimination -is guilty of a misdemeanor. In each case, whether the -suit is against the railway company, or its officials, or a -shipper, the punishment is a fine of $1,000 to $20,000 for -each offence, the imprisonment clause of the Interstate Act -being repealed.</p> - -<p class='c007'>Under these provisions the railroad companies themselves -may be attacked, in addition to the suits against the guilty -officials provided for by the Interstate Act, and shippers -may be convicted by showing that by any device they have -obtained a lower rate than the published rate, without -proving that some one else paid more than the defendant, as -was formerly necessary.</p> - -<p class='c007'>The act also expressly authorizes the United States Circuit -courts to restrain by injunction or other appropriate -process any departure from published rates, or any discrimination -forbidden by law, without prejudice to the -<span class='pageno' id='Page_111'>111</span>bringing of suits for damages or other action under the -Commerce Act. And it further declares that “in proceedings -under this act and the acts to regulate commerce, the -said courts shall have the power to compel the attendance -of witnesses, both upon the part of the carrier and the -shipper, who shall be required to answer on all subjects -relating directly or indirectly to the matter in controversy, -and to compel the production of all books and papers, both -of the carrier and the shipper, which relate directly or indirectly -to such transaction; the claim that such testimony -or evidence may tend to criminate the person giving such -evidence shall not excuse such person from testifying or -such corporation from producing its books and papers, but -<em>no person shall be prosecuted or subjected to any penalty or -forfeiture for or on account of any transaction, matter, or -thing concerning which he may testify or produce evidence, -documentary or otherwise, in such proceeding</em>.”</p> - -<p class='c007'>This is considered one of the best railroad measures so -far enacted. It is said by many that direct rebates have -practically ceased since its passage, and some declare that -it has stopped all sorts of discriminations.</p> - -<p class='c007'>While Mr. Bacon, an important witness from Milwaukee, -was speaking to the Senate Committee, 1905, of which -Senator Elkins was chairman, the following conversation -took place regarding the Elkins Act.<a id='r160'></a><a href='#f160' class='c012'><sup>[160]</sup></a></p> - -<p class='c007'>“<span class='sc'>Senator Elkins.</span> The Pennsylvania Railroad has not -given a rebate since the act was passed, and they do not -want to. It has been a benefit to the railroads, don’t you -think so?</p> - -<p class='c007'>“<span class='sc'>Mr. Bacon.</span> It has benefited the railroads, by millions -of dollars.</p> - -<p class='c007'>“<span class='sc'>Senator Elkins.</span> I mean the good railroads.</p> - -<p class='c007'>“<span class='sc'>Mr. Bacon.</span> It will undoubtedly effect a saving of -upwards of a hundred million dollars a year.”</p> - -<p class='c007'><span class='pageno' id='Page_112'>112</span>Mr. Prouty of the Interstate Commission said to the -Boston Economic Club in March, 1905: “The Elkins Bill -is one of the most beneficent measures touching railway -regulation of recent times. I have no words of commendation -too strong for that measure; but this bill, which has -very largely stopped the payment of rebates, as such, was -a railroad measure, conceived by the railroads, passed by -the railroads, and in the interest of the railroads, and no -one thing in recent times has put into the treasuries of -railways of this country more money than that same -enactment.”</p> - -<p class='c007'>Senator Elkins who drew the bill is the political “boss” -of West Virginia. He is director of a railroad that belongs -to the Pennsylvania system and is otherwise identified with -railroad interests. He acted in harmony with leading -railroads in drawing the bill. In fact, it is said on high -authority that it was framed in the office of A. J. Cassatt, -President of the Pennsylvania Railroad. The law is in -many respects a good one, although there is a clause in it -which may protect the railroads from the consequences of -wrongdoing, and it is thought by many that the real effect -of the law has not yet become apparent. Railroad managers -do undoubtedly desire to protect themselves from -the importunities of shippers to whom they do not wish -to give concessions, and to be free from the danger of -imprisonment, and so far as possible from any danger, -in case they are caught giving preferences to persons or -companies in whose property they or their railroads have -a special interest. The Elkins Act accomplished all these -purposes. It is claimed that the words italicized in the -above quotation from the act will prevent the prosecution -of any officer or road on account of any cause in respect -to which they give evidence or produce books. In other -words, they can only be prosecuted where the discrimination -or departure from schedule rates can be proved without -their help. Commissioner Prouty says: “I have no -<span class='pageno' id='Page_113'>113</span>doubt that rebates to a greater or less extent are paid in -many parts of this country. And if it turns out, as the -railroads contend, that the disclosure by any officer of a -railroad gives the company its exemption under the Elkins -Bill your law is good for nothing. They can resume the -payment of rebates whenever they desire.”<a id='r161'></a><a href='#f161' class='c012'><sup>[161]</sup></a></p> - -<p class='c007'>The fact is, apparently, that for some months after the -act was passed the railroads in large measure discontinued -rebates and some other notorious forms of discrimination, -just as they did for some months after the Interstate Act -was passed in 1887. The abuses “grew up again afterwards, -and almost every 1st of January, from that time -down to this, these railroad gentlemen get together and -make a gentlemen’s agreement that they will quit and -reform and turn a new leaf and not do it any more. They -break down again and make a resolution again. They are -now under a good resolution.”<a id='r162'></a><a href='#f162' class='c012'><sup>[162]</sup></a></p> - -<p class='c007'>Some of the sweeping declarations of railway men and -others about discriminations, and especially about rebates, -are as follows:<a id='r163'></a><a href='#f163' class='c012'><sup>[163]</sup></a></p> - -<p class='c007'>“All stopped.” “Eliminated.” “Almost annihilated -since Elkins Law” (February, 1903). “Almost entirely -wiped out.” “Have known of no such payments for over -12 years.” “Do not know of any in last three years.” -<span class='pageno' id='Page_114'>114</span>“Have not had any for about 20 years.” “Never had -any.” “Know of none.” “Have been practically abandoned.” -“Past issue.” “Have no knowledge of.” “No -complaints of.” “None so far as I know.”</p> - -<p class='c007'>Some of the witnesses give the railways a clean bill of -character and even put a coat of whitewash over the record -of the Standard Oil from 1887 on. Mr. Hiland, head of -the traffic department of the Chicago, Milwaukee and St. -Paul, says: “Unjust discriminations and rebates have -ceased.”<a id='r164'></a><a href='#f164' class='c012'><sup>[164]</sup></a></p> - -<p class='c007'>Mr. Bird, Vice-President of the Gould lines, says: “I -believe there are no rebates paid.”</p> - -<p class='c007'>“<span class='sc'>Chairman.</span> And discriminations?</p> - -<p class='c007'>“<span class='sc'>Mr. Bird.</span> No secret discriminations. There may be -discriminations that are open and published in the tariffs.... -I do not believe that the Standard Oil Company has -received a rebate since 1887.... I do not believe that the -beef trusts are getting rebates.”<a id='r165'></a><a href='#f165' class='c012'><sup>[165]</sup></a></p> - -<p class='c007'>Mr. Brown, counsel for the Santa Fe, said: “My sole -purpose in appearing here is to put on record a sweeping -denial that the A. T. and S. F. Company has made any -discriminatory rates or paid any rebates.”<a id='r166'></a><a href='#f166' class='c012'><sup>[166]</sup></a></p> - -<p class='c007'>Mr. Biddle, traffic manager of the Santa Fe, was not -quite so sweeping. He said: “It is true that rebates have -been paid, although personally I have not known of any -such payments for over twelve years.”<a id='r167'></a><a href='#f167' class='c012'><sup>[167]</sup></a></p> - -<p class='c007'>A more impressive mass of negative evidence could -hardly have been secured, even if the Commission had -selected the witnesses with a view to their ignorance of -rebates and kindred manœuvres. It is peculiarly fortunate, -just at this time, to have the statements of so many who -seem to have refrained from associating with rebates or -<span class='pageno' id='Page_115'>115</span>seeing any discriminations, in view of the vigorous anti-rebate -remarks of President Roosevelt in his recent messages -to Congress, asking for further legislation to check -railroad abuses. The President is under the impression -that rebates and other evils still exist, but if the -Senate Committee can report to Congress that this is -a mistake it will be clear that the said new legislation -is not needed.</p> - -<p class='c007'>Unfortunately, however, the weight of evidence is against -those who affirm the conversion of the railroads to the ways -of virtue. The cessation of discriminations is denied by a -large number of authorities including railroad men of the -highest position.<a id='r168'></a><a href='#f168' class='c012'><sup>[168]</sup></a></p> - -<p class='c007'>James J. Hill, President of the Great Northern, says -discriminations still exist and must exist. He thinks discriminations -will never cease, and declares that railroads -“have to discriminate.”<a id='r169'></a><a href='#f169' class='c012'><sup>[169]</sup></a></p> - -<p class='c007'>Victor Morawetz, Chairman of the Executive Committee -of the Santa Fe and its chief counsel, says that discrimination -still exists and is “bound to exist” under present -conditions. Many things the traffic managers do are not -authorized by their superiors and would not be approved -<span class='pageno' id='Page_116'>116</span>by them, but it is understood that concessions are given -and must be given.<a id='r170'></a><a href='#f170' class='c012'><sup>[170]</sup></a></p> - -<p class='c007'>President Stickney of the Chicago and Great Western -says that prior to the injunctions against paying rebates -“it was understood among business men that schedules -were made for the small shippers and those unsophisticated -enough to pay the established rates,” and since the injunctions -the knowledge of the traffic directors has been exerted -in “the problem of how to pay rebates without paying -rebates.” They use “elevator fees” and “midnight schedules” -or sudden changes of tariff known beforehand to -favored shippers. These special tariffs “are of frequent -occurrence and result in greater injustice than secret -rebates.”<a id='r171'></a><a href='#f171' class='c012'><sup>[171]</sup></a></p> - -<p class='c007'>Mr. Rich, the general solicitor for the B. & M., said to -the Providence Economic Club, in the spring of 1905, that -75 percent of products is carried below the published -rates. He added that the rates are mostly open. The -published rates no doubt are open, but it is hard to believe -that the cut rates are mostly open. If they were, there -would be no reason for publishing rates other than those in -use. Every rate below the published tariff is a violation -of law. And it is not easy to see why the railroads -should risk multitudinous violations of law simply to -establish open rates which might be published without -interfering with any purpose that is honest. I quoted -Mr. Rich’s words to an excellent authority and he said, -“Cut rates are not open rates. Can’t make people believe -that.”</p> - -<p class='c007'>Senator Dolliver said:<a id='r172'></a><a href='#f172' class='c012'><sup>[172]</sup></a> “A famous railway president, -speaking in this city a month ago, stated that the whole -railway practice of America was honeycombed with secret -rebates and discriminations as late as last January.”</p> - -<p class='c007'>Professor Ripley says<a id='r173'></a><a href='#f173' class='c012'><sup>[173]</sup></a> that discriminations between -<span class='pageno' id='Page_117'>117</span>localities and between commodities through classification, -etc., are still serious evils.</p> - -<p class='c007'>Governor Cummins of Iowa said:<a id='r174'></a><a href='#f174' class='c012'><sup>[174]</sup></a> “So long as there is -competition among the railroads in securing business, so -long they will find some way of getting that business -through favors.”</p> - -<p class='c007'>Mr. C. W. Robinson, representing the New Orleans -Board of Trade, said: “The direct rebate has been stopped -by the Elkins law, but there still remains the indirect -rebate, or the almost innumerable forms of discrimination, -which are difficult to reach by legislation, and in the -practice of which some of the traffic managers are unquestionably -experts.”<a id='r175'></a><a href='#f175' class='c012'><sup>[175]</sup></a></p> - -<p class='c007'>The complaints made to the Interstate Commission in -the last few years<a id='r176'></a><a href='#f176' class='c012'><sup>[176]</sup></a> and the facts brought out in the -<span class='pageno' id='Page_118'>118</span>investigations of the Interstate Commission from March, -1903, to the present time, and in the Hearings of the Senate -Committee, 1905, abundantly confirm the opinions of these -witnesses.</p> - -<p class='c007'>The Elkins Bill became law in February, 1903. In -December of the same year the Interstate Commerce Commission -reported that they believed the payment of rebates -was largely discontinued, but that pressure upon the companies -to maintain published rates had “begotten a new -crop of expedients for the purpose of favoring particular -shippers.”<a id='r177'></a><a href='#f177' class='c012'><sup>[177]</sup></a> Private-car abuses and terminal-railway -abuses especially have “grown up much more intensely and -to an aggravated degree since the Elkins Act than ever -before.”<a id='r178'></a><a href='#f178' class='c012'><sup>[178]</sup></a> In 1902, in consequence of the exposure of -wholesale rebates in the dressed-meat traffic, etc., temporary -injunctions were issued against 14 leading railroads of the -West, and while the matter was still before the court the -Elkins Bill was passed, settling the injunction question in -<span class='pageno' id='Page_119'>119</span>favor of the Commission. The railroads, convinced that -rebates were dangerous, for the time at least, turned their -attention to methods of discrimination not so subject to -injunction or other judicial disorder. To these they have -given their main allegiance, though they have by no means -abandoned the rebate.</p> - -<div class='chapter'> - <span class='pageno' id='Page_120'>120</span> - <h2 class='c005'>CHAPTER XVIII.<br /> <span class='large'>THE WISCONSIN REVELATIONS.</span></h2> -</div> - -<p class='c006'>In 1903, as stated in a previous chapter, Governor La -Follette began an investigation of the railroads in Wisconsin, -in relation to illegal deductions from the gross earnings -returned by them as a basis for taxation. The investigation -covered the period from 1897 to 1903, and it was found -that $10,500,000 of illegal tax deductions had been made -in that time, about $7,000,000 of which was in the form -of unlawful rebates and discriminations. Every railroad -of any importance in the State had paid rebates every year -in large amounts both on passenger traffic and freight -business. Here is a table of the rebates paid in violation -of the Interstate Commerce Act and the Elkins Law by the -leading railways in Wisconsin, so far as brought to light by -the investigation:<a id='r179'></a><a href='#f179' class='c012'><sup>[179]</sup></a></p> - -<table class='table1'> - <tr><td class='c011' colspan='3'><span class='sc'>Illegal Rebates Paid to Shippers in Wisconsin, 1897–1903.</span></td></tr> - <tr> - <td class='c009'> </td> - <td class='c008'> </td> - <td class='c016'> </td> - </tr> - <tr> - <th class='c009'></th> - <th class='c017'><span class='sc'>Freight.</span></th> - <th class='c018'><span class='sc'>Passenger.</span></th> - </tr> - <tr> - <td class='c009'>Chicago, Milwaukee & St. Paul</td> - <td class='c008'>$1,346,237.</td> - <td class='c016'>$170,968.</td> - </tr> - <tr> - <td class='c009'>Chicago & Northwestern</td> - <td class='c008'>3,023,810.</td> - <td class='c016'>614,361.</td> - </tr> - <tr> - <td class='c009'>Chicago, St. Paul, Minneapolis & Omaha</td> - <td class='c008'>515,323.</td> - <td class='c016'>64,559.</td> - </tr> - <tr> - <td class='c009'>Wisconsin Central</td> - <td class='c008'>244,492.</td> - <td class='c016'>82,475.</td> - </tr> - <tr> - <td class='c009'>“Soo Line”</td> - <td class='c008'>464,041.</td> - <td class='c016'>39,807.</td> - </tr> - <tr> - <td class='c009'>Burlington</td> - <td class='c008'>366,105.</td> - <td class='c016'> </td> - </tr> - <tr> - <td class='c009'>Other Railroads</td> - <td class='c008'>158,677.</td> - <td class='c016'>489.</td> - </tr> - <tr> - <td class='c009'> </td> - <td class='c008'><hr /></td> - <td class='c016'><hr /></td> - </tr> - <tr> - <td class='c009'> </td> - <td class='c008'>$6,118,689.</td> - <td class='c016'>$972,661.</td> - </tr> -</table> - -<p class='c007'><span class='pageno' id='Page_121'>121</span>These figures represent only part of the rebates really -paid, and do not touch in any way the vast amount of -favoritism which does not take the rebate form nor appear -in any cash item.</p> - -<p class='c007'>Part of the Wisconsin rebates were paid on State business, -but far the larger part was on interstate traffic. The -Elkins Law, instead of putting an end to the payment of -rebates, as so many railroad men have declared, had no -effect whatever, apparently, on the volume of rebates paid. -Here is the monthly record of rebates paid in 1903 by one -of the principal railroads operating in Wisconsin:</p> - -<table class='table1'> - <tr> - <td class='c009'>January, 1903</td> - <td class='c016'>$37,000</td> - </tr> - <tr> - <td class='c009'>February</td> - <td class='c016'>57,000</td> - </tr> - <tr> - <td class='c009'>March</td> - <td class='c016'>47,000</td> - </tr> - <tr> - <td class='c009'>April</td> - <td class='c016'>36,000</td> - </tr> - <tr> - <td class='c009'>May</td> - <td class='c016'>25,000</td> - </tr> - <tr> - <td class='c009'>June</td> - <td class='c016'>13,000</td> - </tr> - <tr> - <td class='c009'>July</td> - <td class='c016'>101,000</td> - </tr> - <tr> - <td class='c009'>August</td> - <td class='c016'>32,000</td> - </tr> - <tr> - <td class='c009'>September</td> - <td class='c016'>46,000</td> - </tr> - <tr> - <td class='c009'>October</td> - <td class='c016'>9,000</td> - </tr> - <tr> - <td class='c009'>November</td> - <td class='c016'>666</td> - </tr> - <tr> - <td class='c009'>December</td> - <td class='c016'>2,032</td> - </tr> -</table> - -<p class='c007'>The Elkins Act went into effect February 19, 1903; yet -the rebates in February and March were larger than in -January; and the rebates for July were nearly three times -the January figure. It is clear, however, that when the -light of publicity was turned on by the investigation, which -began September 29, 1903, the rebate payments that could -be checked up on the books dropped from $46,000 in September -to $9,000 in October, $666 in November, and $2,032 -in December. Instead of paying cash rebates the railroads -began to issue a great many “midnight tariffs,” that is, rate -schedules printed on purpose to give favored shippers -advantages over others and then revoked or superseded -as soon as the purpose has been accomplished, so that the -<span class='pageno' id='Page_122'>122</span>midnight tariff has, in a different way, done exactly what -is done by the payment of the cash rebate.</p> - -<p class='c007'>The impotency of the Elkins Law is still further shown -by the fact that the total rebates paid by the railroads in -1903 were greater than the rebates of 1902. The Northwestern -road, for example, jumped from $212,075 rebates -in 1902, before the Elkins Law, to $410,476 in 1903, mostly -after the Elkins Act took effect.</p> - -<p class='c007'>We have seen in Chapter III how President Mosher of the -Northern Grain Company fought La Follette’s railroad reforms -because of his deep sympathy with, and appreciation -of, the rights of railroads that were paying his company -$30,000 a year in secret rebates. Another man who bitterly -opposed La Follette, denouncing him as “an inciter,” -a demagogue, etc., was an officer of one of the refrigerator -companies that carries beer for a big Milwaukee brewery. -At the very time this official condemned La Follette, his -company was receiving from one to three thousand dollars -a month in rebates from a single one of the Wisconsin -railways, in addition to the mileage profits on the cars. -No wonder the brewers and their allies opposed all -progressive railroad legislation when they were getting -$73,240 a year in mileage rentals, and many thousands -more in secret rebates or commissions from the Chicago, -Milwaukee, and St. Paul alone. These men were -strongly of opinion that there was law enough already.</p> - -<p class='c007'>An investigation in Minnesota a little before that of -Wisconsin showed precisely the same sort of facts, namely, -enormous amounts in rebates were paid by the Great Northern, -the Northern Pacific, and other Minnesota railroads. -But in the Minnesota cases, to forestall further agitation -and publicity, most of the railroads paid the additional -taxes demanded by the State.</p> - -<p class='c007'>The railroads do not by any means confine their rebate -operations to the States in which their lines are located. -The case of the Camden Iron Works, recently before the -<span class='pageno' id='Page_123'>123</span>Interstate Commerce Commission, shows that a railroad will -reach half across the continent with a rebate in its hand to -grasp important shipments. In this case the Northern Pacific -gave R. D. Wood & Co. of Philadelphia, the owners of -the Iron Works, a rebate of 5 cents a hundred on 1,500 -tons of iron pipe. The Great Northern, the Canadian Pacific, -the Delaware & Hudson, and other roads had agents on the -spot trying to get the business away from the Pennsylvania, -which would naturally have taken the shipment, but -the 5 cent rebate carried the day and the iron went via -the B. & O., the Great Lakes, and the Northern Pacific. The -rebate was paid by a check for $1,500, and no one but the -traffic managers knew of the transaction, which would probably -never have come out except for the complaint of a -traffic agent on the Pennsylvania, who had offered a rebate -of 1 cent a hundred but did not get the business and was -therefore blamed by his superiors.</p> - -<div class='chapter'> - <span class='pageno' id='Page_124'>124</span> - <h2 class='c005'>CHAPTER XIX.<br /> <span class='large'>THE COLORADO FUEL REBATES AND OTHER CASES.</span></h2> -</div> - -<p class='c006'>In the Colorado Fuel and Iron Case, investigated by the -Commission in 1904 and 1905, it was shown that the Santa -Fe has persistently violated the Interstate Act, the Elkins -Act, and the injunctions issued by the United States Circuit -Court. The Santa Fe tariff filed with the Interstate -Commission May 24, 1903, and in effect till November 27, -1904, made the rate on coal from the Trinidad district, -Colorado, to Deming, N. M., $4.05 a ton; but Mr. Biddle, -General Traffic Manager of the Santa Fe, testified that -during all this time $1.15 of the $4.05 was always paid -back by the railroad to the Colorado Fuel and Iron Company, -a concern in which the Standard Oil people are -largely interested. Similar favors were shown the Colorado -Company in respect to shipments from its mines -at Gallup, N. M., giving that company a decided advantage -over competitors, who were obliged to pay the full -rate.<a id='r180'></a><a href='#f180' class='c012'><sup>[180]</sup></a></p> - -<p class='c007'>It made a difference, also, who was to get the coal. The -Santa Fe carried Colorado Fuel and Iron Company coal to -the El Paso and Southwestern for $2.90 a ton, while charging -<span class='pageno' id='Page_125'>125</span>$3.45 a ton for hauling the same coal from the same -mine to the same point, Deming, when the billing was to -the Southern Pacific. The El Paso could get coal on a -rate of $2.90, while the Southern Pacific must pay $3.45 -and the published tariff rate was $4.05. Anybody on the -line of the El Paso who stood in with the management -could get the $2.90 rate, while his competitors might be -paying $4.05.</p> - -<p class='c007'>Mr. Biddle testified as follows, December, 1904, in answer -to the questions of Mr. Field: “I say the freight rate we -got from the Southern Pacific was $3.45 at the time we -were accepting $2.90 on coal destined to the El Paso and -Southwestern.”</p> - -<p class='c007'>“<span class='sc'>Mr. Field.</span> That is to say, at that time you were -charging the Southern Pacific Railroad Company $3.45 -per ton for transporting coal (to Deming), when you were -charging the El Paso and Southwestern Railroad Company -only $2.90?</p> - -<p class='c007'>“<span class='sc'>Mr. Biddle.</span> Yes, sir.</p> - -<p class='c007'>“<span class='sc'>Mr. Field.</span> And all upon a published tariff which -showed a rate of $4 to Deming?</p> - -<p class='c007'>“<span class='sc'>Mr. Biddle.</span> No; the arrangement we had with the -Southern Pacific was an agreement as to what they would -pay for their coal.</p> - -<p class='c007'>“<span class='sc'>Mr. Field.</span> You paid no attention whatever to the -published tariffs?</p> - -<p class='c007'>“<span class='sc'>Mr. Biddle.</span> I don’t know that we published a tariff -on Southern Pacific coal at all.</p> - -<p class='c007'>“<span class='sc'>Mr. Field.</span> When you published a tariff for the information -of the public and the Interstate Commerce Commission, -it was with the reservation that you might modify -that tariff to certain consumers as suited your business?</p> - -<p class='c007'>“<span class='sc'>Mr. Biddle.</span> It didn’t apply to coal when destined to -the Southern Pacific.</p> - -<p class='c007'>“<span class='sc'>Mr. Field.</span> That is another way of saying that it -didn’t apply when you didn’t want it to apply.</p> - -<p class='c007'><span class='pageno' id='Page_126'>126</span>“<span class='sc'>Mr. Biddle.</span> It means just exactly what I said it -meant. I said that the rate we published to Deming on -coal was published with the full knowledge that it did not -apply on coal destined to the Southern Pacific, or coal -going to points on the El Paso and Southwestern.</p> - -<p class='c007'>“<span class='sc'>Mr. Field.</span> With whose full knowledge?</p> - -<p class='c007'>“<span class='sc'>Mr. Biddle.</span> With my full knowledge.”</p> - -<p class='c007'>That is to say: The law requires all rates to be published -and adhered to, so that the Commission and the public may -know what rates are being charged. The traffic manager -publishes a rate on coal, knowing that he intends to give a -secret cut rate to special customers, and then testifies that -the secret rate is no breach of the published tariff or violation -of law because the tariff was published with his full -knowledge that he wasn’t going to stick to it. The law in -such case depends entirely on what the railroad manager -whispers to himself when he issues the tariff. If the manager -says to himself, “I intend to follow this tariff which -I’m sending to the Interstate Commerce Commission,” then -a rate lower than the tariff is in violation of the law; but if -the manager says, “I intend to give the Southern Pacific -and the El Paso lower rates than this tariff shows,” then -the tariff is issued with full knowledge that it doesn’t apply -to Southern Pacific and El Paso, and cut rates to Southern -Pacific and El Paso and their customers constitute no violation -of law.</p> - -<p class='c007'>The Caledonian Company was organized in 1888 to -operate a coal mine at Gallup, N. M., on the Santa Fe.</p> - -<p class='c007'>The company sold large quantities of engine coal to the -Santa Fe. The contract expired in 1898 or 1899, and was -not renewed, the parties not being able to agree on the -price; but the Santa Fe continued to buy more or less coal -from the Caledonian till 1901. Some time previous to the -expiration of the contract, the other mines at Gallup came -under the control of the Colorado Fuel Company. An agent -of the Colorado Company asked the Caledonian manager to -<span class='pageno' id='Page_127'>127</span>name a price on his property, but he declined to do so. -“Soon after the Colorado Company took possession of -these mines, the Santa Fe system stopped receiving engine -coal from the Caledonian Company.” The Caledonian had -a contract for engine coal with another road, the majority -of whose stock was owned by the Santa Fe. This contract -was also terminated in 1903, the manager of the road -stating that he did it, not because of any dissatisfaction, -but by direction of the purchasing agent for the Atchison.<a id='r181'></a><a href='#f181' class='c012'><sup>[181]</sup></a></p> - -<p class='c007'>The Caledonian sought other markets, but found itself -handicapped by discriminating freight rates. Coal from the -Colorado Fuel Company’s mines at Trinidad and at Gallup -was being supplied at a price which just about equalled the -freight rate alone from the point of production to destination. -For example, the rate on lump coal from Gallup to -Las Cruces was $5.65, and the coal was selling at the mine -for $1.60 to $2.50 per ton; yet Gallup lump coal from the -Colorado Fuel Company’s mines was being sold in Las -Cruces for $5.65 a ton, exactly what the rival company, -the Caledonian, would have to pay in freight. The Caledonian -shipped coal to Silver City, N. M., paying the published -rate, $5.90 a ton, while the Colorado Company was -able to deliver Gallup coal at Silver City at $5.75 total for -freight and cost of coal. This was in April, 1900. Later, -the Caledonian shipped to Silver City at a rate of $5.75 per -ton, just what the Colorado sold for, freight and all. As -Gallup, Silver City, and Las Cruces are all in New Mexico, -the Interstate Act does not apply to traffic between those -points; but “Mr. Bowie (manager of the Caledonian) testified -that he had made many shipments from Gallup to -El Paso, Tex., upon which he paid the published rate, -and that he found the same competitive conditions at El -Paso and at points in Arizona and Mexico which existed -at Silver City.”<a id='r182'></a><a href='#f182' class='c012'><sup>[182]</sup></a></p> - -<p class='c007'><span class='pageno' id='Page_128'>128</span>The result was that the Caledonian and other mines were -practically driven from the market, their business brought -to a standstill, and the Colorado Fuel Company obtained -a virtual monopoly of the trade that should have been -divided with these companies.</p> - -<p class='c007'>Before the Senate Committee, 1905, in answer to a question -by Senator Kean about the so-called discriminations -in the matter of the Colorado Fuel and Iron Company and -the Santa Fe Railroad, Mr. Hearne of the Colorado Fuel -Company said: “This matter has been brought about largely -by sensational newspapers.... The coal produced by the -Gallup people is inferior,<a id='r183'></a><a href='#f183' class='c012'><sup>[183]</sup></a> carrying not more than half the -heating power of our high-grade bituminous. If the railroads -have not extended to them the same rate they have -extended to us, I presume it is because the people at Deming -and El Paso, etc., do not want that fuel at any price.”<a id='r184'></a><a href='#f184' class='c012'><sup>[184]</sup></a> In -other words, the Gallup coal was so poor that the people at -Deming did not want it anyway, and so the railroad put a -prohibitive rate on it to keep the people at Deming from -buying it instead of the far superior Colorado coal which -the people were determined to buy anyway.</p> - -<p class='c007'>The Santa Fe used to own and operate coal mines, but in -1896 leased them to the Colorado Fuel and Iron Company -under a contract<a id='r185'></a><a href='#f185' class='c012'><sup>[185]</sup></a> supposed to cover the question of freight -rates. Afterward a circular in reference to coal rates was -<span class='pageno' id='Page_129'>129</span>issued from the central office of the Santa Fe in Topeka.<a id='r186'></a><a href='#f186' class='c012'><sup>[186]</sup></a> -It stated that coal originating at certain points (where -the Colorado Fuel and Iron Company had mines) would be -delivered when consigned to certain specified industries or -parties at prices covering both freight and cost of the coal, -which total prices might be, as we have seen, no greater -than the published freight rate alone. The circular was -headed: “This publication is for the information of employees -only, and copies must not be given to the public.”<a id='r187'></a><a href='#f187' class='c012'><sup>[187]</sup></a> -And it gave notice to Santa Fe agents that the Colorado -Company’s coal shipped to points on the Santa Fe was “to -be billed at figures furnished by the Colorado Fuel and Iron -Company which will include the freight rate and the price -of coal.”<a id='r188'></a><a href='#f188' class='c012'><sup>[188]</sup></a></p> - -<p class='c007'>The following questions of the I. C. C. counsel, Mr. -Field, and answers by Mr. Biddle, the general traffic manager -of the Santa Fe, are of interest in this connection:</p> - -<p class='c007'>“<span class='sc'>Mr. Field.</span> You did not advise the Commission that -the rate you made (on the Colorado Company’s coal) included -the price of the commodity?</p> - -<p class='c007'>“<span class='sc'>Mr. Biddle.</span> No.</p> - -<p class='c007'>“<span class='sc'>Mr. Field.</span> Why didn’t you?</p> - -<p class='c007'>“<span class='sc'>Mr. Biddle.</span> I didn’t consider it necessary.</p> - -<p class='c007'>“<span class='sc'>Mr. Field.</span> I ask you categorically if you didn’t -do it with the intention of deceiving the Interstate Commerce -Commission and the competitors of the Colorado Fuel -and Iron Company as to that rate.</p> - -<p class='c007'>“<span class='sc'>Mr. Biddle.</span> No, sir.</p> - -<p class='c007'><span class='pageno' id='Page_130'>130</span>“<span class='sc'>Mr. Field.</span> What was your purpose, Mr. Biddle?</p> - -<p class='c007'>“<span class='sc'>Mr. Biddle.</span> Well, we did it for business reasons.</p> - -<p class='c007'>“<span class='sc'>Mr. Field.</span> What were the business reasons? I want -you to tell me the reasons.</p> - -<p class='c007'>“<span class='sc'>Mr. Biddle.</span> We did it for reasons we did not consider -necessary to tell; on coal to intermediate points—the -rate that we found it necessary to make to points -reached by the El Paso and Southwestern.</p> - -<p class='c007'>“<span class='sc'>Mr. Field.</span> You say upon your oath now, that you -did not do it for the purpose of deceiving the Interstate -Commerce Commission or the competitors of the Colorado -Fuel and Iron Company?</p> - -<p class='c007'>“<span class='sc'>Mr. Biddle.</span> Whatever answer I may make here I -am making under oath.</p> - -<p class='c007'>“<span class='sc'>Mr. Field.</span> Do you say that is so?</p> - -<p class='c007'>“<span class='sc'>Mr. Biddle.</span> I repeat what I said.</p> - -<p class='c007'>“<span class='sc'>Mr. Field.</span> You did not intend to conceal from the -Interstate Commerce Commission the fact that that rate as -published included the price of the commodity?</p> - -<p class='c007'>“<span class='sc'>Mr. Biddle.</span> We did it for business reasons.</p> - -<p class='c007'>“<span class='sc'>Mr. Field.</span> I ask you for a categorical answer. Did -you or did you not intend to conceal from the Interstate -Commerce Commission the fact that that rate included the -price of the commodity?</p> - -<p class='c007'>“<span class='sc'>Mr. Biddle.</span> I decline to answer.”</p> - -<p class='c007'>In another part of the hearing, Mr. Field said to Mr. -Biddle: “Can you say, Mr. Biddle, how it happened that -you issued a circular to your subordinates in which you -said, with reference to these coal rates, ‘To be billed at -figures furnished by the Colorado Fuel and Iron Company, -which include the freight rates and the price of coal; the -rates issued in the regular tariffs to be the minimum’?”</p> - -<p class='c007'>“<span class='sc'>Mr. Biddle.</span> Yes, sir.</p> - -<p class='c007'>“<span class='sc'>Mr. Field.</span> Will you tell us?</p> - -<p class='c007'>“<span class='sc'>Mr. Biddle.</span> It is because the railroads—the Western -railroads particularly—I don’t know whether the Eastern -<span class='pageno' id='Page_131'>131</span>roads do it or not—have been engaged in the reprehensible -occupation of serving as a collecting agency for the coal -companies, and those particular instructions were given so -that the Colorado Fuel and Iron Company could sell coal to -John Smith at a given place and charge him $1.25 and -somebody else $1.50 for that same coal.”<a id='r189'></a><a href='#f189' class='c012'><sup>[189]</sup></a></p> - -<p class='c007'>When the document was presented in evidence before -the Interstate Commerce Commission, counsel for the railway -objected to its introduction on the ground that it had -been stolen.</p> - -<p class='c007'>Morawetz says that the rate agreement in respect -“to shipments to the El Paso and Southwestern was a -three-cornered arrangement made in New York in 1901 -between the Colorado Fuel Company, the Santa Fe, -and Phelps, Dodge & Co., who operated large copper -mines and controlled the El Paso and Southwestern -Railway.”<a id='r190'></a><a href='#f190' class='c012'><sup>[190]</sup></a></p> - -<p class='c007'>Paul Morton, who was then the head of the Santa Fe -traffic department, says that in 1901 the people interested -in smelting and mining in Southern Arizona and Northern -Mexico threatened to use Eastern coke or build a coal railroad -of their own unless lower prices were made on the -coal and coke they were receiving at El Paso and Deming. -They were large consumers, and their threat menaced a -traffic worth nearly a million dollars a year to the Atchison -system. To protect its interests the Santa Fe entered -into an agreement with the Fuel Company and the El Paso -and Southwestern people the terms of which were that the -Fuel Company was to supply coal at $1.15 a ton, and the -Santa Fe was to haul the coal to El Paso and Deming “at -the very low rate of $2.90 per ton, which was in reality a -division of rate, not usually published.” And “the Southwestern -people were to pay $4.05 for the coal which was -<span class='pageno' id='Page_132'>132</span>to be used by the railroad itself and the industries along its -line.”<a id='r191'></a><a href='#f191' class='c012'><sup>[191]</sup></a></p> - -<p class='c007'>This arrangement was, in view of the rates charged shippers -from other points and other consignees at El Paso and -Deming, a clear violation of the common law and the Interstate -Commerce Act. A Federal injunction was served on -the Santa Fe in March, 1902, forbidding departure from the -published rates, and the Elkins Bill was passed in February, -1903. The El Paso arrangement was not at the start a -defiance of injunction or the law of 1903, but became such -by its continuance after their issue. General Traffic Manager -Biddle and General Freight Agent Gorman sent out -general orders in March, 1902, and February, 1903, that the -law was to be obeyed, and that “no departure therefrom -will be permitted so far as this company is concerned,” -but the law was not obeyed nevertheless. A general order -of a railroad manager counter to the financial interests -involved does not seem to count any more than a Federal -injunction.</p> - -<p class='c007'>The El Paso agreement was by no means the only breach -of law in the case. Even the discriminations in respect to -shipments between New Mexico points were in direct violation -of settled principles of the common law.</p> - -<p class='c007'>The Commission found that the Santa Fe acted as agent -for the Colorado Fuel Company in collecting from its customers -the price of the coal itself along with the freight -rate;<a id='r192'></a><a href='#f192' class='c012'><sup>[192]</sup></a> that for over five years (July, 1899, to Nov. 27, 1904) -<span class='pageno' id='Page_133'>133</span>the railroad had paid the Colorado Fuel Company a rebate -of $1.10 to $1.25 per ton on shipments to Deming; that -the railroad and the Coal Company have “systematically -and continuously” violated the Interstate Commerce Act -of 1887 and also the Elkins Act of 1903; and that from -March 25, 1902, till Nov. 27, 1904 the railway had been in -“continuous disregard” of the order of the United States -Circuit Court (in a suit begun at the instance of the Interstate -Commission) enjoining the railway to observe its -published schedules of rates.<a id='r193'></a><a href='#f193' class='c012'><sup>[193]</sup></a></p> - -<p class='c007'>Commissioner Prouty says: “In all my experiences with -railway operations I never saw such barefaced disregard -of the law as the Santa Fe railroad and the Colorado Fuel -and Iron Company have manifested in this coal case. For -years the railroad company has received less than its published -rates from the Colorado Fuel and Iron Company -while its competitors have paid higher rates.”</p> - -<p class='c007'>The counsel, Judson and Harmon, employed by the Government -to examine into the “alleged unlawful practices -of the Santa Fe in the transportation of coal and mine -supplies” reported to the Attorney General, February 28, -1905, as follows: “From August, 1902, until December, -<span class='pageno' id='Page_134'>134</span>1904, the railway company continuously transported coal -for the Colorado Fuel and Iron Company at less than the -published rates then in force, from various points in Colorado -and elsewhere to El Paso, Tex., Deming, N. M., and -other places, to which such transportation was interstate -commerce.</p> - -<p class='c007'>“This was done by secret arrangement between the two -companies, under which the coal was apparently billed at -the published rate of freight, although in fact the price of -the coal was included. The railroad company collected the -amount shown by the billing, and paid over part of it to -the fuel company as the price of the coal, making the real -charge for transportation less than the published rate by -just that amount. At the same time the rates given and -charged other shippers were the published tariff rates -without any deduction.</p> - -<p class='c007'>“This plan, and the way it was carried out, plainly -indicate an intention to deceive the Government and the -public, and to enable the fuel company to gain a monopoly -of the coal supply at the points involved by giving them a -strong advantage over competitors in the actual cost of -transportation. The motive for thus favoring the fuel -company does not appear in the evidence thus far taken, -but the fact is clear.</p> - -<p class='c007'>“This secret arrangement with the fuel company involved -the carriage of hundreds of cars per month. The -concessions from the established rates must have amounted -to about a million dollars for the two and one-half years -during which they were granted; and it is incredible that -this scheme was devised and carried out by any authority -but that of the chief officers of the railway company, who -were in control of its traffic department. And it was the -duty of each and all of these officers to see that the injunction -(of March, 1902) was obeyed.”</p> - -<p class='c007'>The special counsel recommended that “the Atchison -Company and all its principal officers and agents who had, -<span class='pageno' id='Page_135'>135</span>during the period above named or any part thereof, power -and authority over traffic agreements and freight rates, be -arraigned for contempt of court.”</p> - -<p class='c007'>President Roosevelt has directed that proceedings for -contempt be taken against the companies in the Colorado -Fuel Case and the International Harvester Case, but will -not proceed against individual officers personally in any -case until the department is in possession of “legal evidence -of wilful and deliberate violation” of law on their part.</p> - -<p class='c007'>I went over the Santa Fe while these secret discriminations -were in full blast, and met President E. P. Ripley, -Vice-President Paul Morton, and other high officials, who -impressed me so favorably in our talks about rates, discriminations, -etc., that I wrote in my notebook: “I believe I -have found one honest railroad in America, honest at least -in intent, whatever deviations from principle the system -may force upon it.” Mr. Spearman evidently got a similar -impression, for he says: “The Santa Fe has eliminated -preferential rates entirely from its own traffic problems; -and this sturdy determination to put all shippers on a just -and equal footing, to maintain open and even rates, is the -keynote of President Ripley’s successful strategy.”<a id='r194'></a><a href='#f194' class='c012'><sup>[194]</sup></a></p> - -<p class='c007'>This is stronger than the impression I received, which -was that discriminations did exist and it was not thought -possible that they should cease to exist, so long as competition -continues, but that there was an earnest purpose to -eliminate them so far as possible. Notwithstanding the -Colorado Case and others mentioned hereafter I still think -that the present administration of the Santa Fe is on the -whole relatively very honest and very admirable.<a id='r195'></a><a href='#f195' class='c012'><sup>[195]</sup></a></p> - -<p class='c007'><span class='pageno' id='Page_136'>136</span>President Roosevelt was led to a similar conclusion by -the frank and manly stand taken by Paul Morton in his -testimony in the Dressed-meat Hearings, Jan. 7, 1902. In a -letter to Mr. Morton, June 12, 1905, the President says: -“At the time when you gave this testimony the Interstate -Commerce Law in the matter of rebates was practically a -dead letter. Every railroad man admitted privately that -he paid no heed whatever to it, and the Interstate Commerce -Commission had shown itself absolutely powerless to -secure this heed. When I took up the matter and endeavored -to enforce obedience to the law on the part of the -railroads in the question of rebates, I encountered violent -opposition from the great bulk of the railroad men and a -refusal by all of those to whom I spoke to testify in public -to the very state of affairs which they freely admitted to -me in private. You alone stated that you would do all in -your power to break up this system of giving rebates.” It -was this, the President says, that led him to invite Mr. -Morton to take a place in the Cabinet.</p> - -<p class='c007'>The high character and ability of Mr. Morton and President -Ripley and the fact that the Santa Fe management -seems to represent high-water mark in railroad honesty, -gives great importance to the Santa Fe cases, and the attitude -of her leading officers towards the law, and the principle -of impartial treatment of shippers.</p> - -<p class='c007'>Paul Morton is reported to have said to a representative -of the Chicago <cite>Daily News</cite>, December 31, 1904: “What -<span class='pageno' id='Page_137'>137</span>Mr. Biddle did was exactly right, in my judgment, and if I -had been in his place I should have done the same thing.” -And President Ripley is stated to have said to a reporter -for the <cite>Inter-Ocean</cite>, “It was not rebating. It was simply -a figure agreed upon by private contract. Mr. Paul Morton -was cognizant of it, and though his name may not be -affixed to the order, he was the man from whom Mr. Biddle, -the freight traffic manager, got authority to haul coal for -the Colorado Fuel and Iron Company on the terms named.”</p> - -<p class='c007'>“Did you also know of it, Mr. Ripley?”</p> - -<p class='c007'>“Why, yes, as I know of all of our business. I consider -it absolutely legitimate, and will do it again to-morrow if I -like.”</p> - -<p class='c007'>Knowing that serious misrepresentations have appeared -in the papers,—for example, that Mr. Morton was a stockholder -in the Colorado Fuel Company, and recreant to -Atchison interests, which was untrue, as Mr. Morton had -sold his stock in the Fuel Company and all its auxiliaries -when he left its employ before entering the service of the -Atchison in 1895—knowing the frailty of newspaper reports -I wrote to President Ripley and Paul Morton asking -if it were true that they had said Mr. Biddle did right in -making the arrangement with the Colorado Fuel Company in -respect to the rates to Deming, etc. They replied as follows:</p> - -<div class='nf-center-c0'> -<div class='nf-center c019'> - <div><span class='sc'>The Atchison, Topeka & Santa Fe Railway System.</span></div> - <div class='c003'><em>President’s Office.</em></div> - </div> -</div> - -<div class='lg-container-r c019'> - <div class='linegroup'> - <div class='group'> - <div class='line'><span class='sc'>Chicago</span>, August 22d. 1905.</div> - </div> - </div> -</div> - -<p class='c020'><span class='sc'>Dear Sir</span>,—I did say to the Press that Mr. Biddle’s -action in making the rate was exactly right. The whole -trouble arose from a mistake in our tariff printing department -in confusing the actual rate charged with the amount -to be collected at destination. It was our custom, and that -of all the other fuel roads in Colorado, to collect at destination -the price of the coal as well as the freight rate. Inasmuch -<span class='pageno' id='Page_138'>138</span>as the tariffs printed are a guide intended quite as much -for the information of our own agents as for the public, the -clerks included the price of coal in the tariff as a guide to -collecting agents, but it did not occur to them that the information -was liable to mislead the public, especially as it -was a well-known fact that no shipper except the Colorado -Fuel and Iron Company could possibly be interested. The -whole transaction was a perfectly innocent one so far as regards -any intent to injure any interests or to deceive the -public in any way, nor was any person injured by the transaction. -I think that all this will transpire and be recognized -by the court in the case now pending at Kansas City, -though, of course, I am not in position to anticipate a court -decision. The trouble with the whole matter was the fact -that Mr. Morton was a member of the Cabinet and that -certain portions of the Press made use of the incident for -the purpose of discrediting the Administration.</p> - -<p class='c020'>The matter was unfortunate in so far as it may have constituted -a technical violation of the Interstate Commerce -Law and of the Injunction, but that is the worst that can -be said of it.</p> - -<div class='lg-container-r c019'> - <div class='linegroup'> - <div class='group'> - <div class='line'>(<em>Signed</em>) <span class='sc'>E. P. Ripley.</span></div> - </div> - </div> -</div> - -<p class='c020'><span class='sc'>The Equitable Life Assurance Society.</span></p> - -<p class='c020'><em>President’s Office.</em></p> - -<div class='lg-container-r c019'> - <div class='linegroup'> - <div class='group'> - <div class='line'><span class='sc'>New York</span>, August 24, 1905.</div> - </div> - </div> -</div> - -<p class='c020'><span class='sc'>Dear Sir</span>,—Referring to your query relative to the -remarks alleged to have been made by me on December 31, -1904, to a reporter of the Chicago <cite>Daily News</cite>, I have -to say that although I do not now recall everything that -may have been said by me in conversations which were not -intended for publication, it is quite possible that I did -remark to some newspaper men that in my judgment Mr. -Biddle’s personal action in the case was entirely justifiable, -and exactly what I or any other railroad man would have -<span class='pageno' id='Page_139'>139</span>done under similar circumstances. The contract between -the Railroad Company and the Fuel Company was of itself -neither unlawful nor unbusinesslike. On the other hand, -it was perfectly defensible from a legal standpoint, as well -as being good business ethics.</p> - -<p class='c020'>The fault lay with the Railroad Company’s tariff bureau, -which failed to properly publish the tariff, which should -have shown that the published rate of $4.05 per ton -included the price of the coal ($1.15 per ton). There was -no discrimination in favor of the Colorado Fuel and Iron -Company; in fact, discrimination was impossible, because -there was no other shipper of coal in that territory.</p> - -<div class='lg-container-r c019'> - <div class='linegroup'> - <div class='group'> - <div class='line'>(<em>Signed</em>) <span class='sc'>Paul Morton.</span></div> - </div> - </div> -</div> - -<p class='c007'>There were, however, other mining companies in adjacent -territory, along the line of the Santa Fe in New -Mexico, and at Gallup there were competitors in the -same field. The same day that the Commission began -to investigate the Colorado Case complaint was made -about the rates from San Antonio, N. M. San Antonio lies -150 miles north of El Paso on the Santa Fe line from -Trinidad, which is 500 miles from El Paso. The rate paid -by the Fuel Company from Trinidad was $2.90 and the -rate from San Antonio had been $1.25. “Under this -adjustment of rates a coal operator at Carthage whose product -reached the iron of the Santa Fe at San Antonio had -been able to compete with the Colorado fields, and had -entered into a contract for furnishing the Mexican Central -Railway Company with its fuel. While that contract was -pending the Santa Fe advanced the freight rate from San -Antonio to El Paso from $1.25 to $1.50. By this action -the operator at San Antonio was forced to give up his contract -and go out of business.”<a id='r196'></a><a href='#f196' class='c012'><sup>[196]</sup></a></p> - -<p class='c007'>It seems clear that even our best railroads, while unwilling -to countenance graft and desiring to avoid all criminal -<span class='pageno' id='Page_140'>140</span>practices, see nothing immoral in granting whatever favors -or imposing whatever disadvantages may be deemed necessary -to forward the financial interests of the road.</p> - -<p class='c007'>The Santa Fe is by no means the only railroad that has -been kicking over the traces since the Elkins Bill was -passed. Mr. Hendrickson, Secretary of the Associated -Merchants of Cumberland, Maryland, told the Senate -Committee that he came “to complain of coal discriminations. -We are charged 15 cents more a ton to tide water -for our coal than is charged other mines in more distant -regions (50 to 75 miles further from market on the same -road), and we have a large amount of bituminous coal that -cannot be developed at the 15 cents differential.”</p> - -<p class='c007'>“<span class='sc'>Senator Dolliver.</span> Why do they make this differential -against you?</p> - -<p class='c007'>“<span class='sc'>Mr. Hendrickson.</span> I can only state that the Baltimore -and Ohio officials, when they were petitioned, said -that other districts have poorer coal than ours, a compliment -we did not appreciate under these circumstances; -and they object to letting our coal reach market as cheaply -as these districts which they claim have poorer coal. -Nevertheless, it shuts our region out entirely. It is practically -a confiscation of our coal values, not our coal, but coal -values, and that amounts practically to the same thing.”<a id='r197'></a><a href='#f197' class='c012'><sup>[197]</sup></a></p> - -<p class='c007'>The B. & O. made certain charges when coal was -loaded by tipple and exacted more if it was loaded in any -other way. This is an unreasonable discrimination against -all who do not load by tipple.<a id='r198'></a><a href='#f198' class='c012'><sup>[198]</sup></a> The Pere Marquette -Railway has been selling ice to the Armour Car-Line at $2 -a ton while charging other shippers $8 to $12 per ton.<a id='r199'></a><a href='#f199' class='c012'><sup>[199]</sup></a></p> - -<p class='c007'>The absorption of switching charges in some cases and -not in others constitutes an easy method of discrimination. -<span class='pageno' id='Page_141'>141</span>For example, at Cincinnati there is a large buyer of lumber -whose yard is on what is called “Hazen’s Switch.” To -get to this switch from the Louisville and Nashville Railroad, -cars must go over part of the tracks of the P. C. C. -and St. Louis Railway and the Cinn. L. & N. Railway. -These roads charge the Louisville and Nashville $6.50 to -$9 a car for switching. On lumber originating at some -points the shipper has to pay these switching charges in -addition to the freight; while on lumber from other points -the Louisville railroad pays the switching charges and the -shipper is favored to that extent.<a id='r200'></a><a href='#f200' class='c012'><sup>[200]</sup></a></p> - -<div class='chapter'> - <span class='pageno' id='Page_142'>142</span> - <h2 class='c005'>CHAPTER XX.<br /> <span class='large'>FREE CARTAGE, STATE TRAFFIC, DEMURRAGE, THE EXPENSE BILL SYSTEM, GOODS NOT BILLED, MILLING-IN-TRANSIT.</span></h2> -</div> - -<p class='c006'>In a recent St. Louis case it appears that the railroads were -paying 5 cents a hundred to transfer companies for carting -goods across the river from East St. Louis to the depots in -St. Louis. They paid the same amount to the Grant Chemical -Company for hauling their own goods across the river -and also to the make-believe transfer company of the Simmons -Hardware Company, the traffic manager of which -organized the company’s own teams into a little transfer -company on purpose to get 5 cents per hundred from the -railroads. Other shippers were refused the 5 cent teaming -allowance. The Interstate Commission held that the payments -to the Chemical Company and the burlesque Simmons -transfer company were unlawful rebates.<a id='r201'></a><a href='#f201' class='c012'><sup>[201]</sup></a></p> - -<p class='c007'>Traffic within a State not subject to the Interstate Commerce -Act is carried at low rates for favored shippers. -Sometimes the shipper pays the full interstate rates in consideration -of receiving preferences on shipments within the -State to which the Interstate Act does not apply. Allowances -and advantages are accorded in handling and storing. -Commissions are paid, and goods are billed at less than -actual weight. And goods are shipped under false classification -or to a false name under the “straw man” system. -This system is thus described by Mr. Gallagher, representative -<span class='pageno' id='Page_143'>143</span>of the Merchants’ Exchange of St. Louis: “Instead -of billing that stuff to the man I have sold it to I bill it to -a fictitious man, or straw man. On the bills he is the actual -shipper. I do not see him at all, don’t know anything -about him, but he bills the stuff to the man that I want it -to go to, my customer, and it will go through all right, and -by and by the straw man sends me a check for a rebate. -You cannot find him; at least, I have not been able to do -it. That was also described to me by a man who practices -it.”<a id='r202'></a><a href='#f202' class='c012'><sup>[202]</sup></a> Some shippers are allowed to let carloads lie 15 days -without demurrage, while others have to pay for the car -service they get.<a id='r203'></a><a href='#f203' class='c012'><sup>[203]</sup></a> In the West I found many instances of -this. In Butte, for example, one mining company does -not have to pay any demurrage, while other companies are -charged with demurrage.</p> - -<p class='c007'>Railway purchasing agents are instructed to buy supplies -from parties who are large shippers, and these agents buy -at prices which afford such shippers all the benefits they -would get from a rebate on the freight rates.<a id='r204'></a><a href='#f204' class='c012'><sup>[204]</sup></a> This is, in -fact, only another way of paying rebates. The allowance -of fictitious claims is still in vogue.<a id='r205'></a><a href='#f205' class='c012'><sup>[205]</sup></a></p> - -<p class='c007'>Abuse of the “rebilling privilege” or the “expense bill -system” is still in full bloom. Rebilling properly relates -to the reshipment of goods received in unbroken carload -lots, so as to make them complete a continuous trip at the -through rate from the point of origin to final destination. -But it appears from a case passed upon this year, 1905, by -the Supreme Court of Mississippi, that merchants in Vicksburg -receiving freight over the Vicksburg, Shreveport and -Pacific Railroad are allowed to use their “expense bills,” -showing the amount of freight received over that line, in a -way that enables them to get reduced rates. Within 90 -<span class='pageno' id='Page_144'>144</span>days of the date of any expense bill the holder can ship out -over that road an equal quantity of freight not necessarily -the same he had received, but anything he chooses. By -this means the Vicksburg merchants can get grain by -barge and ship it out at 3½ cents, while the merchants of -Meridian have to pay 10 cents on similar shipments, and -the low rate was not available either for merchants in -Vicksburg who did not deal with the said specially favored -associated line having the through rate.<a id='r206'></a><a href='#f206' class='c012'><sup>[206]</sup></a></p> - -<p class='c007'>In a still more recent investigation (July 1905) by the -Interstate Commission at Louisville, Ky., it appears that -on presentation of an expense bill for each car of grain -from St. Louis at any time within the preceding 90 days, -the Louisville dealer may ship an equal amount of grain -on to Atlanta at a rate 3 cents per hundred below the -tariff from Louisville to Atlanta. One day during the -hearing 67 expense bills were presented in evidence, some -of which had been altered and the rest duplicated and even -triplicated with the result of giving the guilty shippers an -unlawful advantage of 3 cents a hundred over their competitors -selling grain in the southeastern territory. Many -of these bills were admitted to be forgeries from beginning -to end, while others were altered by erasing the original -words and writing in others. For example, wheat was -sent as bricks by erasing the word “bricks” on an incoming -bill, writing in the word “wheat” and using the altered -bill to forward a car of wheat at the expense bill discount. -Every one of the bills in the bunch we are speaking of was -in favor of a single Louisville firm which does an immense -business in the Southeast.</p> - -<p class='c007'>In other cases goods are not billed right. Dealers have -been known to ship cutlery as iron bolts, and dynamite as -dried apples. False billing as to weight is practised both -in freight and express shipments. The carrier acts in -<span class='pageno' id='Page_145'>145</span>collusion with the shipper in some cases while at other -times the carrier is among the defrauded.</p> - -<p class='c007'>Sometimes large amounts of freight are sent without -being billed at all. “I know of a point,” said Mr. Davies -of Chicago, representing 70 fruit associations of that city, -“where 150 cases of strawberries were systematically -loaded on a car upon which there was never any freight -paid, and the rate was 21½ cents a crate.”</p> - -<p class='c007'>“<span class='sc'>Senator Kean.</span> How long ago was that?</p> - -<p class='c007'>“<span class='sc'>Mr. Davies.</span> A year or two ago. It is done to-day.</p> - -<p class='c007'>“<span class='sc'>Senator Kean.</span> Do you have knowledge of it?</p> - -<p class='c007'>“<span class='sc'>Mr. Davies.</span> Yes; and so can you, if you go around -the freight yards.</p> - -<p class='c007'>“<span class='sc'>Senator Kean.</span> Is this knowledge of yours a guilty -knowledge?</p> - -<p class='c007'>“<span class='sc'>Mr. Davies.</span> I just a moment ago told you not, and -further, I will offer to this committee the records of my -business.</p> - -<p class='c007'>“<span class='sc'>Senator Kean.</span> But you say you know these -things are being done and have made no complaint.</p> - -<p class='c007'>“<span class='sc'>Mr. Davies.</span> Haven’t I? I would like to show you -these papers that have been nursed by the Interstate -Commerce Commission for a year.”</p> - -<p class='c007'>Mr. Prouty of the Interstate Commerce Commission -says:<a id='r207'></a><a href='#f207' class='c012'><sup>[207]</sup></a> “I knew some years ago that a train-load of wheat -was transported from Minneapolis to Chicago for nothing. -There was simply no record of that shipment on the books -of the railroad.”</p> - -<p class='c007'>“<span class='sc'>Senator Cullom.</span> What object had they in doing -that?</p> - -<p class='c007'>“<span class='sc'>Mr. Prouty.</span> They wanted to prefer that man that -had the wheat. Instead of paying a rebate they carried -the shipment for nothing.”</p> - -<p class='c007'>The power to give or withhold the milling-in-transit privilege -is a serious means of discrimination. The Pennsylvania -<span class='pageno' id='Page_146'>146</span>Railroad, for example, grants this privilege to mills -west of Pittsburg, but denies it to millers at Harrisburg.<a id='r208'></a><a href='#f208' class='c012'><sup>[208]</sup></a> -The Commission decided that the allowance of the privilege -of milling-in-transit by a carrier to shippers in one -section must be without wrongful prejudice to the rights -of shippers in another section served by its line. But -the evidence in this case was too meagre and incomplete to -enable the Commission to make any order in the premises -involving the general extension of milling-in-transit privileges -into a territory where such privileges had not been -previously allowed.</p> - -<p class='c007'>By refusing to accord the milling-in-transit privilege<a id='r209'></a><a href='#f209' class='c012'><sup>[209]</sup></a> -to some when it is granted to others the railroads may -crush a mill more effectively than it could be done by a -hail storm in which each hailstone weighed a ton. The -big Atlantic Flour Mill at Beach and Green Streets, -Philadelphia, was rendered useless by the Pennsylvania -Railroad’s refusal to extend to it the milling-in-transit -privileges enjoyed by other Philadelphia mills.<a id='r210'></a><a href='#f210' class='c012'><sup>[210]</sup></a></p> - -<p class='c007'>Western roads give saw-mills operating on their lines -and having logging roads an allowance of 2 to 4 cents per -hundred lbs. on the through rates. Roads east of the -Mississippi decline to make any such allowance, so that -the Western mills enjoy an advantage of 60 cents to $1.80 -per 1000 feet in the through freight rates.<a id='r211'></a><a href='#f211' class='c012'><sup>[211]</sup></a></p> - -<div class='chapter'> - <span class='pageno' id='Page_147'>147</span> - <h2 class='c005'>CHAPTER XXI.<br /> <span class='large'>MIDNIGHT TARIFFS AND ELEVATOR FEES.</span></h2> -</div> - -<p class='c006'>“Midnight tariffs” or “flying tariffs,” changed while -you wait,<a id='r212'></a><a href='#f212' class='c012'><sup>[212]</sup></a> are used to give rebates and preferences all -wool and a yard wide, strictly gilt-edged and in accord -with the statutes made and provided for the publication -and observance of schedule rates.</p> - -<p class='c007'>When a big shipper gets ready to send a large amount -of freight the railroads will suddenly make lower rates, -publish them just in time to fulfil the law, and the moment -the shipment is made the lower rates are withdrawn. For -example a miller contracted for 17,000 bags of flour. At -400 to the car, 17,000 bags will make quite a string of -freight. He went to the railroad folks and got a cut rate -of 5 cents a hundred on that amount. They slapped in -one of these “midnight tariffs,” published it, and gave -notice of withdrawal just as soon as the contract was -filled.<a id='r213'></a><a href='#f213' class='c012'><sup>[213]</sup></a></p> - -<p class='c007'>In the spring of 1905, a grain merchant who owned large -elevators, accumulated about 20,000,000 bushels of corn. -When he got ready to ship, the railroads reduced the tariff -2 cents per bushel, so that he could ship at a low rate.<a id='r214'></a><a href='#f214' class='c012'><sup>[214]</sup></a></p> - -<p class='c007'><span class='pageno' id='Page_148'>148</span>In some cases discriminations are the result of <em>intentional -mistakes</em> in printing rate schedules. A tariff is printed with -a 3, perhaps, in place of an 8, so that a rate of 38 appears -as 33, or a rate of 82 as 32. After a few copies have been -printed and sent to favored shippers the error is conveniently -discovered and the schedule is corrected for all -ordinary shippers.</p> - -<p class='c007'>The payment of elevator or commission fees continues to -be a means of discrimination beyond the reach of the law -as it stands to-day. Some lines which have buyers on their -roads who own elevators at terminal points allow an elevator -charge or commission to their buyers, usually 1¼ cents -per hundred, which constitutes practically a rebate or preference -not accorded to other shippers. Other lines which -have no elevators pay a rebate to their buyers equal to the -elevator charge.<a id='r215'></a><a href='#f215' class='c012'><sup>[215]</sup></a></p> - -<p class='c007'>A judgment has been obtained for $5,600 damages in -favor of the Kellogg Elevator against the Western Elevator -Association and the four trunk lines—the New York -Central, the Erie, the Lackawanna, and the Lehigh—on -the ground of conspiracy to ruin the business of the Kellogg -Elevator by discrimination in freight rates in favor of -the elevators in the Combine. The charge was that the -railroads contracted to pay the elevator trust ½ cent per -bushel for all grain shipped on their rails from Buffalo, -whether it was elevated from lake vessels by the Elevator -Trust or not. So, in effect, the Elevator Trust was given a -rate of ½ cent per bushel cheaper than the Kelloggs could -get, and also that premium on the Kelloggs’ business. The -verdict of $5,600 was for three weeks’ operation of the conspiracy. -The Kelloggs claim that the annual damage to -them from discriminating rates amounts to $50,000 or -$75,000. The case is now pending on appeal to the Supreme -Court of New York.</p> - -<p class='c007'><span class='pageno' id='Page_149'>149</span>In the investigation now going on in Kansas City (July, -1905) it appears that some elevator men get double rebates, -while others get no allowances at all from certain roads. -E. O. Moffat said he got 1¼ cents a hundred from the -Union Pacific, Rock Island, Burlington, Santa Fe, Alton, -and Missouri Pacific, but got nothing from the Milwaukee. -That railway he believed paid an allowance to the -Simonds-Shields Company but refused to allow him anything, -though he is a heavy shipper.<a id='r216'></a><a href='#f216' class='c012'><sup>[216]</sup></a></p> - -<p class='c007'>M. H. McNeill, representing the Chicago and Great -Western, admitted that the custom was a senseless one -and a wrong one, but said it had been started at Omaha -and had to be adopted at Kansas City. E. P. Shields of -the Simonds-Shields Company was asked by Commissioner -Cockrell: “When such allowances are made are not opportunities -for discrimination and the granting of rebates -opened up?”</p> - -<p class='c007'>“Certainly,” he replied.</p> - -<p class='c007'>“I believe there are some abuses to-day regarding the -matter of allowances which ought to be corrected,” said -the witness.</p> - -<p class='c007'>“Do you believe double or triple allowances have been -made in Kansas City?” asked Mr. Barry.</p> - -<p class='c007'>“I don’t know of my own knowledge,” replied the witness, -“but I suspect that they have been.”</p> - -<div class='chapter'> - <span class='pageno' id='Page_150'>150</span> - <h2 class='c005'>CHAPTER XXII.<br /> <span class='large'>COMMODITY DISCRIMINATIONS.</span></h2> -</div> - -<p class='c006'>Unfair discriminations in respect to special commodities -are very common. The New Haven and Hartford charges -$80 a car on peaches from New York to Boston, 228 miles, -while the same peaches come from Georgia points to New -York, 1150 miles, for $162 a car. The Commission says -the $80 rate is arbitrary and unjust and that $50 a car would -be a reasonable charge.<a id='r217'></a><a href='#f217' class='c012'><sup>[217]</sup></a></p> - -<p class='c007'>The Atlantic Coast Line Railroad made its rate on -peaches depend on the valuation put on the fruit, in order -that by increase of rate in proportion to valuation, shippers -might be led to put low valuation on their shipments and -so provide the railways with an argument against paying -the real damages in case of accident or loss.<a id='r218'></a><a href='#f218' class='c012'><sup>[218]</sup></a></p> - -<p class='c007'>From some places shingles are carried at rates as low as -those applied to lumber, while shingle shippers at other -points pay more than the lumber rates. This is held an -unjust discrimination against shingles, and against the -places and shippers that pay the high rates.<a id='r219'></a><a href='#f219' class='c012'><sup>[219]</sup></a></p> - -<p class='c007'>Railroads make high rates on ties, higher than on lumber, -in order to prevent their shipment to other parts of the -country, and so diminish their value and lower their cost -to the discriminating railroad. The president of one railroad -<span class='pageno' id='Page_151'>151</span>stated the policy clearly: “We are simply following -what we consider our interest, which is to prevent the shipment -of tie lumber.”<a id='r220'></a><a href='#f220' class='c012'><sup>[220]</sup></a></p> - -<p class='c007'>Early this year, 1905, the South Side Elevated road of -Chicago wanted 400 carloads of ties. The blanket rate on -ties from the entire yellow pine belt to Chicago is 26 -cents per hundred lbs. On shipments originating between -Luzon, La., and Pearl, Miss., the Illinois Central made a -special tariff (March 22 and April 6, 1905), fixing the rate -on ties at 26 cents per tie, each tie to be billed at 130 -lbs. This was equivalent to a reduction of the rate to -20 cents per hundred lbs., and no shipper outside of the -favored region could compete in the Chicago market. It -is suspected that the party who got the Elevated contract -knew beforehand that the railroad would issue this special -tariff, and was therefore able to underbid competitors in -perfect safety.<a id='r221'></a><a href='#f221' class='c012'><sup>[221]</sup></a></p> - -<p class='c007'>A rate of 90 cents a ton is charged on coal for a special -use such as railroad supply, while the same coal must pay -$1.85 between the same points if intended for manufacturing -or other industrial domestic use.<a id='r222'></a><a href='#f222' class='c012'><sup>[222]</sup></a></p> - -<p class='c007'>It is unjust discrimination to charge more for carrying -cattle and hogs than for carrying packing-house products, -and the desire of the carrier to get more business by so -doing is no excuse.<a id='r223'></a><a href='#f223' class='c012'><sup>[223]</sup></a></p> - -<p class='c007'>The railroads have carried dressed meats from Omaha to -Chicago at 18½ cents, while charging 23½ cents on live-stock -from Iowa points nearer Chicago. The packer could buy -the cattle at Fort Dodge, Iowa, ship them to Omaha, kill -them and ship the dressed carcasses to Chicago, cheaper -than the live-stock owner at Fort Dodge could ship the -cattle to Chicago. Some years ago on arbitration, Mr. -<span class='pageno' id='Page_152'>152</span>Fink and Judge Cooley being the arbitrators, it was decided -that the fair ratio between live-stock and dressed -meats from Chicago to New York would be 26 cents per -hundred for live cattle, and 45 cents for the dressed -carcass. But the railroads have reversed this relation, -although the Interstate Commerce Commission has decided -that the rate on dressed meats should be higher than on -live-stock.<a id='r224'></a><a href='#f224' class='c012'><sup>[224]</sup></a></p> - -<p class='c007'>Recently, January 1905,<a id='r225'></a><a href='#f225' class='c012'><sup>[225]</sup></a> the Commission has reaffirmed -its decision of 1890 and held that it is unlawful to charge -more for transporting live-stock from Missouri River points -and St. Paul to Chicago than for carrying packing-house -products between the same points, but the Beef Trust -cares nothing for the opinions of Judge Cooley nor for the -orders of the Interstate Commerce Commission, and the -Trust controls the railroads.</p> - -<p class='c007'>On shipments from Chicago east to New York the rates -are 28 cents per hundred and 45 cents on dressed beef. -Formerly the same rule applied in the West, but when the -Beef Trust began to build up great packing-houses at -Omaha, Kansas City, and St. Paul, they wanted to make -the rates on cattle from the West to Chicago higher than -the rates on beef, so as to force live-stock to come to their -stockyards on the Missouri River where they had a practically -absolute monopoly, and the railroads obeyed their -behest. Shippers fought the change, and in 1890 the Interstate -Commission ordered the railroads to desist from -charging more for live-stock products than for packing-house -products. The railroads did not dare to raise Armour’s -rate on dressed beef, so they reduced the live-stock -rate to 23½ cents, the same as the rate for dressed meats. -<span class='pageno' id='Page_153'>153</span>Armour then demanded and received a rebate of 5 to 8 -cents a hundred lbs. on packing-house products. The -rebate was secret at first, but after the Elkins Bill was -passed the beef men made a contract with the Great -Western road at the rate of 18½ cents and the rate was -published. The cattle rate remained at 23½ cents so that -Armour and his railroad allies were again in open defiance -of the orders of the United States Government issued -through its Interstate Commerce Commission. The new -decision of the Commission, January, 1905, requiring the -railroads to charge more for live-stock than for live-stock -products has not been obeyed and is not likely to be.<a id='r226'></a><a href='#f226' class='c012'><sup>[226]</sup></a></p> - -<p class='c007'>“Could anything more clearly show the power of the -Trust,” says Mr. Baker, “than this reversal of the order of -rate-making as manifested in the tariffs east of Chicago, so -that beef, the high-priced product, is shipped at 18½ cents, -while cattle, the low-priced product, is shipped at 23½ cents, -simply to enable the Trust to close the Chicago market—the -best market in the country for export cattle—to thousands -of western cattle growers? They cannot afford to -ship live-stock to Chicago at 23½ cents when the Trust can -ship the products of the same cattle, weighing only 60 or -70 percent as much as the live animal, at 18½ cents. They -are therefore compelled to ship to Missouri River points -where the Beef Trust is in absolute control.”</p> - -<p class='c007'>A rate of $1.25 per hundred lbs. on oranges from California -to points on and east of the Missouri River, while -lemons are carried for $1 to the same points—is held -<span class='pageno' id='Page_154'>154</span>unreasonable.<a id='r227'></a><a href='#f227' class='c012'><sup>[227]</sup></a> A higher charge on rye and barley than -on wheat is unjust.<a id='r228'></a><a href='#f228' class='c012'><sup>[228]</sup></a></p> - -<p class='c007'>Western millers complain that the discrimination between -flour and wheat on shipments to the East is causing them -much injury and will put them out of business. The Commission -decided that the difference should not exceed 2 -cents a hundred, but it has no power to enforce its order -and “frequently for considerable periods there is very -great discrimination between the rates on flour and the -rates on wheat.”<a id='r229'></a><a href='#f229' class='c012'><sup>[229]</sup></a></p> - -<p class='c007'>Railroads can discriminate against a whole industry by -advancing rates on particular commodities above the fair -level, as illustrated in the recent advances on hay and -lumber.<a id='r230'></a><a href='#f230' class='c012'><sup>[230]</sup></a></p> - -<div class='chapter'> - <span class='pageno' id='Page_155'>155</span> - <h2 class='c005'>CHAPTER XXIII.<br /> <span class='large'>DISCRIMINATION BY CLASSIFICATION.</span></h2> -</div> - -<p class='c006'>The intricacies of classification afford boundless opportunity -for favoritism. Classification is always more or -less arbitrary by necessity, and is frequently more arbitrary -than necessary. One industry or wholesale trade is often -charged two or three times as much as another for the -same service. The New York Railroad Commission found -the railroads charging twice as much on dry goods as on -coffee or sugar and protested against the rule as utterly -indefensible, but the railroads refused to comply with the -request for a change. Iron and coal cost less to transport -than grain, yet the ton-mile rates on iron and coal from -Pittsburg have been at times for years together from 2 to -5 times the rates on grain from New York to Chicago.</p> - -<p class='c007'>In 1890 the Interstate Commerce Commission ordered the -railroads to transfer soap from the 5th to the 6th class. In -1900 the railroads changed it back to 5th class in carload lots, -and from 4th to 3d class in less-than-carload lots, but if -shipped in mixed lots with dressed beef it goes as 5th class. -So that Armour, Swift & Co., of the Beef Trust, have been -able to ship soap in less-than-carload lots at much lower -rates than their competitors.<a id='r231'></a><a href='#f231' class='c012'><sup>[231]</sup></a> The Commission ordered the -roads to cease their excessive discrimination on less than -carload lots, etc. The roads refused to obey. The Circuit -Court has sustained the order of the Commission.</p> - -<p class='c007'><span class='pageno' id='Page_156'>156</span>Under the Illinois Central tariffs at one time it made a -difference of $40 a car if a man shipped a peck of potatoes -in a car of 16,000 lbs. of strawberries. If there were no -potatoes in the car so that it was not a mixed load, it cost -$40 more than if there were a peck of potatoes in with the -strawberries.<a id='r232'></a><a href='#f232' class='c012'><sup>[232]</sup></a></p> - -<p class='c007'>The classification of castor oil on the Lake routes affords -a curious example of the freaks of tariff classing. Vegetable -castor oil is 5th class, or 16½ cents a hundred, from -Cleveland to Chicago, while mineral castor oil takes a rate -of 25 cents a hundred.<a id='r233'></a><a href='#f233' class='c012'><sup>[233]</sup></a></p> - -<p class='c007'>The law has not yet definitely touched the favoring of -large shippers by excessive difference in the rates on carloads -and less than carloads. There is not more than 5 percent -difference in the cost of transporting goods in carload -lots and less-than-carload lots, and yet the rates vary from -30 to 80 percent, as a rule, and sometimes 150 percent.<a id='r234'></a><a href='#f234' class='c012'><sup>[234]</sup></a></p> - -<p class='c007'>In a famous case three years ago, involving the rates on -400 commodities from the Middle West to the Pacific Coast, -the Commission held that a differential between carloads -and less than carloads, which is at once more than 50 cents -per hundred and more than 50 percent of the carload rate, -is <i><span lang="la" xml:lang="la">prima facie</span></i> excessive, and puts the railroad on the defensive -to show special reason why so great a difference should -be made.<a id='r235'></a><a href='#f235' class='c012'><sup>[235]</sup></a> The difference between the carload rates and -less-than-carload rates, involved in this complaint, was held -to be excessive in many cases.</p> - -<p class='c007'>On the Yazoo and Mississippi Railroad and the Illinois -Central, 1 horse can go 667 miles for $36 and 4 horses pay -$99, while 25 horses can take the trip together for $100. -This encourages social habits. The first horse is billed at -<span class='pageno' id='Page_157'>157</span>2,000 lbs. no matter what he really weighs; the second is -billed at 1,500 lbs.; and each additional animal counts -1,000 lbs. The rate is double first-class, or $1.80 per hundred, -which the Commission says is twice the fair rate.<a id='r236'></a><a href='#f236' class='c012'><sup>[236]</sup></a></p> - -<p class='c007'>In a recent case it appeared that the Texas and Pacific -was charging 42½ cents per hundred lbs. on cattle from -Fort Worth to New Orleans, and $15 a car additional on a -shipment of less than ten carloads. This addition of $15 -a car was held unreasonable.<a id='r237'></a><a href='#f237' class='c012'><sup>[237]</sup></a> For 17 years the road made -a much lower rate—34 to 40 cents per hundred lbs., without -any $15 a car additional. In March, 1903, the rate -was raised to 42½ cents, and in October of the same year -the additional charge of $15 a car was imposed. The distance -is 500 miles. The distance from Fort Worth to -Kansas City is about the same, while to St. Louis it is -700 miles. The rate on cattle from Fort Worth to Kansas -City is 36½ cents, and to St. Louis 42½ cents, without any -$15 addition. The Commission held the $15 charge to -be an unjust discrimination between the large and small -shippers, and against New Orleans in favor of St. Louis.</p> - -<p class='c007'>Discriminative rates are made oftentimes without any intent -to prefer one shipper to another, but simply to make -things move. For example, a business man of Greensboro, -N. C., wanted to build a smoke-stack of New Jersey brick, -but the rates from New Jersey were too high. “A quotation -was made me by the stack builder, whose office is -in New York, and I remarked to him, ‘That price is -prohibitive; I cannot pay that price for that stack.’ He -said, ‘That is the best I can do; but if you will tell me -what you can afford to pay for that stack in competition -with home-burned brick, I will see what I can do with the -railroad people.’ He wanted to know how soon it would -be necessary for him to give me a reply, and I said, ‘I -want to know within ten days.’ He said, ‘All right; I -<span class='pageno' id='Page_158'>158</span>will take it up with the railroad people.’ His quotation -included the delivery of the brick and the erection of the -stack at my plant. It would require something like 50 -carloads of brick to build that stack. Within a week he -had his price revised, and gave me a satisfactory quotation -and took my contract for the stack.”<a id='r238'></a><a href='#f238' class='c012'><sup>[238]</sup></a></p> - -<p class='c007'>The railroads, having regard to what the traffic would -bear, gave the builder a special rate in order that the -New Jersey brick might move over their lines to North -Carolina.</p> - -<div class='chapter'> - <span class='pageno' id='Page_159'>159</span> - <h2 class='c005'>CHAPTER XXIV.<br /> <span class='large'>VARIOUS OTHER METHODS.</span></h2> -</div> - -<p class='c006'>Railroads are in the habit of giving special rates on stuff -sent over their lines for other roads. “It is done,” says -one of the leading traffic managers of the country, “on -everything that is handled,—supplies, coal, and material.”<a id='r239'></a><a href='#f239' class='c012'><sup>[239]</sup></a> -This enables any one who stands in with the management -of a railroad to have coal, etc., billed at low rates to the -railroad for him.</p> - -<p class='c007'>The routing of freight is the source of a double discrimination. -Connecting lines in some cases pay shippers -to route the goods over their roads, while in other cases -the connecting lines pay the rebates to the originating line, -or make an agreement with it for reciprocal favors in the -routing of freight.<a id='r240'></a><a href='#f240' class='c012'><sup>[240]</sup></a> Shippers receiving rebates from a -connecting line can afford to pay the originating road or -its clerks to route the goods over the said connecting line. -Mr. Morawetz says it is customary for shippers to pay -clerks in the routing department $5 or $10 to route the -goods the way the shipper desires. Or it is done by giving -theatre parties or presents to wives and daughters.<a id='r241'></a><a href='#f241' class='c012'><sup>[241]</sup></a></p> - -<p class='c007'><span class='pageno' id='Page_160'>160</span>In the California Orange Routing Case (132 Fed. Rep. -829) the United States Circuit Court decided that an -agreement between railroads as to routing, whereby the -apportionment of freight to connecting roads is affected, -is in the nature of a traffic pool and comes within the prohibition -of pooling, Section 5, of the Interstate Act.</p> - -<p class='c007'>The Interstate Commission held that the regulations of -the Southern Pacific and Santa Fe, reserving to themselves -the right of routing, were unlawful under the discrimination -clauses, but the court did not decide this point. (I. C. C. -Rep. 1904, p. 78.)</p> - -<p class='c007'>Mr. Ferguson says the private car-lines “sell the tonnage -to the highest bidding connecting line. It is purely a matter -of bargain and sale.”<a id='r242'></a><a href='#f242' class='c012'><sup>[242]</sup></a></p> - -<p class='c007'>Unfair distribution of cars is an easy means of discrimination. -Failure to furnish cars to complainant for shipments -of grain, while supplying more than a fair proportion -of cars to a competing shipper in the same town, is as -effective as any rebate could be.<a id='r243'></a><a href='#f243' class='c012'><sup>[243]</sup></a></p> - -<p class='c007'>Railways have refused cars to persons desiring to ship -railroad ties which the railways did not wish to have go -out of their own field.<a id='r244'></a><a href='#f244' class='c012'><sup>[244]</sup></a></p> - -<p class='c007'>A Michigan railroad neglected to furnish the Richmond -Elevator Company with cars in which to ship the hay the -company had contracted to deliver, although the railroad -was all the while supplying other shippers with cars for -hay and straw, etc.<a id='r245'></a><a href='#f245' class='c012'><sup>[245]</sup></a></p> - -<p class='c007'>The Pennsylvania Railroad has been recently sued by -independent coal companies along its line for $2,000,000 -damages for refusal to furnish cars in fair proportion. It -is charged that the mines in which the railroad company -<span class='pageno' id='Page_161'>161</span>is interested have had all the cars they needed, while the -independents have not received cars enough to fill their -orders; in consequence of which great loss has been inflicted -upon them and their business diverted to the railway -mines.</p> - -<p class='c007'>The B. & O. was also sued for refusing to furnish cars -to the Glade Coal Company, while supplying cars to competing -mines.<a id='r246'></a><a href='#f246' class='c012'><sup>[246]</sup></a></p> - -<p class='c007'>In the case of the West Virginia Northern Railroad<a id='r247'></a><a href='#f247' class='c012'><sup>[247]</sup></a> the -Circuit Court issued a mandamus ordering the road to cease -from discrimination against the Kingwood Coal Company -in the supply of cars and to furnish said company with a -specified percentage of cars. In affirming this decision the -Circuit Court of Appeals said:</p> - -<p class='c007'>“It is insisted that the court had no power in a proceeding -of this character to fix the percentage of cars the relator -should have, and to command that such percentage of cars -should be furnished to the relator. The acts of Congress -forbade discrimination and made it unlawful to give any -undue or unreasonable preference or advantage to particular -persons, companies, corporations, or localities, or any -particular description of traffic, or to subject them to any -undue or unreasonable prejudice or disadvantage in any respect -whatsoever, and vested jurisdiction in the circuit and -district courts to proceed by mandamus as a cumulative -remedy for violations of the statutory provisions. We -are unable to accept the view that Congress intended to -confine the scope of the writ to admonition merely, or to a -general command to desist from discrimination, rather than -from the particular action in which the discrimination consisted. -By the findings, the delivery to the relator of any -less than 31 percent of the supply amounted to unlawful -<span class='pageno' id='Page_162'>162</span>discrimination, and the judgment of the court did no more -than to correct it.”</p> - -<p class='c007'>Sometimes it is the denial of a switch, that blocks the -independent; for example, the railroads controlled by the -coal pool refused to put in a switch for the Johnson coal -mine or to permit the company to put one in until suit to -forfeit its charter for refusing equal opportunities to shippers -was begun in the Ohio Supreme Court. Then the -switch was put in.</p> - -<p class='c007'>The Coal Combine and its railroads have persistently -pursued the policy of crushing smaller rivals by denying -them transportation facilities.</p> - -<p class='c007'>An exasperating form of discrimination near of kin to -this refusal of cars is the refusal directly or indirectly to -take shipments for certain persons or to certain points. -The Hope Cotton Oil Company operates a mill at Hope, -Ark., for the manufacture of cotton-seed oil. It desired to -buy seed at various points on the Texas and Pacific Railroad. -This seed could only reach the mill by passing over -the Texas and Pacific to Texarkana and from there to -Hope by the St. Louis, Iron Mountain and Southern Railroad. -The published rate from the points in question to -Texarkana was 12½ cents per hundred, and 5 cents from -Texarkana to Hope. After receiving this information the -agent of the Hope Company bought 49 carloads of seed on -the line of the Texas and Pacific, intending to send them to -Texarkana on the 12½ cent rate and from there to Hope -on the 5 cent rate. Seventeen cars were sent in this way. -But when the General Freight Agent of the Texas and -Pacific ascertained what was being done, he refused to -allow the shipments to continue, insisting that the seed -must take the broad joint rate of 67 cents applicable to -class A in which cotton seed belonged. Under his orders -the station agents on the Texas and Pacific refused to bill -the cars in any way to Texarkana on the published local -rate of 12½ cents. The 67 cent rate amounted to $13.40 a -<span class='pageno' id='Page_163'>163</span>ton on seed which only cost $14 a ton, and to insist on -such a rate the Commission says “was for all practical -purposes to decline to receive the cotton seed for shipment -on any terms.”<a id='r248'></a><a href='#f248' class='c012'><sup>[248]</sup></a> The secret of the situation was that the -Texas and Pacific did not want the cotton seed to go off of -its line. If shipped to Texarkana mills or other mills on -its line the products would find their way to market over -that road, while if manufactured at Hope this would not -probably be the case.</p> - -<p class='c007'>Denying a private switch to one party while providing -such facility for a competing dealer<a id='r249'></a><a href='#f249' class='c012'><sup>[249]</sup></a> may amount to a -preference similar to that resulting from free cartage.</p> - -<p class='c007'>A discrimination in the place of delivery of freight may -work serious injury to a shipper. For example, D. W. -Miner, a dealer in beef and pork products at Providence, -complains to the Interstate Commerce Commission, July, -1905, that the New Haven road refuses to deliver his merchandise -at the Canal Street yard where his place of business -is located, carrying his freight half a mile beyond, -while delivery is made to his competitors at the Canal -Street yard.</p> - -<p class='c007'>Sometimes railroads discriminate even on long hauls in -interstate traffic by taking advantage of the fact that the -Interstate Commerce Act does not apply to State traffic. -They take the car across the State line on a “mem.-bill,” -then draw a new bill of lading marked “State Business,” -and then pay the rebate without fear of disagreeable -consequences.</p> - -<p class='c007'>In other cases the full freight is charged on the -way-bill, but a fictitious entry is made in the prepaid -column which is to be subtracted from the total amount -of charges when the bill is collected. If the freight on -a car amounted to $90, and $15 were entered in the prepaid -<span class='pageno' id='Page_164'>164</span>column, $75 would be collected and the consignee -would be in the same position as if he had received a rebate -of $15 on the car.</p> - -<p class='c007'>Another method, akin to this, is to give the local agent -at the station of delivery power to correct the way-bill, or -deduct a certain percentage from every bill presented to -the favored shipper. The agent forwards the amount collected -as full payment, correcting his accounts so as to give -himself the necessary credit, which is O. K.’d by the auditor -of the road on his next visit to the station.</p> - -<p class='c007'>Large payments are made by some railroads “to encourage -new industries.” They have the example of cities -and States and of the nation to justify appropriations for the -establishment of infant industries and development of the -country, but they abuse the principle by making it a cover -for payments which are really rebates to favored shippers. -Some of the “new industries,” or infant undertakings, -which the Wisconsin investigators found were being “encouraged” -by cash contributions from the railroads, have -been established and prosperous for 25 or 30 years, one of -them being founded away back in 1873 and others in the -eighties.</p> - -<p class='c007'>Sometimes the railroads make a low rate, joint or single, -on certain goods when intended for a specific purpose, -thereby limiting the low rate to certain favored shippers. -For example, in a recent case decided on complaint of the -Capital City Gas Company the railroads had made a joint -rate of 90 cents per ton on bituminous coal from Norwood, -N. Y., to Montpelier, Vt., when intended for railroad supply, -while the ordinary combination rate of $1.85 per ton applied -to such coal carried between the same points and -used for manufacturing or any other industrial or domestic -purpose. This was held by the Commission to be an unlawful -discrimination, on the ground that it is not permissible -under the Interstate Commerce Act for two or more -carriers to establish a joint through rate less than the sum -<span class='pageno' id='Page_165'>165</span>of their locals, which shall be applicable only to a particular -shipper, or class of shippers, while denying such low rate to -other shippers of like traffic between the same points.<a id='r250'></a><a href='#f250' class='c012'><sup>[250]</sup></a></p> - -<p class='c007'>A method of discrimination that has spread enormously -in the last year is to pay large salaries or commissions to -traffic agents located at important points, on the understanding -that these traffic agents shall divide their salaries -or commissions with favored shippers. This is much safer -than paying rebates or commissions direct to the shipper, -and is one of the most difficult forms of discrimination to -overcome. In the recent investigations in Wisconsin and -other States this method has been found in frequent use, -along with underbilling and underweighing of freight, the -allowance of cartage or switching charges to favored shippers, -permission to hold cars as a means of storage for considerable -time without demurrage, midnight tariffs, direct -rebates, etc., etc.</p> - -<div class='chapter'> - <span class='pageno' id='Page_166'>166</span> - <h2 class='c005'>CHAPTER XXV.<br /> <span class='large'>TERMINAL RAILROADS.</span></h2> -</div> - -<p class='c006'>Another method of preference without departing from -published rates is the division of rates with private terminal -companies or mere switching roads, or roads existing only -on paper. A man of large experience in railroad matters -said to me not two years ago that “Since injunction suits -were instituted by the Interstate Commerce Commission in -1900, published tariffs have been more generally followed. -But big concerns build a mile or more of railroad of their -own, or incorporate their switch tracks and sidings in a -railroad company, and the division of the through rate permits -any commission that may be desired. That is the new -kind of discrimination that is spreading very rapidly. The -effect is to concentrate discrimination and the advantages -it gives more and more in the hands of the largest concerns. -Formerly any big shipper could get a rebate. Now only -those big enough to build a railroad or own an elevator get -lower rates than others.” This is a little too strong. There -are many other forms of preference still in prevalent use, -as we have seen, but there is no doubt that the private -railroad and the private car do tend to concentrate discrimination, -giving greater and greater advantages to those who -need them least.</p> - -<p class='c007'>They not only give the private railroads of some shippers -a larger percentage of through rates than they give to the -private railroads of other shippers, but they refuse to give -the railroads of some shippers any division of rates while -<span class='pageno' id='Page_167'>167</span>dividing rates in this way with other shippers in the same -business.<a id='r251'></a><a href='#f251' class='c012'><sup>[251]</sup></a></p> - -<p class='c007'>A few examples will make clear the private railroad or -“fake terminal” method of discrimination. The first case -of this kind came to light in 1903 through an investigation -of the “Salt Trust” by the Interstate Commission. Hutchinson -is the centre of the salt industry in Kansas. There -are 16 mills, 9 of which are operated by the Hutchinson -Salt Company, known as the “Salt Trust,” while each of -the independent mills is operated by a different individual -or company. In July, 1902, the Hutchinson and -Arkansas River Railroad was organized under the laws -of Kansas. It took possession of about 1 mile of side -tracks which had been built by the Salt Trust in connection -with its works. This new Lilliputian railroad company -had no equipment of any kind. The president of the Salt -Trust and the president of the railroad were one and the -same man, Joy Morton, brother of Paul Morton, who was -then at the head of the traffic department of the Santa Fe. -The Santa Fe, the Rock Island, and the Missouri Pacific—all -the railroads entering Hutchinson—made an agreement -with the switch-track Salt railroad to give said little 1–mile -Salt Trust railroad 25 percent of the rates on bulk salt to -Missouri River points, not to exceed, however, 50 cents a -<span class='pageno' id='Page_168'>168</span>ton on all the bulk salt shipped to such points. The rate -to Omaha was 12 cents per hundred and the rate to Kansas -City was 10 cents. The division was therefore equivalent -to a rebate of 50 cents a ton, which is of itself an excellent -profit in the manufacture of salt. The result was that -without departing from published rates, or apparently violating -any provision of law, the trust and the railroads drove -the independents out of the bulk salt business on the Missouri -River and elsewhere, and an extension of the arrangement -to all markets and all kinds of salt would give the -Trust a weapon with which it could at any time destroy the -independents.<a id='r252'></a><a href='#f252' class='c012'><sup>[252]</sup></a></p> - -<p class='c007'>Barton, one of the independents, had a contract to supply -all the bulk salt used by Swift & Co., at Missouri River -points. The contract expired April 1, 1903. Before asking -renewal of the contract Barton went to the coal people -and the railroad to see what his costs were to be for the -coming year. He found that coal was to be advanced 25 -cents a ton and freight on it 25 cents a ton, making 50 -cents a ton more on coal. As it takes 1 ton of coal to produce -2 tons of salt, the increase in coal cost meant 25 cents -added to the cost of each ton of salt. Barton’s former contract -was on the basis of $2.25 at Hutchinson, now he must -have $2.50. While Barton was negotiating a renewal of -his contract with the Swifts, Hon. Frank Vincent, State -Senator, manager of the Salt Trust, and director in the -Salt Trust railroad at Hutchinson, took a vacation from the -legislature, went to see the Swifts, and offered them salt -on the basis of $2.10 at Hutchinson, or 40 cents less than -the independents could afford to sell it. The Trust got -the contract with Swift. This gives an idea of the extent -to which the railway favoritism enabled the Trust to underbid -the independents.</p> - -<p class='c007'>The owner of one of the independent salt plants was -asked: “From where did you meet most competition, as -<span class='pageno' id='Page_169'>169</span>far as you know?” “From the Santa Fe Railroad,” he -replied.</p> - -<p class='c007'>One of the most remarkable facts in the case is that the -division of rates with the Salt railroad was made without -even taking the trouble to find out whether or no there was -any railroad at all of any kind behind the name presented -in the request for a division.</p> - -<p class='c007'>“<span class='sc'>Mr. Marchand.</span> Then you entered into this joint -arrangement with the Hutchinson and Arkansas River -Railroad without really knowing whether there was any -road there or not?</p> - -<p class='c007'>“<span class='sc'>Mr. Biddle.</span> I have done that hundreds of times.”<a id='r253'></a><a href='#f253' class='c012'><sup>[253]</sup></a></p> - -<p class='c007'>Another indication that the terminal railroad is not the -real reason for the division of rates is found in the fact -that it is not every large shipper who can get a rebate by -owning a private railroad. One of the independent salt -mills, the Matthews mill, had a switch built and paid for -and expected to get a rebate of $1 a car on the strength of -it. But the railroad refused to give any division of rates. -Matthews did not belong to the Morton family, nor have -any other special claim to hospitality at the hands of the -Santa Fe.</p> - -<p class='c007'>The International Harvester Company, popularly known -as the Harvester Trust, was formed in 1902 to consolidate -several big concerns manufacturing farm machinery. It -organized the “Illinois Northern Railroad Company” and -turned over to it the 17 miles of switching track in the -private grounds of its Chicago works. Till the end of -1903 this vest-pocket railroad handled the cars of the -Trust for a switching charge of $1 to $3.50 per car, the -average haul being about 4 miles. For the works at Plano, -another microscopic railway company, “The Chicago, West -Pullman and Southern Railroad,” with 4 miles of track, -was organized to switch the cars of the Harvester Trust. -<span class='pageno' id='Page_170'>170</span>The International Harvester Company owns these two railroads. -Its officials are the officials of those railroads in -most instances. And it absolutely controls the operations -of the roads.<a id='r254'></a><a href='#f254' class='c012'><sup>[254]</sup></a> In January, 1904, contracts were made for -the division of rates to the Missouri River. The Santa Fe, -C. B. & Q., Rock Island, Chicago and Alton, Great Western, -Chicago and North Western, Wisconsin Central, Chicago, -Milwaukee and St. Paul, etc.—practically all the railroads -going west—allowed the private Trust railroads a division -of 20 percent of the through rate with the Missouri River -as a maximum, amounting to $12 on an ordinary car of -20,000 lbs. of farm machinery going from Chicago to any -point in Kansas or Nebraska or the Far West. The Interstate -Commerce Commission says: “Since the International -Harvester Company owns the Illinois Northern -Railroad, a payment to the railroad is a payment to its -owner, the International Harvester Company. When a -line transporting a carload of traffic from Chicago to the -Missouri River pays the Illinois Northern Railroad $12 for -switching that car from the McCormick works to its iron, -it gives the International Harvester Company a preference -of at least $8.50 over what any other shipper of that same -carload would be obliged to pay.... And there is no -limit in law to the extent to which this shipper may be -preferred to other shippers in this way.”<a id='r255'></a><a href='#f255' class='c012'><sup>[255]</sup></a> In a suit -brought July 11, 1905, by R. B. Swift, a former officer of -the McCormick branch of the Harvester Trust, it is declared -that up to September 30, 1902, the Trust received rebates -from the railroads amounting to $500,000 through the -West Pullman switch road, and over $3,000,000 through -the Illinois Northern switch road.</p> - -<p class='c007'><span class='pageno' id='Page_171'>171</span>The “Chicago, Lake Shore and Eastern Railway” is -another of these homeopathic railroads. It was organized -in the interest of the Illinois Steel Company and is now -owned by the Steel Trust (The United States Steel Corporation) -which some time ago absorbed the Illinois Steel -Company. Since 1897 this private railway has been allowed -a division of 10 percent on business to New York and other -seaboard points, 15 percent to Pittsburg, Buffalo, and other -middle points, and 20 percent on traffic to the Missouri -River. It also has a division on rates to the South. All -Eastern and Southern lines as well as the Western roads -divide their rates with this Trust road. These divisions -amount to $6 to $12 a car for the switching service performed -by the private road. Besides this, certain special -divisions are made. On coke from the Connellsville region, -for example, a division of 70 cents per ton is allowed. -This gives the “Chicago, Lake Shore, etc.,” above named, -$700 to $1000 for hauling a train of coke 7 miles from -Indiana Harbor to its plant in South Chicago, while the -actual cost would not exceed one-tenth of this sum.</p> - -<p class='c007'>Railroad officers have claimed that such divisions of rates -are justified because the little private road is the “gateway -of the traffic.” “The business originates on the little road -and it controls the routing, and the division is only an application -of the custom of allowing the road on which -traffic originates a considerable percentage of the through -rate, usually 25 percent.” Other railroad men tell me -that this is not true. President Tuttle, for example, says: -“There is no such thing as a custom to give the initiating -road 25 percent or 10 percent or any percent. The division -is on the mileage basis, but if one road does special -work, switching etc., a reasonable allowance may be made, -1 percent or 2 percent or whatever is fair to cover the special -work or expense.” Even if there were a custom to -give 25 percent to the initiating railroad that could hardly -explain the 70 cents per ton on traffic not originating on -<span class='pageno' id='Page_172'>172</span>the trust railroad in Chicago, but coming to it from Pennsylvania -points.</p> - -<p class='c007'>Whatever may be the custom or analogy used as a warrant -for these divisions it is clear that their effect is precisely -the same as that of a giant rebate.</p> - -<p class='c007'>The Trust railroad in this case makes a net profit of 150 -percent a year upon its capital stock of $650,000. How -much the Steel Trust as a whole gets in this way through -all the private railroads connected with its various plants -is not known, but the Commission says it is certainly a -“sum sufficient to pay dividends on several millions of -dollars of capitalization.”<a id='r256'></a><a href='#f256' class='c012'><sup>[256]</sup></a></p> - -<p class='c007'>The Illinois Glass Company at Alton, Ill., is the largest -producer of glass bottles in the United States. In 1895 -certain persons in its interest organized the Illinois Terminal -Railroad Company, the principal business of which -is to handle the cars of freight that come to and from the -Glass Works. This terminal company in Alton is allowed -by the railroads a division of rates amounting to 25 percent -of the Chicago rate, and 15 percent of the rates to the Missouri -River and to Eastern destinations, or $8 to $13 per car. -This is the testimony of the Glass Works manager, but -the Commission finds that as much as $17.10 has been paid -the Terminal Company on a car shipped from Alton to -Kansas City, an amount that is nearly double the 15 percent -above mentioned. This $8 and $13 or $17 is a pretty -heavy payment for switching a car, a service which the Terminal -Company renders for $1.50 a car when the amount is -to be paid by the Glass Works.<a id='r257'></a><a href='#f257' class='c012'><sup>[257]</sup></a></p> - -<p class='c007'>The St. Louis Preserving Company at Granite City, -Ill., also gets large rebates in the form of divisions of -rates with a toy railroad the company controls.<a id='r258'></a><a href='#f258' class='c012'><sup>[258]</sup></a></p> - -<p class='c007'><span class='pageno' id='Page_173'>173</span>Rate divisions have also been made by the railroads with -boat lines<a id='r259'></a><a href='#f259' class='c012'><sup>[259]</sup></a> belonging to or in league with large shippers, -with “tap roads” belonging to lumber companies,<a id='r260'></a><a href='#f260' class='c012'><sup>[260]</sup></a> etc., -and this method of securing a practical rebate is being -rapidly adopted by large concerns all over the country. A -division of rates with a private line is not necessarily unfair -but if there is a desire to give an unfair advantage, this -system affords a cloak for it.</p> - -<div class='chapter'> - <span class='pageno' id='Page_174'>174</span> - <h2 class='c005'>CHAPTER XXVI.<br /> <span class='large'>PRIVATE-CAR ABUSES.</span></h2> -</div> - -<p class='c006'>Some of the worst discriminations now prevailing are -connected with the private-car system.</p> - -<p class='c007'>The private car originated in the need for special -equipment for particular purposes. It was clear that -the transportation of live-stock, fruit, vegetables, and -other perishable products might be facilitated by the use -of special cars. When the inventors of improved stock -cars and refrigerator cars went to the railroad managers, -they were informed that the railroads had no money with -which to make experiments in such lines, but if cars that -would do the work proposed were constructed the railroads -would be glad to hire them for a fair rental. So the cars -were built by private companies and used by the railroads -on a mileage basis. The fact that such special cars are -needed in different parts of the country at different seasons, -their use in any large numbers being confined on some roads -to a few weeks in each year,<a id='r261'></a><a href='#f261' class='c012'><sup>[261]</sup></a> makes the local ownership of -such cars by the several railroads, less convenient and economical -than their ownership by car companies able to distribute -the cars to advantage throughout the country so that -each section may have the cars it needs, at the proper time, -without unnecessary duplications of equipment.<a id='r262'></a><a href='#f262' class='c012'><sup>[262]</sup></a></p> - -<p class='c007'><span class='pageno' id='Page_175'>175</span>To move the Georgia peach crop the Southern Railway -would need about 3,000 refrigerator cars. The shipments -occupy about six weeks, beginning about the middle of -June. The Pere Marquette Railroad moves about 2,000 -carloads of fruit under refrigeration from Michigan -points mostly in September and October, and would need -about 1,000 cars for the work. These and other roads might -well hesitate to invest the sums required to provide expensive -equipment when it would have to be idle the greater -part of the year; but this is easily done by a car company -whose cars can be employed in the orange trade from California -and Florida in the winter, in the Georgia peach traffic -in June and July, and in the Michigan and New York fruit -business during the fall.<a id='r263'></a><a href='#f263' class='c012'><sup>[263]</sup></a></p> - -<p class='c007'>The railroads began long ago<a id='r264'></a><a href='#f264' class='c012'><sup>[264]</sup></a> and still continue paying -mileage rates for the use of stock cars, tank cars, and refrigerator -cars, the three chief kinds of private cars. This -would be all right if the mileage rate were fair, but serious -injustice results when the mileage is so great as to give the -owners of the cars a practical rebate of large amount on -all their shipments in such cars, as is the case with all -three classes of cars above named,<a id='r265'></a><a href='#f265' class='c012'><sup>[265]</sup></a> and especially with the -<span class='pageno' id='Page_176'>176</span>refrigerator cars of the Armour Car-Lines which are operated -in the interest of the Beef Trust. The railroads allowed -at first a mileage rate of ¾ of a cent a mile when the car -was loaded. After a little the car companies got the roads -to pay the mileage on the cars both ways, loaded or empty. -The mileage rate on refrigerator cars was raised from ¾ of a -cent to 1 cent over most of the territory west of Chicago -and St. Louis, and the 1 cent rate also applies to the -movement of refrigerator cars between Chicago and New -England via Montreal.<a id='r266'></a><a href='#f266' class='c012'><sup>[266]</sup></a> From Chicago to New York over -the Vanderbilt lines is about 1,000 miles; so the mileage -on a refrigerator car amounts to $7.50 each way, or $15 -for the trip.</p> - -<p class='c007'>The car companies have secured various concessions -from the railroads besides the payment of mileage loaded -or empty. They require the railroads to run their cars at -high speed in special trains. The average run of the -freight cars owned by the leading railroads is 25 miles a -day. The average run of the private tank cars (Standard -Oil mostly) is 66 miles, private stock cars 72 miles, refrigerator -cars 108 miles, and refrigerators operated in the -beef trade 135 miles per day.<a id='r267'></a><a href='#f267' class='c012'><sup>[267]</sup></a></p> - -<p class='c007'>There is evidence that Armour often makes his cars run -<span class='pageno' id='Page_177'>177</span>300 miles and even 400 miles a day. He compels the -railroads to push his cars day and night whether loaded or -empty. Most freight cars are loaded both going and coming, -which greatly lowers the cost of transportation, but -Armour requires the railroads to rush his cars back empty -at full speed without waiting for any return load. Ordinary -freight trains go on a side-track and wait till the -Armour cars go by. The railroads sometimes even side-track -passenger trains in order that a meat train may be -rushed by to make a little more profit for the Beef Trust. -Armour’s system of checking his cars by means of his agents -stationed at icing points along the principal roads keeps -his central office constantly informed of the whereabouts -of every car. If a train has lost time, if an Armour car is -side-tracked anywhere the Armour office asks over the -wires: “What’s the matter?” And if a railroad agent -does not do as Armour bids he may lose his position as a -consequence. More than one railroad man, high in authority, -has been dismissed because he did not obey the Beef -Trust. If offences accumulate, some day the railroad finds -that Armour has diverted his entire business to a rival line -which will hurry his cars and otherwise obey his orders. -What chance has the small shipper against such a system? -He may own private cars, but he cannot make them run, -nor can he obtain exclusive contracts such as Armour has -on many roads, nor make the railroads collect excessive -icing charges for him, nor hold up the roads in any other -way; on the contrary, they are more likely to hold him up.</p> - -<p class='c007'>The result of high speed and the mileage rate loaded or -empty, is that refrigerator cars earn for their owners an -average of $25 a month, and cars engaged in the export -meat trade from Chicago frequently get $30 and upward -per month from the railroads in mileage. This is enough -to pay the whole cost of the refrigerator car in 3 years, and -its maintenance in the meantime.<a id='r268'></a><a href='#f268' class='c012'><sup>[268]</sup></a> Private stock cars in -<span class='pageno' id='Page_178'>178</span>some cases net their owners 50 percent a year on the -invested capital, repaying the cost of the cars in 2 years, -above operating expenses.<a id='r269'></a><a href='#f269' class='c012'><sup>[269]</sup></a> The average mileage of through -stock trains on the principal lines exceeds 100 miles a day, -yielding to the owner of such cars over 60 cents a day. -This is three times what the railroads pay each other for -railroad cars in use on a road other than the owning railway. -A railroad receives 20 cents a day for each day that -one of its own freight cars is on another road, while the -same railroad pays the car companies 60 cents a day for -the use of a stock car, and $1 a day for the use of an -Armour refrigerator car in the dressed-beef business.<a id='r270'></a><a href='#f270' class='c012'><sup>[270]</sup></a> Yet -a well built modern freight car costs more than the average -private stock car, and nearly as much, many of them quite -as much, as the average refrigerator car.<a id='r271'></a><a href='#f271' class='c012'><sup>[271]</sup></a></p> - -<p class='c007'><span class='pageno' id='Page_179'>179</span>Out of a total of 50,000 refrigerator cars,<a id='r272'></a><a href='#f272' class='c012'><sup>[272]</sup></a> about 15,000 -are owned by the railroad lines. These earn, it is claimed, -about 40 cents a day, while the cars owned by the Armours -and other private car-lines earn or receive on the average -60 cents to $1 or more per day from the mileage payments -alone.</p> - -<p class='c007'>The owners of the Beef Trust cars make enormous shipments -of their own, and have gained control of a vast -amount of other business by offering a share of the mileage -receipts and other inducements to large shippers of fruit, -vegetables and dairy products, etc. With prodigious masses -of traffic in their hands which they could divert to any line -they chose, they have compelled the railroads to fix rates -as they dictated,<a id='r273'></a><a href='#f273' class='c012'><sup>[273]</sup></a> collect their icing charges for them, delay -the cars of disobedient or protesting shippers, blacklist -them, shut off their credit, carry on a system of espionage -upon the business of their competitors, use their power over -railroads and shippers to drive their rivals out of business,<a id='r274'></a><a href='#f274' class='c012'><sup>[274]</sup></a> -<span class='pageno' id='Page_180'>180</span>and even make exclusive contracts prohibiting the use of -any other refrigerators on the lines of the contracting -railroads. In some cases the railroads pay the car-lines -commissions of 10 to 12½ percent of the freight rate in -addition to the mileage on the cars loaded or empty.<a id='r275'></a><a href='#f275' class='c012'><sup>[275]</sup></a> -Certain repairs on the private cars are also made by the -railroads.<a id='r276'></a><a href='#f276' class='c012'><sup>[276]</sup></a> Annual passes are also granted to owners of -private cars in order that their officers and agents may -travel with the goods, watch the car, and look out for the -care and disposal of the contents.<a id='r277'></a><a href='#f277' class='c012'><sup>[277]</sup></a> A wholesale firm which -owned but one car made three members respectively president, -vice-president and general manager of their little car -company and got annual passes for all three members on -the railroads on the strength of that one car.<a id='r278'></a><a href='#f278' class='c012'><sup>[278]</sup></a></p> - -<p class='c007'>One result of the exclusive contracts is that “charges -for refrigeration have been enormously and unreasonably -increased.”<a id='r279'></a><a href='#f279' class='c012'><sup>[279]</sup></a> The Interstate Commerce Commission says -<span class='pageno' id='Page_181'>181</span>that “under the operation of these exclusive contracts the -cost of icing to the shipper (some shippers) has been advanced -from 50 to 150 percent and that the charges in most -cases are utterly unreasonable.<a id='r280'></a><a href='#f280' class='c012'><sup>[280]</sup></a> At first the railroads -made no charge for icing. Gradually the practice of making -small charges for ice was introduced, but the charges -did not go much if any beyond the cost of the service. -They were very mild compared to the present refrigeration -taxes. The charges made by the railroads and even by the -Armour Car-Line before it secured the exclusive contracts, -range from ½ to ⅙ of the present Armour icing charges. -From the Pacific to Duluth over the Northern Pacific or -the Great Northern, which still own and operate their own -refrigerator cars, the icing charge on a carload of fruit is -$25, while the Armour charge by the Southern lines is $107 -<span class='pageno' id='Page_182'>182</span>per car. From Rochester to Cincinnati railroads using -their own refrigerator cars charge $5 for icing. For the -same distance and time the Trust charges $35. The icing -charge for a Pennsylvania car from Silver Creek, N. Y. to -Chicago, 500 miles, is $7.75 to $10; the Trust’s ice charge -is $25 from Lawton, Michigan, to Chicago, 120 miles. The -icing charge under the exclusive contract with the Armour -lines is $45 on a car of pineapples from Mobile to Cincinnati, -against $12.50 from New Orleans to Cincinnati over -the Illinois Central. In 1898 the Armour charge for ice -from Michigan to Boston was $20 per car. In 1904 its -charge was $55 a car for the same service over the same -route. The icing charge on an independent refrigerator -car from Chautauqua, N. Y., to Chicago, 550 miles, is $10, -against $84 in the Trust cars from Gibson to Chicago, 522 -miles. In 1902, before the exclusive contract with the -Pere Marquette Railroad, the icing charge from Mattawan, -Mich., to Duluth was $7.50, while the present refrigerator -charge between the same points in the same Armour -cars is $45. On shipments of strawberries, etc., from the -South, the Armour icing charges are $45 a car, against $10 -to $15 over roads that have not yet capitulated to the Beef -Combine. The Armour icing charge on strawberries from -Tennessee to Chicago is $84, against $30 on the Illinois -Central and $15 actual cost.<a id='r281'></a><a href='#f281' class='c012'><sup>[281]</sup></a> From many points on the -Pere Marquette Railroad in Michigan to Chicago where the -railroad charge for refrigeration used to be $6 a car, the rate -under the Armour contract has been increased 416 percent.<a id='r282'></a><a href='#f282' class='c012'><sup>[282]</sup></a> -In the Duluth case above mentioned the increase was 500 -percent. This, however, is more than the average.</p> - -<p class='c007'>From the great vegetable growing regions of Mississippi -and Alabama to Cincinnati the charge for ice was $27 -before the exclusive contracts were made. Afterward the -price was raised to $60 and a little later to $75.</p> - -<p class='c007'><span class='pageno' id='Page_183'>183</span>In the summer of 1903 John Leverone of Cincinnati -received 24 cars of pineapples from Cuba. Ten cars came -by the Illinois Central via New Orleans with an icing charge -of $11.37 a car. Fourteen carloads came on Trust cars via -Mobile, 100 miles nearer Cincinnati, with icing charges of -$45 a car.</p> - -<p class='c007'>Even when shipments are made in railroad refrigerators -from regions the Trust claims as its own peculiar territory, -the full Trust charges are collected and paid over to the -Trust.</p> - -<p class='c007'>For example, in August, 1904, Coyne Bros. of Chicago -received an Illinois Central refrigerator car loaded with -melons from Poseyville, Indiana. The freight was $39 and -the icing charge $45. The Illinois Central icing charge for -that distance was $10. Coyne Bros. went to the manager -of the railroad refrigerator service and found that the road -had an arrangement by which the Trust was to be paid at -Trust rates on all shipments from the melon region, whatever -cars were used. If the firm refused to pay the charge -they would be boycotted or taken off the credit list.</p> - -<p class='c007'>August 11, 1904, Coyne Bros. received a Louisville and -Nashville car loaded with melons from Epworth, Indiana. -On the bill were two charges for icing, one was the railroad -charge of $14 and the other the Trust charge of $45. The -firm asked if they were expected to pay both charges. The -railroad then erased the $14 item. The firm refused to pay -the $45 Trust charge for a service worth no more than the -railroad charge of $14, and the railroad took them off the -credit list. Mr. Urion, attorney for the Armour folks, -came to Coyne Bros. and told their manager that they must -pay the ice charges or else everything shipped to them must -be prepaid. The firm found that shipments to them from -the Michigan grape region were cut off. They sent their -own man to load the cars, but the railroad agent refused -to bill them. “I have my instructions from Armour’s man -here,” he said, “and I must follow them.”</p> - -<p class='c007'><span class='pageno' id='Page_184'>184</span>On a car of melons from Carlisle, Ind., to Mr. Scales of -Chicago, the freight was $35 and the icing charge $50, -representing 20 tons of ice. There was no re-icing, and the -car bunkers would not hold more than 6 tons of ice, so that -there was a clear overcharge of $35 for refrigeration.</p> - -<p class='c007'>J. D. Mead & Co. of Boston were charged $99.90 by the -Armour lines for icing on a car of peaches from Missouri. -This is a startling sum for a service that the railroads used -to perform free of charge. On another car of peaches from -Maryland, the charge was $64 for icing. As the car bunkers -would not hold more than 4 to 6 tons and only one re-icing -was necessary between Cumberland and Boston, the -firm protested vigorously. They were told that the bill -was a “trial bill.”</p> - -<p class='c007'>“What is that?” they asked.</p> - -<p class='c007'>“Try to collect,” said the railroad manager.</p> - -<p class='c007'>In this case, on appeal to New York, the bill was reduced -to $24, a slice of $40 off the icing bill, which was to Mr. -Mead a <em>trial</em> bill in more senses than one.</p> - -<p class='c007'>Ellis and Company of Chicago received a car of tomatoes -from Gibson, Tenn., 522 miles away, and another from -New Orleans, 923 miles distant. The first was a Trust car -with $74 icing charge; the other was an Illinois Central -car with $15 icing charge. That is, the Trust charge was -5 times as great as the railroad charge, though the railroad -car came 400 miles further, nearly double the distance in -fact that the Trust car covered.</p> - -<p class='c007'>Grapes have been shipped from the New York grape -field to Boston in Vanderbilt refrigerator cars without any -icing charge, while shipments in Trust cars between the -same points in the same month paid $22 for ice. The -Michigan Central has given notice that it has withdrawn -from the Armour contract and will handle Michigan fruit -products in its own cars supplying ice at cost which it says -is $2.50 per ton. So the man who can ship over the -Michigan Central will get a rate of $15 to $25 a car to -<span class='pageno' id='Page_185'>185</span>Boston, while the man who has to use the Pere Marquette -will pay $45 a car for ice.<a id='r283'></a><a href='#f283' class='c012'><sup>[283]</sup></a> Two Boston men recently -(1905) had occasion to order each a carload of peaches -from Michigan points some 20 miles apart. One car came -from Coloma over the Pere Marquette with Armour -charges of $45, while the other car came from Eau Claire -over the Michigan Central with the same freight rate, but -only $13.13 for icing,—$5.63 for the original icing, $5 -for re-icing at Collingwood, and $2.50 for re-icing at West -Seneca. A year ago, before the Armour contract with the -Michigan Central expired, the icing charge on both railroads -was $55 to Boston; now the Armour charge has -come down to $45, but the Armour charge for ice in the -case just stated was $9 a ton while the Vanderbilt railroads -charged only $2.50 a ton, which last the Interstate Commission -in a recent case has held to be a just and reasonable -charge.<a id='r284'></a><a href='#f284' class='c012'><sup>[284]</sup></a> There are no icing charges on dairy products. -The ice is paid for by the car company and the railroad. -It takes as much ice for dairy products as for fruit, but the -Trust is carrying its own goods in this field mostly and -not the goods of other shippers, and so it has not felt the -need of changing the original arrangement in respect to -ice.</p> - -<p class='c007'>The railroads have also bound themselves by secret contract -to furnish by wire “such information as may be -requested by the car-line’s representatives.” This enables -the Trust to know what every other shipper is doing all -over the country on the lines of the car-line-contract roads. -The Armours thus have means of knowing immediately of -the shipments made by competitors and the destination of -the same, so that they can tell exactly what to do to capture -or destroy the competitive business. If a car of -apples is loaded by a competitor and billed for Worcester, -<span class='pageno' id='Page_186'>186</span>the Trust knows of it in time to run in a car of apples -ahead of the competitor’s and sell out the market from -under him. At Buffalo, while the Trust was fighting to -control the local fruit market, it forestalled, they say, every -shipment that was made to its competitors.</p> - -<p class='c007'>The Armour lines have another advantage, through the -arrangement of the freight tariffs, and the friendly inspection -methods, or non-inspection methods, which enable -them to ship dairy products, fruits, vegetables, etc., at -much lower rates than others. Packing-house products, -<em>i. e.</em>, hams, bacon, lard, etc., go from Chicago to New York -in carloads at 30 cents a hundred; fresh meats, 45 cents; -eggs, 65 cents; poultry, 75 cents; butter, 75 cents, etc. -The Armours have a practical monopoly on packing-house -products and the fresh-meat business, as they own all the -slaughter houses of any importance, with 2 or 3 exceptions -in the country. So the bulk of their own goods go at 30 -and 45 cents which are regarded by railroad men as very -low rates for goods transported in refrigerator cars. On -the other hand rates upon dairy products are very much -higher, and most shippers have to pay those rates. According -to all rules of classification packing-house products -should pay higher rates than fruit; but, in order to help -out the infant beef industry, a commodity tariff is arranged -of which this is a sample:<a id='r285'></a><a href='#f285' class='c012'><sup>[285]</sup></a></p> - -<table class='table2'> - <tr> - <th class='bttd bbt c021'></th> - <th class='bttd bbt blt c022'>Distance.</th> - <th class='bttd bbt blt c022'>Fruit third class.</th> - <th class='bttd bbt blt c022'>Beef (commodity rate).</th> - <th class='bttd bbt blt c022'>Difference.</th> - </tr> - <tr> - <th class='c021'></th> - <th class='blt c023'> </th> - <th class='blt c022'>Cents.</th> - <th class='blt c022'>Cents.</th> - <th class='blt c022'>Percent.</th> - </tr> - <tr> - <td class='c021'>Chicago to Duluth</td> - <td class='blt c023'>478</td> - <td class='blt c023'>44</td> - <td class='blt c023'>28½</td> - <td class='blt c023'>54</td> - </tr> - <tr> - <td class='c021'>Kansas City to Duluth</td> - <td class='blt c023'>699</td> - <td class='blt c023'>53</td> - <td class='blt c023'>40</td> - <td class='blt c023'>33</td> - </tr> - <tr> - <td class='c021'>Omaha to Duluth</td> - <td class='blt c023'>504</td> - <td class='blt c023'>45</td> - <td class='blt c023'>35</td> - <td class='blt c023'>28</td> - </tr> - <tr> - <td class='c021'>Sioux City to Duluth</td> - <td class='blt c023'>432</td> - <td class='blt c023'>45</td> - <td class='blt c023'>35</td> - <td class='blt c023'>28</td> - </tr> - <tr> - <td class='bbt c021'>Cedar Rapids to Duluth</td> - <td class='bbt blt c023'>409</td> - <td class='bbt blt c023'>44</td> - <td class='bbt blt c023'>28½</td> - <td class='bbt blt c023'>54</td> - </tr> -</table> - -<p class='c007'><span class='pageno' id='Page_187'>187</span>President Ripley of the Santa Fe declares that the rates -on beef products between Kansas City and Chicago are so -low that every carload is carried at a loss to the roads. -Here are his figures:</p> - -<p class='c007'>Dressed meats: Actual cost per car, $82.19; revenue, -$42.19; deficit, per car, $40.</p> - -<p class='c007'>Packing-house products: Cost per car, $85.03; revenue, -$56; deficit, $29.03.</p> - -<p class='c007'>He also asserts that cattle are now hauled at a loss.</p> - -<p class='c007'>Other witnesses have disputed President Ripley’s statement -of cost, but however this may be it is evident that -the Beef Trust has been very generous to itself in the rates -it has compelled the railroads to adopt for its shipments.</p> - -<p class='c007'>The railroads do not like to be bossed either by the Beef -Trust or the Standard Oil, but they declare that they -cannot help themselves. President Ripley says: “The -packing-house business to-day is concentrated in so few -hands that this fact, together with the competition between -the railroads, practically makes it possible for the latter -to dictate rates for dressed beef and the packing-house -products.”</p> - -<p class='c007'>President Stickney of the Great Western Railroad says: -“In fixing the rate on dressed meat we don’t have very -much to say. The packer generally makes the rate. He -comes to you and asks how much you charge for a certain -shipment of dressed meats. The published tariff may be -23 cents a hundred, but he will not pay that. You say to -him: ‘I’ll carry your meat for 18 cents.’ He says: ‘Oh, no, -you won’t. I won’t pay that.’ Then you say: ‘Well, what -will you pay for it?’ He then replies, ‘I can get it hauled -for 16 cents.’ So you haul it for 16 cents a hundred.”</p> - -<p class='c007'>President Calloway, speaking to the Interstate Commission -about the speeding of the beef cars and other Armour -exactions, said:</p> - -<p class='c007'>“We do not do these foolish things from choice. I will -say that the thing is just as bad and foolish and stupid as -<span class='pageno' id='Page_188'>188</span>can be, but what are you going to do about it? We have -built up these dressed-beef men and they have all got their -own cars, and they can dictate what they are going to pay. -They just keep these cars humping. We unload them and -get them back to Chicago just as quickly as we can. The -Pennsylvania people also were very much disinclined to -allow or foster this dressed-beef business, but were forced -into it.”</p> - -<p class='c007'>Very few railroads have dared to fight either Armour or -Rockefeller openly, but secretly the railroads did combine -to fight these men and employed an agent, Mr. Midgley -of Chicago, for that purpose, whose investigations and disclosures -have done much to throw light upon the hidden -ways of the Trust magnates.</p> - -<p class='c007'>Mr. Midgley told the Interstate Commission in April, -1904, how the representatives of sixty railroads met in -St. Louis in 1894 and tried to stand up against the Trusts, -beginning with a reduction of the extortionate mileage -rates on tank and refrigerator cars, but they could not free -themselves from the yoke of oil and beef. The Standard -gave all its shipments to the Great Western, which agreed -to pay the old mileage. The other lines out of Chicago -could not get a carload to St. Paul or the Missouri River. -The railroads surrendered finally to both the Standard Oil -and the Beef Trust. They reduced the mileage rates on -stock cars, railroad cars, and other cars not controlled by -the Trusts to 6 mills per mile, but excepted refrigerator -and tank cars out of respect to the power of Armour and -Rockefeller, because, the trunk lines said, referring to the -power of these Trusts: “We have never been able to stand -up against it.”</p> - -<p class='c007'>We have not yet finished with the favors shown to Armour. -The railroads as a rule inspect the loading of every -car and the unfavored shipper cannot mix eggs or poultry -with low-class provisions and bill it all at a low rate. But -the Armours can do this, for inspection in their case is a -<span class='pageno' id='Page_189'>189</span>mere form. There is one inspector for shipments that -average 75 cars a day. The inspector could not watch -them all if he would, and in fact he simply inspects the -Armour records and takes their word for the contents of -the cars.<a id='r286'></a><a href='#f286' class='c012'><sup>[286]</sup></a></p> - -<p class='c007'>It is charged that Armour not only gets large quantities -of high-class freight carried at the rates appropriate to -lower-class freight by unreported mixing of his goods in -carload lots billed at the lowest rate applicable to any of -the goods in the car; it is also further charged that the -space beneath the beef that is hung up in the refrigerator -cars is often crowded full of poultry, eggs, etc., which are -carried for nothing. No wonder Armour can undersell his -rivals all over the country and ruin his competitors in any -market he chooses to enter.</p> - -<p class='c007'>The Beef Trust has compelled the railroads to fix a very -low minimum carload limit—20,000 lbs. on dressed beef, -etc., against 26,000 to 30,000 lbs. on products the big -Trusts are not interested in. If a load is below the carload -limit it has to pay less-than-carload rates, which are -20 percent or more higher than carload rates. It is for the -interest of the railroads to keep the minimum carload limit -at a good height to prevent hauling cars with small loads -and low rates, and to reduce the effect of the prevalent -custom of billing Trust cars at the minimum no matter how -heavily they are really loaded. The railroads have made -efforts to unite on a higher carload limit, but without avail -so far. On Dec. 12, 1903, it is said, 16 presidents and managers -of the greatest railroads in America met in New York -and decided to make 24,000 lbs. the minimum on dressed -meats. The proceedings were under promise of secrecy by -all concerned. But within two days the Trust people knew -<span class='pageno' id='Page_190'>190</span>all about the secret meeting, and they took measures which -prevented the new order from ever taking effect. No -agreement has ever been formulated that will stand against -the power of the Trust, the seductiveness of its promises of -diverting new masses of business to the yielding road, and -the terror of its threats of withdrawal of traffic from the -unyielding.</p> - -<p class='c007'>These advantages—excessive mileage rates, high speed, -exclusive contracts, exorbitant icing charges, espionage of -competitors, control of tariffs, low carload limit, and go-as-you-please -inspection—have the same effect as a very large -rebate; the private-car owners can ship at very much lower -cost than ordinary unprivileged shippers. The profits are -immense—$72,000 a day, it is said for the Armour cars.</p> - -<p class='c007'>It is estimated that the railroads pay the Beef Trust’s -car-lines about $25,000,000 a year in rebates or payments -in practical violation of the law.</p> - -<p class='c007'>On the basis of the very moderate Beef Trust Report -of the Department of Commerce, Mr. Baker figures the -annual profits on the 14,000 Armour refrigerator cars, from -rentals alone, at $200 net per car, or $2,800,000—nearly -$3,000,000 a year, not including the enormous sums extorted -in excessive icing charges, nor the rebates and commissions -paid by the railroads in addition to the mileage. The estimate -of $200 a car is probably too low, for Mr. Robbins, -manager of the Armour Car-Lines, has testified that they -rent old, inferior cars to breweries, etc., at $204 to $280 -per year.</p> - -<p class='c007'>Mr. Baker says: “Can any simple-minded person see -any difference between a payment of $3,000,000 net profit -on mileage annually to a favored shipper like Armour, and -an old-fashioned cash rebate of $3,000,000? I confess I -cannot.”<a id='r287'></a><a href='#f287' class='c012'><sup>[287]</sup></a></p> - -<p class='c007'>Mr. Baker has deducted operating expenses, repairs, and -a liberal allowance for depreciation, but he has not allowed -<span class='pageno' id='Page_191'>191</span>for fair interest upon the capital invested in the cars, a -charge amounting to $650,000 a year which should be deducted -from the $2,800,000 in order to get the portion of -the mileage payment which is really equivalent to “an old-fashioned -cash rebate,”—an article that is not so old-fashioned, -however, as to be out of use, by any means, as we -have seen.</p> - -<p class='c007'>Wherever it serves their purposes the car-lines share their -rebates with important shippers. This has been of special -service in inducing large shippers like the fruit growers of -California and the South to give their trade to the profit-sharing -car-lines. The car-lines would pay shippers a bonus -on condition that such shippers would call on the railroad -for the cars of the agreeing car-line. Both refrigerator -lines and stock car-lines use this method. Sometimes half -the mileage is paid to the favored shipper. Sometimes -$10 or $15 or even $25 and $35 a car is paid back to the -shipper by the car-line, which is of course a rebate pure and -simple, and has precisely the same effect when paid by -the car-line as if paid by the railroad directly to the -shipper.</p> - -<p class='c007'>The Santa Fe car-line found it necessary to give a rebate -of $25 a car in California in order to get traffic in competition -with the Armour Car-Lines and on shipments going -beyond Chicago the rebate that seemed necessary to get -business was $35 a car. So Mr. Leeds, the manager of the -Santa Fe car-line testified in April 1904 before the Interstate -Commerce Commission. Part of Mr. Leed’s testimony -in answer to the questions of the Commission and -of its counsel Mr. Marchand was as follows:<a id='r288'></a><a href='#f288' class='c012'><sup>[288]</sup></a></p> - -<p class='c007'><span class='pageno' id='Page_192'>192</span>“<span class='sc'>Mr. Leeds.</span> This is the first year that we entered into -the deciduous fruit business in Northern California, and I -met the competition which we found there when we began -business.</p> - -<p class='c007'>“<span class='sc'>Mr. Marchand.</span> What competition?</p> - -<p class='c007'>“<span class='sc'>Mr. Leeds.</span> I think it amounts to $25 a car.</p> - -<p class='c007'>“<span class='sc'>Mr. Marchand.</span> $25 a car?</p> - -<p class='c007'>“<span class='sc'>Mr. Leeds.</span> Yes, sir.</p> - -<p class='c007'><span class='pageno' id='Page_193'>193</span>“<span class='sc'>Mr. Marchand.</span> By whom?</p> - -<p class='c007'>“<span class='sc'>Mr. Leeds.</span> We had only one competition.</p> - -<p class='c007'>“<span class='sc'>Mr. Marchand.</span> Who was your competitor?</p> - -<p class='c007'>“<span class='sc'>Mr. Leeds.</span> The Armour Car-Line.</p> - -<p class='c007'>“<span class='sc'>Mr. Marchand.</span> And it was necessary to give $25 or -more in order to secure the traffic—was that your idea?</p> - -<p class='c007'>“<span class='sc'>Mr. Leeds.</span> I believed so.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> Uniformly $25 a car?</p> - -<p class='c007'>“<span class='sc'>Mr. Leeds.</span> I think there would be some exception, -as to business farther east than Chicago.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> Would it be more than -that?</p> - -<p class='c007'>“<span class='sc'>Mr. Leeds.</span> Yes, sir.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> What on Eastern business?</p> - -<p class='c007'>“<span class='sc'>Mr. Leeds.</span> An additional $10.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> $35?</p> - -<p class='c007'>“<span class='sc'>Mr. Leeds.</span> Yes, sir.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> You pay $25 back to -Chicago and points west of Chicago?</p> - -<p class='c007'>“<span class='sc'>Mr. Leeds.</span> Yes, sir.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> And $35 to points east of -Chicago?</p> - -<p class='c007'>“<span class='sc'>Mr. Leeds.</span> That is what it would amount to.</p> - -<p class='c007'>“<span class='sc'>Commissioner Prouty.</span> Do you agree to do that -before the shipment is made, or afterwards?</p> - -<p class='c007'>“<span class='sc'>Mr. Leeds.</span> Before.</p> - -<p class='c007'>“<span class='sc'>Commissioner Prouty.</span> Are your agents authorized -to make that discount?</p> - -<p class='c007'>“<span class='sc'>Mr. Leeds.</span> No; they are not.</p> - -<p class='c007'>“<span class='sc'>Commissioner Prouty.</span> Where is the agreement -made, and with whom?</p> - -<p class='c007'>“<span class='sc'>Mr. Leeds.</span> Myself.</p> - -<p class='c007'>“<span class='sc'>Commissioner Prouty.</span> Do your agents there know -anything about it?</p> - -<p class='c007'>“<span class='sc'>Mr. Leeds.</span> I do not think they know what it is. -They may know that something of that kind is going on, -but not what it amounts to.</p> - -<p class='c007'><span class='pageno' id='Page_194'>194</span>“<span class='sc'>Commissioner Clements.</span> How does the shipper -know that he can get this $25 and $35 back?</p> - -<p class='c007'>“<span class='sc'>Mr. Leeds.</span> Well, he probably could not ship if he -did not know it.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> How does he find it out? -You say your agents there do not inform him.</p> - -<p class='c007'>“<span class='sc'>Mr. Leeds.</span> Well, I spent about three months there -in the past year.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> You have advised them -all that that was done, have you?</p> - -<p class='c007'>“<span class='sc'>Mr. Leeds.</span> We sought the business.”</p> - -<p class='c007'>Mr. Watson appears to have received on California -shipments about $50,000 a year in rebates from the Fruit -Growers’ Express (now an Armour line), and perhaps the -amount was nearer $100,000.<a id='r289'></a><a href='#f289' class='c012'><sup>[289]</sup></a></p> - -<p class='c007'>The reduction of icing charges to favored shippers is, of -course, only another way of paying rebates. Yet the car-lines contend that icing charges are compensation for a -private service which is not part of the transportation -service, and therefore outside the Interstate law. The -Interstate Commerce Commission says: “It has been very -<span class='pageno' id='Page_195'>195</span>customary in the past, and the practice still prevails in -some quarters, to allow to particular shippers a reduction -in these refrigerator charges. Testimony recently taken -at Chicago shows that one large shipper of California to -various eastern destinations was allowed concessions of this -kind, which probably aggregated in a series of seven or -eight years several hundred thousand dollars.”<a id='r290'></a><a href='#f290' class='c012'><sup>[290]</sup></a></p> - -<p class='c007'>The testimony of H. J. Streychmans before the Commission -at Chicago, May 12, 1905, throws much light on the -Armour Car business. Mr. Streychmans was for over 4 -years, from April, 1900, to August 1904, in the employ of -Armour & Company, and the Fruit Growers’ Express, one -of their car-line systems. One of his duties was to check -ice bills. He says the Armour Car-Lines generally pay $2 -to $2.50 a ton for ice, except on the St. Paul and Northwestern -and Erie. On the Northwestern the Armours -paid $1 a ton for ice, and on the Erie $1.25 or $1.50. -“These were the main lines. The Northwestern and St. -Paul handled practically all the green fruit shipments, and -the Erie used to get the shipments east.” The profits -were “five or six hundred percent.” On the very long -hauls the percentage was not so high. From Fresno, California, -to Boston, for example, the cost of icing was about -$38 and the Armour tariff charge for icing was $125, leaving -a margin of $87 a car.</p> - -<p class='c007'>On some roads Streychmans says that rebates were paid -the Armours on ice. The Chicago, Milwaukee and St. -Paul, for example, billed the ice at $2.50, but in paying -the railroad for the ice the Armours put in a rebate claim -for $1 a ton, reducing the net cost to $1.50. On the Texas -and Pacific, the company furnishing the ice remitted $1 per -ton making the net price $2.50. Ice cold rebates were also -paid at Buffalo.</p> - -<p class='c007'>The Armours in their turn made “allowances” to favored -shippers. Streychmans had to make up “allowance -<span class='pageno' id='Page_196'>196</span>statements” “showing the number of cars shipped by the -shippers and giving him a rate of 60 percent of the tariff -rate.” A “rebate of $15 to $25 a car” was paid back. The -last statement Mr. Streychmans put in typewriting before -leaving the Armour service in California was for a rebate -of 45 percent to Alden Anderson, Lieutenant-Governor of -California. The witness saw on the office file statements -of rebates to the Southern California Fruit Exchange of -$10 a car on 1904 shipments of oranges, etc. A number -of shippers in California got rebates amounting to 45 to -50 percent of the icing charges. They paid the actual cost -of icing plus a bonus of $10 to Chicago, $15 to New York, -and $20 to Boston. The cost and bonus together were -ordinarily less than half the tariff charges. For instance, -the Armour ice tariff to Boston from Southern California -was $120, the cost $38, and the bonus $20,—$58 total, -or a little less than half the tariff. The full tariff rates -were collected and the difference paid back. Shippers not -in on the secret-rebate arrangement paid the full rates and -got no discount.</p> - -<p class='c007'>From Portland, Ore., to Chicago the Armour icing charge -was $45, because the Northern Pacific cars are there to -compete; but further south, at Medford, Ore., where there -is only the Southern Pacific, in league with the Armours, -the icing charge to Chicago is $75.</p> - -<p class='c007'>When possible the car-line runs the cars without ice, -sometimes for long distances, but charges the shippers for -icing just as if it had been done.</p> - -<p class='c007'>Some of the railroads pay a bonus for the Armour business, -the St. Paul, the Northwestern, and the Grand Trunk, -for example; in other words, the Armour lines not only -charge extortionate rates for icing and get a mileage -on their cars loaded or empty, but in some cases sell -their tonnage to the railroads. In California, however, -the witness believes there is a traffic commission -to settle questions of the division of traffic between the -<span class='pageno' id='Page_197'>197</span>Santa Fe cars and the Armour cars on the Southern -Pacific.</p> - -<p class='c007'>Mr. Streychmans as a confidential clerk was supplied -with a secret code for use in his correspondence. The -inside title-page says: “Transportation Department, General -Offices, 205 La Salle Street, Chicago, Ill. Cipher -code No. 100; for exclusive use between themselves and -H. Streychmans. July 1, 1902. Armour Printing Works, -Chicago.”<a id='r291'></a><a href='#f291' class='c012'><sup>[291]</sup></a></p> - -<p class='c007'>Some of the cipher words and their meanings are as -follows:—</p> - -<p class='c024'><em>Launching</em>—Can make rebate.</p> - -<p class='c024'><em>Laundry</em>—Force payment higher rebates.</p> - -<p class='c024'><em>Laura</em>—Handle rebate matters very carefully.</p> - -<p class='c024'><em>Laurus</em>—Pay rebates.</p> - -<p class='c024'><em>Lava</em>—Pay rebates from cash on hand.</p> - -<p class='c024'><em>Lavello</em>—Rebate must be confidential.</p> - -<p class='c024'><em>Lavishment</em>—Working for rebate on.</p> - -<p class='c024'><em>Kinsley</em>—Shade rates a little rather than lose business.</p> - -<p class='c024'><em>Apples</em>—What allowance is necessary to secure business.</p> - -<p class='c024'><em>Joculariss</em>—Divide rate.</p> - -<p class='c024'><em>Jewelry</em>—Rates being secretly cut by all lines.</p> - -<p class='c024'><em>Judiciary</em>—Keep your rates below all others.</p> - -<p class='c024'><em>Junior</em>—Rates must be made which will secure the business.</p> - -<p class='c024'><em>Junk</em>—If necessary to secure the shipment you can make the rate to.</p> - -<p class='c024'><em>Juvenal</em>—Maintain rates unless others cut.</p> - -<p class='c024'><span class='pageno' id='Page_198'>198</span><em>Kadmaster</em>—Manipulate rates so as to.</p> - -<p class='c024'><em>Kalatna</em>—Meet any rate offered.</p> - -<p class='c024'><em>Footpath</em>—Interstate Commerce Commission.</p> - -<p class='c024'><em>Footprint</em>—Avoid service of summons from I. C. C.</p> - -<p class='c024'><em>Footrot</em>—Meeting of the I. C. C. at —— on —— to consider question of ——.</p> - -<p class='c024'><em>Imprint</em>—Martin A. Knapp of New York, Chairman.</p> - -<p class='c024'><em>Imprinted</em>—Judson C. Clements of Georgia.</p> - -<p class='c024'><em>Imprinting</em>—James D. Yeomans of Iowa.</p> - -<p class='c024'><em>Imprison</em>—Charles A. Prouty of Vermont.</p> - -<p class='c024'><em>Improbitas</em>—Joseph W. Fifer of Illinois.</p> - -<p class='c024'><em>Improbity</em>—Edward A. Mosely, Secretary.</p> - -<p class='c024'><em>Armour</em>—Arrange this with the utmost secrecy.</p> - -<p class='c007'>It is evident that the Armour Car-Lines make a business -of arranging secret rebates, evading the law and -eluding the Interstate Commission.</p> - -<p class='c007'>There are some 300 private car-lines in the country owning -and operating about 130,000 private cars. But the -law of concentration is acting on the private cars as well as -on the railways, and the private cars are rapidly consolidating -in few hands. Speaking of this movement in the refrigerator -business, the Interstate Commission says in its Report -for 1904, p. 14: “Some years ago there were a number of -these private-car companies which provided refrigerator -cars for the transportation of fruit under refrigeration. -Some of these were the Fruit Growers’ Express, the Kansas -City Fruit Express, the Continental Fruit Express, and -the Armour Refrigerator lines. These companies were all -independent of one another originally, and their cars were -used in competition with each other.... At the present -day all the above car companies have been absorbed by the -Armour Car-Lines Company, which has to-day, in our -opinion, a practical monopoly of the movement of fruit in -large quantities in most sections of the country. There is -the American Transit Refrigerator Company, which operates -over the Gould lines, and the Santa Fe Fruit Express, -<span class='pageno' id='Page_199'>199</span>which operates over the Santa Fe System, and there are -numerous refrigerator lines, having a small number of cars -and engaged in a particular service, but we know of no -company other than the Armour Car-Lines which could -move the peach crop of Georgia or the fruits of Michigan. -And this company, having acquired sufficient strength to -do so, has adopted the rule that it will not allow its cars to -go on the line of any railroad for the purpose of moving -fruit from points of origin on that railroad, unless it be -under what is known as an exclusive contract.”</p> - -<p class='c007'>By force of the enormous shipments the Armours control -they have compelled railroad after railroad to make the -exclusive contracts they desire, fix rates at their dictation, -collect exorbitant icing charges, give them an excessive -mileage allowance, return their cars empty if they will at -high speed instead of detaining them for loading back, etc. -And “if any railroad dares to disobey their orders when -they impose a requirement it will not get any more of their -traffic. The boycott cannot be visited more effectively -upon the railways. That is the secret of the whole situation. -They are the largest shippers, the most arbitrary, -the most remorseless that have ever been known.”<a id='r292'></a><a href='#f292' class='c012'><sup>[292]</sup></a></p> - -<p class='c007'>Is it any wonder that Mr. E. M. Ferguson, representing -a dozen associations of fruit and grocery and produce -houses, should tell the Senate Committee that the “situation -is tantamount to commercial slavery”? “It must be -plain to all that commercial freedom in any line of industry -has ceased when a gigantic trust like the Armour interests -are permitted, through ownership and operation of private -car-lines to absolutely control the common highways in so -far as the use of such highways may be required in the -<span class='pageno' id='Page_200'>200</span>transportation of that particular kind of traffic for which -their cars are a necessary instrumentality of carriage, thus -enabling the Armour interests (who, it will be remembered, -are also merchants in the commodities transported in their -cars) to completely dominate over all independent dealers -to the extent of fixing rates, conditions, and terms under -which such independent dealers may use the common -highways.”<a id='r293'></a><a href='#f293' class='c012'><sup>[293]</sup></a></p> - -<p class='c007'>The fate of a man left to the mercy of the Armours and -the mild influence of the Sermon on the Mount is similar -to the fate of a man without a gun encountering a tiger in -the jungles of Africa. Even the Government seems to be -unable to compel justice in this case. The big guns of the -Federal courts have little or no effect on the packers and -the railroads they have benevolently assimilated. They -disobey injunctions as freely as they do the principles of -Christianity and the dictates of conscience, with the excuse -perhaps, as to the last, of lack of acquaintance.</p> - -<p class='c007'>Standard Oil still practically controls the railroads for -the most part so far as the transportation of oil is concerned, -manipulating rates and service so as to favor -its own business and hinder or destroy the business of -competitors.</p> - -<p class='c007'>In the recent examination of Standard Oil methods by -the State of Missouri, L. C. Lohman, for 30 years an oil -dealer at Jefferson City, testified that he had been forced -to abandon his dealings with independent oil companies -because the Missouri Pacific and Missouri, Kansas, and -Texas roads refused to accept oil for shipment to him -from these companies.</p> - -<p class='c007'><span class='pageno' id='Page_201'>201</span>The railroads discriminate against the Texas oil wells -by making the rates on north-bound oil considerably -higher than on south-bound oil. Again the rate to various -points from Lima, the centre of the Ohio and Indiana -oil fields, is considerably higher than from Chicago, the -Standard Oil shipping point. For example:</p> - -<table class='table1'> - <tr> - <th class='c009'></th> - <th class='c017'>Miles.</th> - <th class='c018'>Rate per hundred.</th> - </tr> - <tr> - <td class='c009'>Lima to Chattanooga</td> - <td class='c017'>470</td> - <td class='c018'>43</td> - </tr> - <tr> - <td class='c009'>Chicago to Chattanooga</td> - <td class='c017'>643</td> - <td class='c018'>39.5</td> - </tr> - <tr> - <td class='c009'>Lima to Mobile</td> - <td class='c017'>916</td> - <td class='c018'>32.5</td> - </tr> - <tr> - <td class='c009'>Chicago to Mobile</td> - <td class='c017'>926</td> - <td class='c018'>23</td> - </tr> - <tr> - <td class='c009'>Lima to New Orleans</td> - <td class='c017'>962</td> - <td class='c018'>32.5</td> - </tr> - <tr> - <td class='c009'>Chicago to New Orleans</td> - <td class='c017'>922</td> - <td class='c018'>23</td> - </tr> - <tr> - <td class='c009'>Lima to Memphis</td> - <td class='c017'>512</td> - <td class='c018'>26.5</td> - </tr> - <tr> - <td class='c009'>Chicago to Memphis</td> - <td class='c017'>526</td> - <td class='c018'>18</td> - </tr> - <tr> - <td class='c009'>Lima to Cincinnati</td> - <td class='c017'>132</td> - <td class='c018'>10</td> - </tr> - <tr> - <td class='c009'>Chicago to Cincinnati</td> - <td class='c017'>305</td> - <td class='c018'>11</td> - </tr> -</table> - -<p class='c025'>It costs 3½ cents more per hundred to ship from Lima, 470 -miles, than from Chicago, 643 miles; 9½ cents more from -Lima, 916 miles, to Mobile, than from Chicago, 926 miles, -to the same place. The shorter distance has the higher -rate till you get 50 percent off, then the half distance from -Lima has about the same rate as the 100 percent distance -from Chicago.</p> - -<p class='c007'>The average rate on 25 staple commodities is about 2 -cents higher per hundred from Cleveland to New Orleans -than from Chicago to New Orleans, while the rate on -petroleum is 8 cents higher. This is a strong discrimination -against the Cleveland refineries in favor of the -Chicago shipping point at Whiting. The Standard Oil -is the only shipper of oil from Whiting.<a id='r294'></a><a href='#f294' class='c012'><sup>[294]</sup></a></p> - -<p class='c007'>The methods by which the Standard controls New -England are still in full swing. The report of the Industrial -Commission tells how the Standard Oil railroads -keep the independent refineries at Cleveland out of New -<span class='pageno' id='Page_202'>202</span>England through high rates on oil by rail, while the -Standard ships by water, and by making oil second class -unless the shipper has a private siding or tank opposite the -rails of the New Haven and Hartford Railroad, but fifth -class if the shipper has such siding or tank, <em>i. e.</em>, if the -shipper is the Standard Oil Co.<a id='r295'></a><a href='#f295' class='c012'><sup>[295]</sup></a> “The freight rate from -Cleveland to Boston,” says the report, “was formerly 22 -cents per hundred pounds alike on iron articles, grain, and -petroleum. But since the Interstate Commerce Act the -rates have been changed, so that the rate on grain is -15 cents per hundred pounds, on iron 20 cents, and on -petroleum 24 cents. Again, on almost every commodity -through rates are made from Cleveland and other western -points to points reached by the New York, New Haven -and Hartford Railroad. On petroleum there are no -through rates, but a local rate is added to the Boston -rate. Moreover the New York, New Haven and Hartford -prescribes that petroleum and its products shall be in the -second class of freight unless the person to whom it is -shipped has a private siding or tank opposite the rails, in -which case it is fifth class, the rate for fifth class being -probably one-half that for second class. These arrangements -are explainable by the fact that the Standard -Oil Company ships oil from its seaboard refineries to -Boston largely by tank steamers, and distributes it from -there for a comparatively short distance at the local -rates.”<a id='r296'></a><a href='#f296' class='c012'><sup>[296]</sup></a></p> - -<p class='c007'>In the West the Standard has persuaded the railroads -to lift the rates on oil so high as to make competition -<span class='pageno' id='Page_203'>203</span>difficult. The rate from Pennsylvania points to Chicago -was raised from 17½ cents to 19½ cents, and the rate from -Chicago to St. Paul went up from 10 cents to 20 cents.<a id='r297'></a><a href='#f297' class='c012'><sup>[297]</sup></a> -The Standard pumps oil to Chicago by pipe, and the higher -the rates by rail the more impossible it is for the independents -to compete. Of course it is against the direct interests -of the railway stockholders to have rates so high as to -check the traffic in oil by rail, but the Standard does not -care about that, and it is a small matter even to the railroad -managers compared to incurring the displeasure of -Standard Oil, which has sufficient control in the railway -world to cause any disobedient railroad most serious loss -and even make a railroad war upon it.</p> - -<p class='c007'>Before the Standard found other methods of controlling -transportation and milking the public it used to receive -half a million dollars a month in rebates. But some -railroad men who are in a position to know say that -since 1900 the Standard Oil has not asked for rebates, -the reason being that the tariffs are made in such a way -as to give the Trust all the advantage it requires.<a id='r298'></a><a href='#f298' class='c012'><sup>[298]</sup></a></p> - -<p class='c007'>The fight now going on in Kansas between the people -and the Oil Combine has forcibly illustrated the methods -of the Standard. When the Kansas oil fields began to -show signs of large prosperity the Standard went into the -State, put up refineries and storage tanks, laid pipe lines, -and began to build a through pipe line from Kansas to its -Chicago station at Whiting. By getting the railroads to -raise their rates on oil, compelling producers to agree to -sell their oil only to the Combine, resorting to cut-throat -competition to drive them out of any market they attempted -to enter, they practically captured the oil business of the -State and were able to put the price of crude oil down and -squeeze the independents until many of them were ready -to sell out to the Combine at the victor’s own price.</p> - -<p class='c007'><span class='pageno' id='Page_204'>204</span>The power of the Trust over the railroads is illustrated -by the case of Mr. I. E. Knapp of Chanute, who went to the -field in 1899 and secured a number of paying wells. He -also obtained a market for his crude oil with the Omaha -and Kansas City gas companies, transporting the oil in -tank cars of his own. In the recent investigation in Kansas -it appeared that he had enlarged his business till he -had 20 tank cars in transit. He paid the railroads 10 cents -per hundred lbs. to Omaha and Kansas City, and they -counted the weight at 6.4 lbs. per gallon. With this rate -and ¾ of a cent mileage on his cars he was able to make a -good profit, but suddenly in May, 1902, two weeks after he -had signed a year’s contract with the gas companies, the -railroads changed the weight classification to 7.4 lbs. per -gallon, adding thereby $7.50 per car to the freight, while -the freight on the products of crude remained unchanged. -That is, the Standard could still ship gas-oil as a product -of crude at the old weight of 6.4 lbs. a gallon.<a id='r299'></a><a href='#f299' class='c012'><sup>[299]</sup></a></p> - -<p class='c007'>Mr. Knapp protested and the railroad agents, admitting -that the classification was arbitrary and not general even -on their own roads, succeeded in getting the order reversed, -but only for a short time, when back it went, and in reply -to further protest from the Kansas agents their superior -officers wrote that they were tired of the correspondence -and declined to discuss the matter further. So for 11 -months Mr. Knapp had to fulfil his contract with a handicap -of $7.50 per car more cost than he had figured on. -The result was that in May, 1903, he turned over his crude -oil to the Standard which thereafter supplied the Omaha -and Kansas City gas companies, while Knapp’s 20 cars were -side-tracked and in the spring of 1905 were still idle at -Chanute.</p> - -<p class='c007'>The weight classification killed Knapp’s business, but a -few small independents lived in spite of it. So another -<span class='pageno' id='Page_205'>205</span>move was made on the railroad chess-board. Three great -railroads tap the Kansas oil fields: the Santa Fe, the Missouri, -Kansas and Texas, and the Missouri Pacific. In -August, 1904, just as the Standard finished its pipe line to -Kansas City, the rates on crude oil and its products were -raised by all the railroads on the field. The rate to Kansas -City went up from 10 cents to 17 cents a hundred; and -the rate to St. Louis rose from 15 cents to 22 cents. On a -carload of fifty-five thousand lbs. the increase in the freight -to Kansas City was $38.50, or $93.50 total, and $121 to -St. Louis. This was prohibitive. In their testimony given -in March last (1905), shippers, even those who were using -their own tank cars, declared that the change in rates -compelled them to stop business at once and shut down -their wells.</p> - -<p class='c007'>The advance in freight was not a part of a general readjustment -of rates. It was made alone. And it made oil -rates out of all proportion to other rates. The freight from -Chanute to Kansas City was $50 for a car of wheat, $40 -for corn, $66 for machinery, $28 for cattle, and $30 for a -car of fruit, against $93.50 for oil, the least valuable of all, -and formerly carried for $50 or $55 a car.</p> - -<p class='c007'>The examiner at the recent Kansas investigation presented -the following letter in explanation of the railroads: -“The reason the Santa Fe and the ‘Katy’ railroads raised -rates on oil after the pipe line was completed was because -the Standard’s companies arranged with them to do so, by -agreeing to give them a percentage upon every barrel of oil -that was run through their pipe lines on condition the railroads -would increase the freight rate on oil to a prohibitive -rate, so that all the oil would be forced through the pipe -line. Now the railroads have no oil, but get about ten -cents per barrel for all oil going through the pipe lines.”</p> - -<p class='c007'>This is similar to an arrangement that existed for several -years from 1884 on between the Pennsylvania Railroad and -the Oil Combine by which the railroad was to have a fixed -<span class='pageno' id='Page_206'>206</span>sum per barrel on 26 percent of all the oil going eastward -from the Pennsylvania oil fields, whether the oil went by -rail or pipe line,<a id='r300'></a><a href='#f300' class='c012'><sup>[300]</sup></a> in consideration of which the railroad -was to put up the rates on oil.</p> - -<p class='c007'>In the Kansas case there are other reasons more direct -and powerful perhaps than any traffic arrangement. The -Standard people have acquired a large interest in the Santa -Fe. One of their strongest and most unscrupulous men, -H. H. Rogers, has taken a place on the board of directors. -John D. Rockefeller and Wm. Rockefeller are directors of -the Missouri, Kansas and Texas, and the Missouri Pacific -is one of the principal lines of the Gould-Rockefeller system. -There are other indications of the grip the Standard has -upon the Kansas railroads. For example, the Colorado -Fuel Company that was so greatly favored by the Santa -Fe is largely owned and managed by the Standard Oil -crowd, and the Standard uses the Santa Fe’s right of way -for its pipe lines in Kansas, and for almost the entire -distance from Kansas City to Whiting.</p> - -<p class='c007'>Kansas has risen in revolt against the Oil Trust, and the -Legislature last year (1905) lowered the freight rates on -oil and passed a bill for the establishment of a State refinery -to compete with the Standard and give the oil producers of -the State a chance to escape from the “commercial tyranny” -they are now subjected to in consequence of the fact that -there is practically only one buyer in the market. The State -Supreme Court, however, has decided that the State refinery -act is unconstitutional. The independents might, however, -establish a co-operative refinery of their own and do a good -business, if they could get equal freight rates and sufficient -support from public sentiment to withstand the boycott to -which the Standard would be likely to resort. Only the -Standard, it is said, can get rates that encourage the shipment -of oil from Kansas wells at present. And the Standard -<span class='pageno' id='Page_207'>207</span>custom of putting prices very low where there is competition, -keeping prices high in other regions where there is no -competition, making the people in non-competitive localities -pay the cost of killing competition in other places, is exceedingly -effective, as is also its diabolical habit of ruining -merchants who buy independent oil, by establishing competing -houses close to them and underselling them on the -whole line of goods they handle, the Trust’s wide business -enabling it to stand such losses easily, as the total is only -an insignificant fraction of the profits made in regions -where no such fight is in progress.</p> - -<div class='chapter'> - <span class='pageno' id='Page_208'>208</span> - <h2 class='c005'>CHAPTER XXVII.<br /> <span class='large'>THE LONG-HAUL ANOMALY.</span></h2> -</div> - -<p class='c006'>The long and short haul clause is still broken by the railroads -as well as by the Supreme Court, especially in the -West and in the South, where the basing-point system -causes such grievous discriminations. For example, with -a rate of 48 cents from New York to Atlanta and a local -rate of 38 cents from Atlanta to Suwanee, the rate from -New York to Suwanee is 86 cents, although Suwanee is -31 miles nearer New York than Atlanta. This system is -not confined to places that have water competition. A -considerable number of towns on the Southern Railway -and on the Louisville and Nashville have been made -basing-points, though they have no water competition.<a id='r301'></a><a href='#f301' class='c012'><sup>[301]</sup></a></p> - -<p class='c007'>Jacksonville is the main basing-point in Florida, and -rates to other destinations are the rate of Jacksonville -plus the local rate from Jacksonville to destination, even -though the destination is nearer the point of shipment -than Jacksonville.<a id='r302'></a><a href='#f302' class='c012'><sup>[302]</sup></a></p> - -<p class='c007'>From New Orleans to the “Virginia Cities,” Richmond, -Lynchburg, and Norfolk, is about 800 miles. Charlotte, -at the southern border of North Carolina, is about half -way. Yet the rates to Charlotte on a number of articles -are double the rates to the Virginia cities, twice the distance. -The Southern Railway and the Seaboard Air Line -<span class='pageno' id='Page_209'>209</span>reach the city, but there is no competition. Water competition -must be met in Virginia, but if the Virginia ton-mile -rate will pay a profit, is not the fourfold ton-mile -rate to Charlotte an exorbitant charge?<a id='r303'></a><a href='#f303' class='c012'><sup>[303]</sup></a></p> - -<p class='c007'>Danville is an excellent example of the evils of place discrimination. -Prior to 1886 Danville enjoyed equal freight -rates with Lynchburg and Richmond through the competition -of the Virginia Midland Railroad and the Southern -Railway, but in that year the Southern road (then known -as the Richmond and Danville) bought the Virginia Midland -and deprived Danville of its equal rates. In 1890 -Danville subscribed $100,000 towards the construction of -another competing road, which was built, but after a few -years it too was purchased by the Southern Railway, and -the rates were made strongly adverse to Danville. The -matter went to the Commission and the courts, but the -city has not been able to carry on the litigation with -the roads.<a id='r304'></a><a href='#f304' class='c012'><sup>[304]</sup></a></p> - -<p class='c007'>The Southern Railway carried bananas in 1902–1903 -from Charleston to Lynchburg for 20 cents a hundred lbs., -but if the fruit stopped at Danville, part way on the road -to Lynchburg, the rate was 43 cents a hundred. The -road said it had to make low rates at Lynchburg to meet -competing bananas coming in by way of Baltimore. The -Commission found, however, that the Lynchburg rate was -13 cents lower than the rate justified by competition from -Baltimore or elsewhere.<a id='r305'></a><a href='#f305' class='c012'><sup>[305]</sup></a> It is claimed that railroad discrimination -has decreased the taxable values of Danville -several hundred thousand dollars from 1900 to 1904. The -Danville representative said, “I have heard a great deal -about confiscatory rates, fixed by a Commission authorized -to fix rates, but I have not heard anything about confiscatory -rates fixed by the railroads, whereby the property of -<span class='pageno' id='Page_210'>210</span>the public and of municipalities and taxable values are destroyed; -but those facts exist. They exist in my town, -and these facts exist in spite of the fact that the city -of Danville contributed $100,000 to the building of the -Lynchburg and Danville Railroad.”<a id='r306'></a><a href='#f306' class='c012'><sup>[306]</sup></a></p> - -<p class='c007'>The rate on canned goods from Hoopeston, Ill., to Nashville, -Tenn., is 27 cents per hundred. From Hoopeston -to Memphis, several hundred miles further, the rate is -19 cents. From Greenwood, Ind., to Nashville the rate -is 25 cents, to New Orleans 21 cents, to Mobile 20 cents, -and to Memphis 19 cents.<a id='r307'></a><a href='#f307' class='c012'><sup>[307]</sup></a> The Chesapeake and Ohio -Railway, the Norfolk and Western, and the Baltimore and -Ohio, all carry lumber from the Blue Ridge Mountains. -The rate from the Shenandoah Valley to Philadelphia is 16 -cents per hundred, while from points in the region a hundred -miles or so further west the rate is only 14 cents. -“The man who is producing lumber to-day on the eastern -slope of the Blue Ridge Mountains, almost within sight of -us, must pay 2 cents per hundred lbs. more to get lumber -to Philadelphia than the man 50 or 75 miles further -west, who gets his lumber transported for 14 cents. Now, -2 cents a hundred lbs. is 40 cents a ton. That is $12 a -carload of 30,000 lbs., and that is probably about all the -margin of profit there is in lumber of that kind.” All three -of the railroads are controlled by one great railroad system, -yet they claim that competition among them justifies -the lower rate in the region where they cross.<a id='r308'></a><a href='#f308' class='c012'><sup>[308]</sup></a></p> - -<p class='c007'>The rate on lumber from Chattanooga to Buffalo via -Cincinnati is 20 cents, while from Chattanooga to Cleveland, -a shorter haul over the same road, it is 23 cents.<a id='r309'></a><a href='#f309' class='c012'><sup>[309]</sup></a></p> - -<p class='c007'><span class='pageno' id='Page_211'>211</span>Corn rates now (1905) are 13 cents per hundred from -Omaha, 1400 miles to New York, and 25 cents from Boone, -Iowa, 1252 miles to New York, 25 cents also from Dennison, -Iowa, 1341 miles to New York, etc. Many similar facts -might be named. And such discriminations between contiguous -markets do not violate the Interstate Law. There -is no requirement that one railroad line shall not charge -less for a given distance than another railroad line charges, -and even on the same line the long and short haul clause -yields to the necessity of meeting competition.</p> - -<p class='c007'>When Dubuque wants to buy things from the South it -must pay much higher rates than Milwaukee, Madison, -Chicago, Freeport, etc. Manufacturers in Fort Dodge and -Dubuque, Iowa, have to pay higher rates to the Pacific -than manufacturers in Chicago and the East.</p> - -<p class='c007'>Iowa raises corn, cattle, and hogs, and would like to have -packing-houses, but cannot because of the discrimination in -favor of Chicago and Missouri River points.<a id='r310'></a><a href='#f310' class='c012'><sup>[310]</sup></a> Iowa business -men also say that small poultry and dressed-meat concerns -cannot compete with the big packers, on account of -the private-car system and the concessions granted the car-lines, -and they complain vigorously of the discrimination -against them in the rates on shoes, grain, cattle, iron, -steel, etc. The railroads have decreed that Iowa shall not -be a manufacturing State.</p> - -<p class='c007'>“<span class='sc'>The Chairman.</span> Why do you say that the railroads -have decreed that Iowa shall not become a manufacturing -State?</p> - -<p class='c007'>“<span class='sc'>Hon. A. B. Cummins</span>, Governor of Iowa. I reach that -conclusion simply because all our manufacturers, when they -attempt to reach beyond our own State, meet rates that so -discriminate against them that they cannot compete with -manufacturers elsewhere.”</p> - -<p class='c007'>In many cases a shipper at an intermediate point between -Minneapolis and Chicago can send his grain to Minneapolis, -<span class='pageno' id='Page_212'>212</span>rebill it to Chicago, and have it go back through his own -town to destination more cheaply than he can ship direct -to destination.<a id='r311'></a><a href='#f311' class='c012'><sup>[311]</sup></a></p> - -<p class='c007'>From Cannon Falls the rate to Chicago is 15 cents a -hundred on grain. The rate from Cannon Falls to Minneapolis -is 7 cents, and from Minneapolis to Chicago 7½ -cents. So it costs ½ cent a hundred more to ship from -Cannon Falls direct to Chicago than to ship to Minneapolis -and from there back through Cannon Falls to Chicago. -And if he wants to send his grain to Louisville, Ky., it will -cost him 5 cents a hundred more to ship from Cannon Falls -to Louisville, than if he sends his grain to Minneapolis and -bills it from there to Louisville.<a id='r312'></a><a href='#f312' class='c012'><sup>[312]</sup></a></p> - -<p class='c007'>Denver still suffers from the sort of discrimination described -in the preceding section.<a id='r313'></a><a href='#f313' class='c012'><sup>[313]</sup></a> The rate in cotton -goods from New England to Denver is $2.24 per hundred. -From New England to San Francisco, 1500 miles further -on, the rate is $1 a hundred in carload lots. On a shipment -in relation to which a Denver merchant made complaint, -the Burlington road received $25.95 from Chicago -to Denver, whereas if the same shipment had been intended -for Frisco the Burlington would have received only $4.50.</p> - -<p class='c007'>Salt Lake City also is wrestling with adverse freight -rates. On cotton goods the rate from New York to Frisco -is $1, while on the shorter haul from New York to Salt -Lake it is just double, $2 per hundred.<a id='r314'></a><a href='#f314' class='c012'><sup>[314]</sup></a> The rate on -window-shade cloth from New York to Salt Lake City is -$2.30. Carrying it 800 miles further, New York to California, -the railroads charge only $1, and this affords a slight -profit. Is it not clear that the $2.30 is excessive?<a id='r315'></a><a href='#f315' class='c012'><sup>[315]</sup></a> “The -men who build a city in the interior cannot expect to get -<span class='pageno' id='Page_213'>213</span>as reasonable a rate as the men who build their city on the -shore of the sea, but the difference should be a reasonable -one.”</p> - -<p class='c007'>It would seem that the men who build in the interior -might expect that they would not be called on to pay railway -fixed charges on coast traffic as well as on their own. -It is unfair to give the coast people the celerity of railway -traffic at the cost of water traffic. The railroad theory that -every pound of freight is to be secured that will pay the -cost of hauling or a little more, though a water route or a -shorter rail line might carry the freight at less absolute -cost, is not in accord with sound public policy or the saving -of industrial power. It is an economic absurdity to haul by -rail what can go more cheaply and as safely by water. A -co-operative company or a consolidated company of any -honest and sensible variety, owning both the railroads and -the steamboat lines, would divide the traffic in such a way -as to secure the maximum economy and convenience, and -would make a reasonable payment for the extra speed and -other advantages of railway transit the main condition of -selecting that method of transportation, with an option in -the company under specified conditions to facilitate the -full loading of trains and boats through the adjustment of -rates.</p> - -<p class='c007'>The case of Spokane is a specially aggravated one. The -rate on bar iron from Chicago to Spokane is $2.07 a hundred -against $1.25 to Seattle; iron pipe $1 to Spokane, 50 -cents to Seattle; lamps $2.35 to Spokane, $1.10 to Seattle; -belting $3.13 to Spokane, and $1.65 to Seattle; mining-car -wheels $1.26 to Spokane and 85 cents to Seattle; cottons -$1.75 to Spokane, 90 cents to the coast; soap (toilet) $1.23 -to Spokane, 75 cents to coast cities; wire and wire goods -$2.35 to Spokane, $1.50 to the coast; sewing machines -$2.25 to Spokane, $1.40 to coast; typewriters $5.96 to -Spokane, $3 to the cities of the coast.</p> - -<p class='c007'><span class='pageno' id='Page_214'>214</span>In general the rates from the East to Spokane are the -through rates to the coast plus the local rates from the -coast back to Spokane.<a id='r316'></a><a href='#f316' class='c012'><sup>[316]</sup></a></p> - -<p class='c007'>The preference which Tacoma, Seattle, etc., have over -Spokane is about 80 percent. Spokane pays about $1.80 -on shipments from Chicago, while Tacoma and Seattle pay -$1.<a id='r317'></a><a href='#f317' class='c012'><sup>[317]</sup></a> Spokane is a great railroad junction, but competition -has been suppressed by agreement between the lines, while -competition is still active at Tacoma and Seattle, so that -under the decision of the Supreme Court the railroads are -free to discriminate against Spokane. Aside from water -competition the railroads want to build up Seattle. They -have invested a great deal of money in docks and facilities -for doing business there. The manufacture of wooden -pipe was flourishing in Spokane. The company was shipping -2 carloads daily and its pay roll was $3,000 a month. -A rival factory in Seattle, backed by the big lumber firms -of the coast, got the railways to make rates that enabled it -to lay down the manufactured pipe in Spokane about 60 -percent cheaper than the Spokane factory could make it. -The situation came to light November, 1903, two months -after the rates went into effect, when the Spokane factory -came into competition with the Seattle factory for a contract -at Butte. The bid of the Seattle firm was less than -the pipe could be sold for at Spokane by the factory in that -city, and Butte is 384 miles east of Spokane. The rates -shut off the Spokane factory from the East entirely. In -about 8 months that flourishing manufacture in Spokane -was wiped out.<a id='r318'></a><a href='#f318' class='c012'><sup>[318]</sup></a> There was no water competition here -to make an excuse for discrimination, for the cut was -made from Seattle east to Spokane and points still further -east.</p> - -<p class='c007'><span class='pageno' id='Page_215'>215</span>The paper-box manufacture was forced out of existence -in Spokane by similar discriminations. Eastern factories -can lay down the boxes in Spokane cheaper than the local -factories can get the strawboard. So with other trades. -The manufacture of sash would be rapidly developed if it -were not for the grievous discrimination on window glass, -$1.38 from Pittsburg to Spokane, against 90 cents to Portland, -Seattle, etc.</p> - -<div class='chapter'> - <span class='pageno' id='Page_216'>216</span> - <h2 class='c005'>CHAPTER XXVIII.<br /> <span class='large'>OTHER PLACE DISCRIMINATIONS.</span></h2> -</div> - -<p class='c006'>There are multitudes of other place discriminations besides -those related to the long and short haul question. The -Business Men’s League of St. Louis and the St. Louis -Merchants Exchange complain of serious discrimination -against their city as compared with Chicago, Kansas City, -Omaha, etc., in rates on corn, wheat, oats, groceries, hardware, -and cotton.<a id='r319'></a><a href='#f319' class='c012'><sup>[319]</sup></a> Des Moines gets supplies from Chicago -at 60 cents, while Fort Dodge, the same distance from -Chicago, pays 72 cents.<a id='r320'></a><a href='#f320' class='c012'><sup>[320]</sup></a> Shoe manufacturers and wholesale -grocers of Atlanta who have had to close down declare -they were ruined by discriminative freight rates. Two -years ago a prohibitive rate was put on cotton bound for -Atlanta, but the freight agents of the leading railroads -entering the city were indicted by the Federal grand jury -and the rate was withdrawn. Mobile complains of loss of -business because of discriminations in favor of New Orleans -on one side and Pensacola on the other. The Fort Wayne -Commercial Club complains of discrimination in rates, -demurrage, switching, supply of cars, etc. The lumber -rate to Boston from points in West Virginia on the Norfolk -and Western is 29½ cents, while points on the B. & O. -and Chesapeake and Ohio in the same State and the same -distance from Boston have a rate of 23½ cents.<a id='r321'></a><a href='#f321' class='c012'><sup>[321]</sup></a> The -<span class='pageno' id='Page_217'>217</span>Pennsylvania Railroad taking lumber to points on the Long -Branch Railroad made the rates by adding to the New -York rate an arbitrary charge of 5 cents a hundred lbs. if -the lumber came from Saginaw, Mich., but only 2 cents -if the shipping point was Buffalo; held an unlawful discrimination.<a id='r322'></a><a href='#f322' class='c012'><sup>[322]</sup></a></p> - -<p class='c007'>Even so important a city as Philadelphia has had serious -complaints to make at times of the favoritism shown New -York by sending many of the best trains from Washington -north through Philadelphia without running into Broad -Street Station, but stopping only at West Philadelphia, -and by arranging excursion tickets so that southern buyers -would go to New York instead of Philadelphia.<a id='r323'></a><a href='#f323' class='c012'><sup>[323]</sup></a></p> - -<p class='c007'>In June, 1905, the New Haven and Hartford notified -connecting lines that it would not receive any further -shipments of coal for delivery east of the Connecticut River -or north of Hartford after August 31. Such an order -constitutes a compound discrimination against certain -localities and a specific commodity.</p> - -<p class='c007'>The whole of New England suffers from a discrimination -of about 100 percent in freight rates, the average rate in -New England being about double the average for the -United States. Quoting my testimony before the United -States Industrial Commission: “Another phase of discrimination -was brought out very prominently in our studies in -New England, and the best source of information, perhaps, -is the report made by the Massachusetts Railroad Commission -<span class='pageno' id='Page_218'>218</span>a few years ago (1894), in which they compared the -average freight rate on New England roads, individual -roads, and the average of all the roads there, showing that -our rates were about double the average freight rate in the -Middle States, or in the Middle West, and that it was -clearly double what the average freight rate was for the -whole United States, and they argued with much force -that it was really a discrimination against New England as -a whole, especially against Boston. One of the pleas put -forward in discussing the question of leasing the Boston -and Albany was that the giving over of the Boston and -Albany to the New York Central control would intensify -instead of relieve that sectional discrimination against New -England as a whole, because the road would come under -the control of those interested chiefly in the development -of New York City, and not in the development of Boston -and the New England States.”<a id='r324'></a><a href='#f324' class='c012'><sup>[324]</sup></a></p> - -<p class='c007'>In the Cincinnati Maximum Rate Case, involving a large -number of railways and steamship lines, the Commission -found discrimination between the rates from the eastern -seaboard and central territory to southern points, and fixed -a schedule of maximum rates from Cincinnati and Chicago -to Knoxville, Chattanooga, Rome, Atlanta, Meridian, Birmingham, -Anniston, and Selma, and required the railroads -to revise their rates to other points in the South in conformity -with the provisions of the order.<a id='r325'></a><a href='#f325' class='c012'><sup>[325]</sup></a> On appeal to -the Supreme Court it was held that the order could not -be enforced against the railroads, it being the opinion of -the majority of the court that the Interstate Act does not -give the Commission power to fix rates, such power not -being expressly conferred and being too great to be implied -<span class='pageno' id='Page_219'>219</span>from the prohibition of unreasonable rates and the general -authority given the Commission to enforce the law,<a id='r326'></a><a href='#f326' class='c012'><sup>[326]</sup></a> -so that the discrimination the Commission sought to -abolish between different sections of the country is still -in operation.</p> - -<p class='c007'>Sectional discrimination, either intentional or unintentional, -is bad enough, but there is a still wider and more -objectionable form of discrimination as between the country -and the big cities. The whole inland territory is made -tributary to a few competing points.</p> - -<p class='c007'>As Hadley says: “The points where there is no competition -are made to pay the fixed charges.”<a id='r327'></a><a href='#f327' class='c012'><sup>[327]</sup></a> The railroads -make whatever rates are necessary to get business on the -through routes, and compel the rural districts to pay rates -high enough to make up for the low rates on through -traffic. In many cases local rates in country districts are -almost as high as they were in the old stage-coach days. -Senator Dolliver suggests that every village and interior -community in the United States has a grievance against -the railways on account of discrimination against them in -favor of the large centres.<a id='r328'></a><a href='#f328' class='c012'><sup>[328]</sup></a> Every small town, and every -small shipper and every farmer has to pay tribute to the -big cities. The effect is to build up the cities in wealth -and population at the expense of the country. For example, -while Indianapolis increased by 32,389 inhabitants from -1880 to 1890, 49 counties remained stationary, and 21 -counties lost. So Detroit grew greatly, while 20 counties -in the State, nearly all the counties in Southern Michigan, -lost population. “It is manifest that the railroads are -greatly aiding the cities in drawing to themselves the best -and the worst from the country, and every moment are -increasing the magnitude of the municipal problem.”<a id='r329'></a><a href='#f329' class='c012'><sup>[329]</sup></a></p> - -<p class='c007'><span class='pageno' id='Page_220'>220</span>Mr. Alexander says that the railways should have credit -for decreasing the discriminations made by nature. “Thirty -years ago it cost over a dollar a pound to carry from New -York machinery and tools to work the mines of Utah, and -the trip consumed the whole summer, during which the -purchaser lost the use of his money. Now the trip requires -but two weeks or less, and the rate is about two cents. -Comparing these rates, and considering the character of -the present service as compared with the old, it is not an -exaggeration to say that the railroads have removed about -ninety-nine one-hundredths of the discrimination against -Utah which nature ordained in surrounding her with -deserts and mountains.”<a id='r330'></a><a href='#f330' class='c012'><sup>[330]</sup></a></p> - -<p class='c007'>It is true that the railways have greatly reduced the obstacles -of nature, but it is also true that they have used -their power of reduction unequally, arbitrarily, and unjustly. -The discriminations of nature have not the quality -of justice or injustice that attaches to discrimination by -human agencies. In the exercise of the function of removing -the difficulties of nature the common carrier must -be impartial.</p> - -<div class='chapter'> - <span class='pageno' id='Page_221'>221</span> - <h2 class='c005'>CHAPTER XXIX.<br /> <span class='large'>NULLIFYING THE PROTECTIVE TARIFF.</span></h2> -</div> - -<p class='c006'>The railroads continue to nullify the protective tariff upon -imports, and erect a counter protective tariff of their own -in favor of foreign goods and against domestic manufactures, -aiming to supply home markets, while on the other -hand they facilitate the export of our productions by rates -much lower than the charges on the same goods for the -same haul when intended for domestic consumption. The -effort seems to enable our producers to capture foreign -markets, and to give our markets, especially the transcontinental -markets, to foreign shippers. Anything to get -business, long hauls, ton-miles.</p> - -<p class='c007'>The Industrial Commission found that merchandise for -export went from Chicago to New York at 80 percent of -the ordinary transportation rates, and grain from Kansas -City to Chicago took 3 cents a hundred lower rate if billed -for export than if intended for local consumption.<a id='r331'></a><a href='#f331' class='c012'><sup>[331]</sup></a> The -export rate on wheat from Chicago to New York is 15 cents, -the domestic rate 20 cents; from Kansas City to Galveston -the export rate is 17 cents against a domestic rate of -33½ cents.<a id='r332'></a><a href='#f332' class='c012'><sup>[332]</sup></a></p> - -<p class='c007'>Another recent investigation shows that wheat from -Kansas City to Galveston was paying 27 cents if for domestic -use, against 10 cents if intended for export. The -<span class='pageno' id='Page_222'>222</span>rates fluctuate, but if the domestic rate flies low the foreign -rate flies lower still.</p> - -<p class='c007'>The price of grain in Liverpool is determined by world -competition; the railroads cut rates so that our grain can -be sold in Liverpool. They get a little more than the cost -of hauling and are satisfied.</p> - -<p class='c007'>When oil is selling at 9 cents a gallon here it can be -bought at 3 cents for shipment to Europe.</p> - -<p class='c007'>Railroads often give manufacturers a reduction of -33⅓ percent for export, and manufacturers sell at 30 percent -less for export. Mr. Bacon told the Senate Committee -(1905) that the export rates from all inland points to the -seaboard have been for years 25 to 33 percent below the -rates on goods for domestic use.<a id='r333'></a><a href='#f333' class='c012'><sup>[333]</sup></a></p> - -<p class='c007'>The rate on rails from Pittsburg to Hongkong via San -Francisco is only 60 cents per hundred, or less than the -rate between points a few hundred miles apart in this -country.</p> - -<p class='c007'>“For the past two years the trunk lines have given the -steel and iron producers a reduction of 33⅓ percent less -than the published tariff on domestic freights, so that all -iron and steel exported is carried at one-third less than the -people of this country are required to pay on freight of the -same character.”<a id='r334'></a><a href='#f334' class='c012'><sup>[334]</sup></a></p> - -<p class='c007'>American steel has sold at Belfast for $24 a ton, while -purchasers in this country had to pay $32 a ton at Pittsburg -for the same steel.<a id='r335'></a><a href='#f335' class='c012'><sup>[335]</sup></a> American rails sell for $28 a ton -for home use, but for foreign use they can be bought in -New York for $19 a ton and delivered in Beirut for $22.88. -Last year Mr. Wright, general manager of the Macon and -Savannah Railroad, stated that his road had to pay $29 a -ton for 5,618 tons of steel rails, although the same steel -<span class='pageno' id='Page_223'>223</span>company offered him rails for Honduras at $20 loaded on -vessels chartered to a foreign port.<a id='r336'></a><a href='#f336' class='c012'><sup>[336]</sup></a> During the last three -or four years, while the home price has been $28, the price -for export has been $5 to $12 below the home price, and -during the period 1902–1904 the difference has been $8 to -$12. The Great Northern and the Northern Pacific pay $28 -a ton for rails, while their competitor, the Canadian Pacific, -buys the same rails for $20 a ton and sometimes for $18 a -ton.<a id='r337'></a><a href='#f337' class='c012'><sup>[337]</sup></a> Even the United States Government could not get -fair prices at home for the materials and supplies needed -for the Panama Canal project, and found it necessary to -open the competition to foreign bids. Even if it were determined -to use only American goods they could be bought -more cheaply abroad than at home. Matters are arranged -so that goods are hauled across the ocean to Europe and -then hauled back and sold here at lower prices than they -could be bought for at the factory here for home use. If -the railways and the steamboats and the allied interests -make money they do not care how much industrial power -is wasted.</p> - -<p class='c007'>An investigation last year brought out the interesting -fact that the cheapest way sometimes to get goods from -Chicago to San Francisco is to ship from Chicago across -the Pacific Ocean and then back to California. The Interstate -Commission says: “The complainant desired to ship -the machinery for a stamp mill from Chicago to China. -Being interested in a line of steamships between San Francisco -and the East, his intention was to make shipment to -San Francisco and thus to destination by his own line. -Upon investigation, however, he learned that the rate from -Chicago to San Francisco was $1.25 per hundred lbs., while -from Chicago to Shanghai it was 90 cents per hundred lbs. -The rate at that time from Shanghai to San Francisco was -20 cents per hundred lbs. Had he desired to lay down his -<span class='pageno' id='Page_224'>224</span>stamp mill at San Francisco, he could have shipped it to -Shanghai, and from Shanghai back for 15 cents per hundred -lbs. less than the direct rate from Chicago to San -Francisco.”<a id='r338'></a><a href='#f338' class='c012'><sup>[338]</sup></a></p> - -<p class='c007'>President Tuttle of the Boston and Maine tells of a cargo -of flour carried from the Pacific Coast around the Horn to -England and then back to Boston to be delivered to a -starch factory at Watertown. “A sailing vessel had gone -to the Pacific coast with goods from Europe. There was -some lack of a cargo for return. They found a lot of soft -wheat flour there with which they loaded that vessel and -carried it to Liverpool and put it in storage. Then the -owner of the flour began to hunt around the world for a -market, and found that within ten miles of Boston he could -sell that flour to a starch factory at a profit and pay for the -additional land haul of 10 miles.”</p> - -<p class='c007'>“<span class='sc'>The Chairman.</span> It first went to Liverpool?</p> - -<p class='c007'>“<span class='sc'>Mr. Tuttle.</span> Went from San Francisco around the -Horn to Liverpool and then across the Atlantic back to -Boston. In order to carry that flour to Watertown, across -the continent by rail, the railroads would have had to make -a rate which was practically nothing, because the transportation -by water is so extremely low that you cannot put -the railway rate against it and make a profit. The cost of -carriage of a ton of freight by a large steamer is so low that -there is hardly any way to figure it. We have to meet -those conditions. That is what we are doing.”<a id='r339'></a><a href='#f339' class='c012'><sup>[339]</sup></a></p> - -<p class='c007'>The low rates on imports enable European manufacturers -to ship their goods to our western States more cheaply than -our own eastern manufacturers can send their goods to the -West. Rates on imports are frequently only a third of -rates on domestic goods over the same lines,<a id='r340'></a><a href='#f340' class='c012'><sup>[340]</sup></a> and sometimes -<span class='pageno' id='Page_225'>225</span>the difference is greater yet. And it is not confined -to manufacturers. Thousands of acres of Kaolin mines -from which the finest chinaware can be made are idle in -the region round Macon, Ga., because clay can be shipped -from England to Ohio factories cheaper than it can go from -Macon to Ohio. Several mining companies have had to -quit business because of foreign competition favored by low -import freight rates.</p> - -<p class='c007'>Both export and import reductions lead to serious -discriminations, not merely as between our people and foreigners, -but among our cities and shippers.</p> - -<p class='c007'>Unscrupulous shippers take advantage of the export rates -in the domestic trade, billing their freight on the export -basis. Grain, for example, is “billed for export” to Chicago -or New York or other centre; and then “the destination -is changed in transit,” that is, after the grain or other -shipment gets to Chicago or New York, the shipper stops -it there, or orders it to Albany or Worcester or otherwise -changes the destination.<a id='r341'></a><a href='#f341' class='c012'><sup>[341]</sup></a> The same thing is done in the -packing-house trade to New York. The Vanderbilt traffic -manager says: “Our domestic business does not amount to -anything.” About all the dressed beef that goes east appears -to be for export. When asked how the eastern territory -got its dressed beef, the manager said: “I could not -give you any information on that point.”<a id='r342'></a><a href='#f342' class='c012'><sup>[342]</sup></a></p> - -<p class='c007'>Such results are worse even than the difference between -the export rate on wheat and on flour, which tends to discourage -the milling of wheat in this country and throw into -the hands of foreign millers business that belongs to our millers. -Worse than this or than the discouragement of home -manufactures by cut rates on imports, is the discrimination -in the export and import rates in respect to different ports.</p> - -<p class='c007'>“One of the most remarkable trade movements of recent -times is the growth of the Gulf ports at the expense of New -<span class='pageno' id='Page_226'>226</span>York and other Atlantic ports. New Orleans has become -the second largest grain-exporting port, and gives promise -of becoming the first. Galveston’s export and import trade -is rapidly increasing. In 1897 New York handled 77.9 percent -of the wheat, corn, and flour exports, and in 1904 her -share had dwindled to 36.9 percent. The Gulf ports have -made corresponding or greater increases. Natural advantages, -including proximity to supply centres, and the -extension of port facilities for handling cargoes, have had -something to do with this increase of exports from the Gulf -ports, but the chief factor has been the differentials made -by railroads connecting with those ports. So alarming is -the decrease of commerce through the port of New York -that an effort is being made to secure a legislative investigation -of the subject.”<a id='r343'></a><a href='#f343' class='c012'><sup>[343]</sup></a> The Chairman of the Committee -on Foreign Commerce for the Baltimore Chamber of Commerce -says: “We are gradually shrivelling up because of -discrimination in freight rates. Ever since December last, -1904, when the grain rates were advanced 1 to 1½ cents on -export grain and 3 cents for domestic delivery, business in -this city has almost come to a standstill.... The Gulf ports -are getting it all, and while millions of bushels of corn were -accustomed to arrive here, after the December marketing -from the Southwest, not one has been received since the -first of the year. Firms formerly engaged in the exporting -business in this city have pulled up stakes and have gone -to New York in search of better railroad opportunities.... -The Chamber of Commerce here is meeting daily to devise -a means of surmounting the danger which now threatens -the export business of Baltimore.”</p> - -<p class='c007'>The Government is forbidden to favor one port more -than another, but the railroads are left free with a power -of favoritism greater than any the Government possesses, and -they are using the power as we have seen. Section 9, of -Article 1, of the Federal Constitution says: “No preference -<span class='pageno' id='Page_227'>227</span>shall be given by any regulation of commerce in revenue to -ports of one State over those of another.”</p> - -<p class='c007'>Congress itself cannot establish any differential that -would give one port of the United States an advantage -over another port. But what the Constitution forbids -Congress to do the railroads can do and have done, by -manipulating the rates on exports and imports, thereby -making business flow to whatever ports they please.</p> - -<div class='chapter'> - <span class='pageno' id='Page_228'>228</span> - <h2 class='c005'>CHAPTER XXX.<br /> <span class='large'>SUMMARY OF METHODS AND RESULTS.</span></h2> -</div> - -<p class='c006'>We have dug down through the geologic epochs of discrimination, -and have examined the living varieties. The -predominant forms have changed, but none of the species -we find among the fossils of the earlier strata have become -extinct, though some of them, ticket scalping and the -direct rebate for instance, are much less in evidence than -formerly.</p> - -<p class='c007'>Passes<a id='r344'></a><a href='#f344' class='c012'><sup>[344]</sup></a> and other personal discriminations<a id='r345'></a><a href='#f345' class='c012'><sup>[345]</sup></a> still prevail, -and the assortment of favoritisms in freight traffic is larger -<span class='pageno' id='Page_229'>229</span>than ever. Here is a list of more than 60 forms of discrimination -that are now in use, many of them constantly and -others as occasion may demand:—</p> - -<p class='c026'>Passes.</p> - -<p class='c026'>Ticket brokerage.</p> - -<p class='c026'>Private passenger-coaches.</p> - -<p class='c026'>Gifts of stock.</p> - -<p class='c026'>Tips on the market.</p> - -<p class='c026'>Secret rates.</p> - -<p class='c026'>Rebates.</p> - -<p class='c026'>Elevator and compress fees.</p> - -<p class='c026'>Commissions to favored shippers as though they were agents -of the company, to secure for it their own freight.</p> - -<p class='c026'>Salaries to favored persons as nominal employees, or fees for -nominal services.</p> - -<p class='c026'>High salaries or commissions to real traffic agents who divide -with favored shippers.</p> - -<p class='c026'>Cash contributions to shippers in the guise of payments to -“encourage new industries.”</p> - -<p class='c026'>Paying “transfer allowances” to some shippers for carting -their own goods.</p> - -<p class='c026'>The “strawman” system.</p> - -<p class='c026'>“Expense bill” abuses.</p> - -<p class='c026'>Loans to dealers and shippers or consignees to increase shipments -or divert them from other roads.</p> - -<p class='c026'>Combination rates of which informed shippers may take advantage.</p> - -<p class='c026'>Making the published rate cover the price of the goods as -well as the freight for some shippers.</p> - -<p class='c026'>Flying rates, or “midnight tariffs.”</p> - -<p class='c026'>Terminal or private-railway abuses—unfair division of rates, -etc.</p> - -<p class='c026'>Private-car abuses—big mileage rates, excessive icing charges, -exclusive contracts, etc.</p> - -<p class='c026'><span class='pageno' id='Page_230'>230</span>Espionage, giving some shippers inside information of the -business of other shippers.</p> - -<p class='c026'>Maintaining or paying for the maintenance of tracks or other -property belonging to the shipper.</p> - -<p class='c026'>The long and short haul abuse.</p> - -<p class='c026'>Unjust differences in the rates accorded different places to -favor certain localities, or individuals who have business -interests located there.</p> - -<p class='c026'>Unduly low rates to “competitive points” in general, as compared -with local rates, building the cities at the expense -of the country.</p> - -<p class='c026'>Unfair classification.</p> - -<p class='c026'>Use of different classification for local and for through traffic.</p> - -<p class='c026'>Laxity of inspection in case of special shippers, enabling -them to get low rates on mixed goods in carloads billed -at the rate appropriate to the lowest product in the -mass.</p> - -<p class='c026'>Intentional mistakes in printing tariffs, a few copies being -run off for favored shippers, after which the mistakes are -discovered and corrected for the ordinary shipper and the -Interstate Commission.</p> - -<p class='c026'>Fictitious entries in the “prepaid” column of the freight -bill.</p> - -<p class='c026'>Instructions to agents to deduct a certain percentage from the -face of the bill when collecting for specified shippers.</p> - -<p class='c026'>Payment of fictitious claims for damage, delay, or overcharge.</p> - -<p class='c026'>Making a low joint rate (or single rate either) on a given commodity -when shipped for a purpose confined to a few shippers, -while other shippers using the same commodity for -other purposes have to pay much higher rates.</p> - -<p class='c026'>False billing,—</p> - -<div class='lg-container-l c027'> - <div class='linegroup'> - <div class='group'> - <div class='line'>false weight—underbilling,</div> - <div class='line'>false number—billing a larger number of packages than are sent and claiming pay for the difference,</div> - <div class='line'>false description—putting goods in a lower class than the one to which they belong,</div> - <div class='line'>false destination—billing for export and changing destination in transit.</div> - </div> - </div> -</div> - -<p class='c026'>Not billing at all—carrying goods free.</p> - -<p class='c026'><span class='pageno' id='Page_231'>231</span>Excessive difference in the rates for large and small shipments.</p> - -<p class='c026'>Unfair discrimination between shipments in different form—barrels -and tanks for example.</p> - -<p class='c026'>Charging more when the freight is loaded in one than when it -is loaded in another way practically identical so far as the -railway is concerned.</p> - -<p class='c026'>Favoritism in switching charges, demurrage, etc.</p> - -<p class='c026'>Direct overcharges, causing loss through delay and expensive -litigation, or through excessive payments.</p> - -<p class='c026'>Withholding cars.</p> - -<p class='c026'>Delay in carriage and delivery.</p> - -<p class='c026'>Refusal to deliver at a convenient place.</p> - -<p class='c026'>Difference in time allowed for unloading.</p> - -<p class='c026'>Refusing privileges accorded others,—</p> - -<div class='lg-container-l c027'> - <div class='linegroup'> - <div class='group'> - <div class='line'>milling-in-transit,</div> - <div class='line'>division of rates,</div> - <div class='line'>credit, or payment of freight at destination,</div> - <div class='line'>station and track facilities,</div> - <div class='line'>special speed.</div> - </div> - </div> -</div> - -<p class='c026'>Selling or leasing terminal or other rights or properties to -favored shippers so as to exclude others absolutely.</p> - -<p class='c026'>Refusing shipments to or from certain persons or certain -places.</p> - -<p class='c026'>Failing to run advertised trains or taking other special action -in order to interfere with plans of an opponent, <em>e. g.</em>, to -keep people from going to mass meeting at which he is to -speak.</p> - -<p class='c026'>Unfair difference in the service accorded different places.</p> - -<p class='c026'>Cutting off part or whole of a customary service.</p> - -<p class='c026'>Side-tracking cities and towns, or depriving them entirely of -railroad facilities.</p> - -<p class='c026'>Arranging stop-overs so as to drive business to other cities.</p> - -<p class='c026'>Arbitrary routing of shipments.</p> - -<p class='c026'>Payments for routing.</p> - -<p class='c026'>Guarantee by railroad against loss upon shipments over its -line.</p> - -<p class='c026'>Unreasonable differences in the commodity rates on different -articles.</p> - -<p class='c026'>Prohibitive rates on special commodities or special shipments.</p> - -<p class='c026'><span class='pageno' id='Page_232'>232</span>Unreasonable differences between the rates on the same goods -going and coming between the same places.</p> - -<p class='c026'>Special rates on goods for export.</p> - -<p class='c026'>Special rates on imports.</p> - -<p class='c007'>Even this long list does not cover the whole field. -The cases on record do not exhaust the possibilities of discriminations. -The following bit of testimony shows how -easy it is to invent new ways of passing railroad moneys -into the treasuries of favored shippers,—ways that would -not be interfered with by any law short of public control -of the purchase and sale of merchandise. Mr. Gavin, -the agent of the Vandalia line, was being examined by the -Interstate Commerce Commission in March, 1901. On the -question as to how business could be got by giving advantages -to shippers without cutting rates Mr. Gavin said: -“There is nothing to prevent my going down to the packing-house -and paying $10 apiece for hams if I wanted to; -if I did not want to cut a rate, there is generally a way out -of the hole.”</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> A good many ways; and -it is your belief that a good many of these have been -practised, is it not?</p> - -<p class='c007'>“<span class='sc'>Mr. Gavin.</span> I do not know. I would not like to say.</p> - -<p class='c007'>“<span class='sc'>Commissioner Prouty.</span> If you bought hams enough -at $10 apiece the packing-house could give you the traffic at -full rates?</p> - -<p class='c007'>“<span class='sc'>Mr. Gavin.</span> Yes, sir.</p> - -<p class='c007'>“<span class='sc'>Commissioner Prouty.</span> Have you ever known that -to be done?</p> - -<p class='c007'>“<span class='sc'>Mr. Gavin.</span> No, sir; but I say there are lots of ways -out of the woods.”</p> - -<p class='c007'>Almost everybody agrees, in public, that railway favoritism -ought to be stopped.<a id='r346'></a><a href='#f346' class='c012'><sup>[346]</sup></a> It disturbs the fair distribution -<span class='pageno' id='Page_233'>233</span>of wealth, undermines industrial justice, business morals, -and political honesty; builds monopoly; wastes resources, -and causes enormous loss to the railroads as well as to the -persons and places that are discriminated against.</p> - -<p class='c007'>Railway discrimination breaks down the equality of -opportunity that is one of the fundamental rights recognized -in every country. It tends to separate success from -merit and industry, and make it depend on fraud and -favoritism. Judge Grosscup touched a vital point when -he said to the Boston Economic Club, March 11, 1905: -“Any difference in rates permitted by law, even though -<span class='pageno' id='Page_234'>234</span>based on the bulk of the tonnage handled, is a direct and -effective blow, by the nation itself, at the principle that -every man, whatever his present business size, shall be -given equal conditions and equal opportunity.... In this -country there is no such thing as size to a business man. -The man of little size expects to get big. He has a right -to get big. He has a right to have the atmosphere of -equal opportunity and equal conditions in which to grow, -and excepting, of course, some unit, such as a ton or a car, -the charge ought to be the same for the little as for the big -shipper.”<a id='r347'></a><a href='#f347' class='c012'><sup>[347]</sup></a></p> - -<p class='c007'>The railways are public highways, they exercise governmental -powers and fulfil governmental functions, and it is -an atrocious misuse of social power to employ these so as to -give special advantages to a few members of the community. -The Interstate Commission says: “The railroad -is justly regarded as a public facility which every person -may enjoy at pleasure, a common right to which all are -admitted and from which none can be excluded. The -essence of this right is equality, and its enjoyment can be -complete only when it is secured on like conditions by all -who desire its benefits. The railroad exists by virtue of -authority proceeding from the State, and thus differs in -its essential nature from every form of private enterprise. -The carrier is invested with extraordinary powers which -are delegated by the sovereign, and thereby performs a governmental -function. The favoritism, partiality, and exactions -which the law was designed to prevent resulted in -<span class='pageno' id='Page_235'>235</span>large measure from a general misapprehension of the nature -of transportation, and its vital relation to commercial and -industrial progress. So far from being a private possession, -it differs from every species of property, and is in no -sense a commodity. Its office is peculiar, for it is essentially -public. The railroad, therefore, can rightfully do nothing -which the State itself might not do if it performed this -public service through its own agents, instead of delegating -it to corporations which it has created. The large shipper -is entitled to no advantage over his smaller rival in respect -to rates or accommodations, for the compensation exacted -in every case should be measured by the same standard. -To allow any exceptions to this fundamental rule is to subvert -the principle upon which free institutions depend, and -substitute arbitrary caprice for equality of right.”<a id='r348'></a><a href='#f348' class='c012'><sup>[348]</sup></a></p> - -<p class='c007'>The losses to the railroads cannot be estimated accurately, -but we have some interesting hints. Franklin B. Gowan -said in 1888: “The gross receipts of the railroads of this -country, in round numbers, are eight hundred millions of -dollars per annum, and I verily and honestly believe that -one hundred millions of dollars annually are taken out of -the pockets of the people of this country by unjust railway -discrimination, and turned over to this privileged class—and -this is equal to a tax of two dollars per head paid by -the people for the sake of building up the new aristocracy -of wealth that in this free country arrogate to themselves -the position of the nobility of the older countries. It is -utterly impossible that there can be any success attending -a monopoly of natural products without the aid of the unjust -discrimination of railroad companies. And only when -such discrimination ceases will all people be placed on terms -of equality.”</p> - -<p class='c007'>If the losses were more than $100,000,000 a year when -the total income of the railroads was $800,000,000 a year, -the losses now with an income of about $2,000,000,000 a -<span class='pageno' id='Page_236'>236</span>year are probably, at least, $200,000,000 a year, allowing -for all the saving that is claimed to have resulted from the -Elkins Act. A railroad officer who says his road has constantly -disregarded the Interstate Commerce Law declares -that in more than one year the net revenues of his company -“would have been increased by more than 15 percent if no -rebates had been paid to favored customers.” The hundreds -of millions which the transportation systems of this -country have, during the period from 1887 to 1905, earned -and repaid to the men who controlled the large industrial -products of the country—coal, iron, grain, salt, sugar, oil, -provisions, and lumber—belonged equitably to employees -and stockholders (or to the people). “And the history of -this period may be repeated as often as the whim or the -interest of a traffic manager or owning director prompts or -requires.”<a id='r349'></a><a href='#f349' class='c012'><sup>[349]</sup></a></p> - -<p class='c007'>The losses through the disturbance of business, interference -with the relation between energy and industry on one -side and success on the other, depression of localities, and -ruin of individuals, are beyond computation.</p> - -<p class='c007'>Most shippers would be glad to do away with discrimination -if they could be sure that there would be a square deal -all round, fair play, and no concessions to their rivals. And -most railroad men would be glad to be protected against the -discriminations that are forced upon them by the shippers, -and by competition among the roads, if they could be sure -that the published rates would really be adhered to by their -competitors.</p> - -<p class='c007'>Law after law has been passed to prevent unjust discriminations, -and yet in spite of the contrary statements -of some witnesses,<a id='r350'></a><a href='#f350' class='c012'><sup>[350]</sup></a> it is perfectly clear that they have -<span class='pageno' id='Page_237'>237</span>not ceased, and that comparatively little has been done in -that direction.</p> - -<p class='c007'>Railroad men in high position declare that discriminations -always will exist. President Ripley of the Santa Fe -says: “The situation is practically remediless. I think -it will always be.”<a id='r351'></a><a href='#f351' class='c012'><sup>[351]</sup></a> President J. J. Hill of the Great -Northern says: “You may say there shall be no discrimination. -But that condition will never exist. If there -were no discrimination the people would come down here -in great throngs and ask you to authorize discrimination. -We have to discriminate.”<a id='r352'></a><a href='#f352' class='c012'><sup>[352]</sup></a> When I asked President -Fish of the Illinois Central how discriminations could be -stopped he said: “Tell me how to enforce the Ten Commandments -and I’ll tell you how to stop discriminations.” -Another railroad president, whose name I am not at liberty -to give, said in reply to the same question: “Discriminations -will never cease so long as there is competition -among the railroads, or political favors and protection can -be secured thereby, or railways and railway men are interested -in other businesses than transportation.” President -Hill also recognizes the factor of special self-interest in -addition to the influence of competition. He says: “I -think that every railway officer in this country should -be disqualified from having any interest, directly or indirectly, -in any large producer of traffic, whether it is -a coal mine or a factory or a mill or anything else, on a -line of railway where he is on the pay roll.”</p> - -<p class='c007'><span class='pageno' id='Page_238'>238</span>“<span class='sc'>Senator Clapp.</span> And the reason for that suggestion -is what?</p> - -<p class='c007'>“<span class='sc'>Mr. Hill.</span> That he cannot be fair to the other fellow -and punish himself.</p> - -<p class='c007'>“<span class='sc'>Senator Clapp.</span> And the opportunity is such that -it cannot be detected and prevented?</p> - -<p class='c007'>“<span class='sc'>Mr. Hill.</span> It is so easy, if there is a great demand -for coal in one direction, or for some commodity -in one place, for him to help one fellow and forget the -other.”<a id='r353'></a><a href='#f353' class='c012'><sup>[353]</sup></a></p> - -<p class='c007'>One of the gravest dangers lies in the fact that men who -are largely interested in the great industrial corporations -control certain railway lines and have large influence -with many others. The interlocking of railroad interests -with other industrial interests is a cause of discrimination -second only to the pressure of railroad competition for -traffic that is used by shippers as a means of extorting the -favors they desire.</p> - -<p class='c007'>A railroad executive writing in <cite>The Outlook</cite> for July 1, -1905 says: “Notwithstanding the violations of the Interstate -Commerce Law have been open and notorious, and -indictments have been numerous and prosecutions not -infrequent, no railroad officer has ever been incarcerated. -For my own part, the penal liability for such disobedience -has never in any wise deterred my purpose to secure -my company’s share of tonnage by whatever means competitors -employed. I have the reputation of a law-abiding -citizen in my home city—am well known—of good -personal character. I flatter myself that a jury could -not be found which would commit me as a felon because I -<span class='pageno' id='Page_239'>239</span>directed the payment of a rebate to a shipper—a transaction -which did not inure to my financial advantage. -Could a jury be found that would exact a felon’s punishment -for such men as Mr. Stuyvesant Fish, or Mr. Secretary -Paul Morton, or Mr. Marvin Hughitt for disobeying a -statute in order that the revenues of the company by -which he was employed might not be decimated?” He -had previously said that the revenues of the railroads -have been decimated by hundreds of millions through -the granting of discriminations, but he argues that the -revenues of any particular railroad that should refuse -concessions would be decimated still more largely. The -truth of this contention is strongly illustrated by the -following incident. Some years ago Judge Taft (now -Secretary of War), as receiver for the “Cloverleaf” Railroad -from Toledo to St. Louis, appointed Mr. Samuel -Hunt of Cincinnati, a well-known and successful railroad -manager, and required him to comply strictly with the -Interstate Law. In doing this Mr. Hunt was obliged -“to disregard many outstanding rebate obligations of his -predecessor in the receivership, thereby giving offence to -many patrons of the road and their friends, the result -of which was a decrease of the gross earnings of the road -within twenty months of more than $340,000.” The -sacrifice of hundreds of thousands of dollars, the loss of -the good-will of shippers, the harsh criticism of competitors, -and broken health were the results of Mr. Hunt’s -earnest efforts to obey the law. M. E. Ingalls, President -of the Big Four, said a few years ago to a convention of -State railroad commissioners: “Men managing large corporations, -who would trust their opponent with their -pocket-book with untold thousands in it will hardly trust -his agreement for the maintenance of tariffs while they -are in the room together.</p> - -<p class='c007'>“The railway official who desires to be honest sees -traffic leave his line.</p> - -<p class='c007'><span class='pageno' id='Page_240'>240</span>“The result is these men in despair are driven to do -just what their opponents are doing. They become lawbreakers -themselves.</p> - -<p class='c007'>“No one is going to try and send his competitor to -prison. Besides, there is the fear that he himself may -have committed transgressions which in turn will be discovered -and punishment inflicted upon himself.</p> - -<p class='c007'>“Unless some change is made, the small shippers of the -country will be extinguished, and a few men of large -capital will control the entire merchandise business. And -railways ... will be seized upon by large capitalists and -combined into one monstrous company.”</p> - -<div class='chapter'> - <span class='pageno' id='Page_241'>241</span> - <h2 class='c005'>CHAPTER XXXI.<br /> <span class='large'>DIFFICULTIES OF ABOLISHING DISCRIMINATION.</span></h2> -</div> - -<p class='c006'>It is difficult to enforce the law against discrimination, -because of the strong interests that call for it, the secrecy -of many of its forms, the reluctance of shippers to make -complaints for fear of persecution, and the resistance -offered by railway officers to efforts to get at the facts, -leaving the country during an investigation, refusing to -answer truthfully on the witness stand, burning books -and papers that might reveal the facts to courts or other -investigating bodies or enable the officers to refresh their -memories so as to be able to answer questions.</p> - -<p class='c007'>Often there are no records of the concessions granted -favored shippers except the memoranda in the personal -note-books of the traffic managers. Rebates or commissions -are frequently paid by messenger boys sent from -the general freight office, or treasurer’s office, with the -currency and a slip of paper with some pencil marks on -it, instead of sending a check and obtaining a voucher.<a id='r354'></a><a href='#f354' class='c012'><sup>[354]</sup></a> -The officers forget about the transaction as soon as possible,—sooner -than possible it seems sometimes,—or in -some other way try to prevent the Commission from getting -the facts with sufficient detail to bring suits. For -example, in the “Dressed-meat” Hearing at Kansas City, -March 21, 1901, fifteen transportation men were subpœnaed -and examined without securing any important facts. The -witnesses, who occupied positions which would naturally -<span class='pageno' id='Page_242'>242</span>lead one to suppose they would know all about the matters -in hand, manifested the most persistent and remarkable -ignorance, and the Commission had to go to Chicago and -try again before it got any light on the packing-house -transportation question.</p> - -<p class='c007'>In March, 1898, the Interstate Commission investigated -rebates on flour from St. Paul, Minneapolis, and Duluth -to Atlantic seaports. The Commission had information of -wide departures from the published tariff. It says: “The -inquiry was greatly hampered by the disappearance of -material witnesses before subpœnas for their attendance -could be served, the inability of several who did testify -to recall transactions there of recent date, and the evident -reluctance of others to disclose any information bearing on -the subject involved. All of the railway witnesses denied -knowledge of any violation of the statute, and most of the -accounting officers testified to the effect that if rebates had -been paid they would necessarily know about them, and -that their accounts did not show any such payments. It -was nevertheless fully established by the investigation that -secret concessions had been generally granted on this traffic, -and that the carriers had allowed larger rebates to some -shippers than to others.”<a id='r355'></a><a href='#f355' class='c012'><sup>[355]</sup></a></p> - -<p class='c007'>After the St. Paul investigation in 1898 the Commission -entered on an investigation at Portland, Ore., in respect -to rates between the coast and points on and east of the -Missouri River. “It was established by the proof that -secret rates generally prevailed at Portland and common -points, and that transportation was, in effect, sold to the -lowest bidder. The lawful rates were ignored, except as -they might serve as a standard in making agreements for -lower charges.... Some of the merchants conformed to -the law, but in so doing they were at a disadvantage in -competing with those who disregarded the statute; and -in many instances this disadvantage represented more than -<span class='pageno' id='Page_243'>243</span>a fair profit upon the commodities involved. Most of the -merchants who admitted that they had thus violated the -law declared themselves unable to remember who paid them -the rebates, or when or upon what shipments any illegal -rate concessions had been made. Some testified that they -had kept account of the unlawful transactions, but that -when they heard of this investigation they destroyed their -memoranda in order to defeat prosecutions on account of -their illegal acts. They insisted that without these data -they could give no specific testimony concerning any of -the transactions.”<a id='r356'></a><a href='#f356' class='c012'><sup>[356]</sup></a></p> - -<p class='c007'>The Commission found in these and other investigations -that “unlawful rebates have been and are being paid by a -great number of carriers,” but they could not get the specific -evidence necessary for prosecutions.<a id='r357'></a><a href='#f357' class='c012'><sup>[357]</sup></a></p> - -<p class='c007'>In its Report for 1904, p. 104, the Commission says: -“Railroad officials often seem to think that it is their duty -to withhold facts, on account of some real or supposed -liability to make disclosures that will impair the railroad’s -rights or interests in future judicial proceedings. Some -companies seem to have adopted a settled policy to give -the least possible information, at all times, on any and all -subjects.”</p> - -<p class='c007'>Discussing the continuance of the payment of rebates -and the reasons the Interstate Commission has not been -able to stop the practice, Commissioner Prouty says:<a id='r358'></a><a href='#f358' class='c012'><sup>[358]</sup></a> -<span class='pageno' id='Page_244'>244</span>“When I first came onto the Interstate Commerce Commission -(1897), I used to see continually in the newspapers -statements like these: ‘Rates sadly demoralized,’ ‘agreement -between railroad officers to restore rates,’ and everything -of that sort. I said to my associates, ‘Gentlemen, -this thing will not do; we must stop the payment of -rebates.’ They said, ‘How are you going to stop the payment -of the rebates?’ I said, ‘We are going to call these -gentlemen before us; we are going to put them under -oath, and we are going to make them admit they paid these -rebates, and we are going to use the evidence which we -obtain to convict them.’ We employed Mr. Day, who is -now with the Department of Justice. The rates which -have been almost uniformly demoralized have been the -grain rates from Chicago to the Atlantic seaboard. We -called in the chief traffic officials of all these lines and we -put them under oath. Now, I would ask these gentlemen, -‘Are you the chief traffic official of this road?’ ‘I am.’ -‘Would you know it if a rebate was paid?’ ‘I would.’ -‘Are any rebates paid on your road?’ ‘There are none.’ -‘The rates are absolutely maintained?’ ‘They are.’</p> - -<p class='c007'>“Well, every traffic official who came before us in that -capacity—and we prosecuted it for three days at Chicago—testified -that rates were absolutely maintained.”</p> - -<p class='c007'>“<span class='sc'>Senator Newlands.</span> How many did you have before -you?</p> - -<p class='c007'>“<span class='sc'>Mr. Prouty.</span> We had the official of every trunk -line leading from Chicago to New York. They all testified -the rates were absolutely maintained from Chicago -to New York. Two years after that I examined the -chief traffic officer of the Baltimore and Ohio, and of -the New York Central—do not think it was the same man -in either case—and of the other lines, and they all testified -that rates had never been maintained. I would like -to know what I could do as Interstate Commerce Commissioner -to make those gentlemen admit that they paid -<span class='pageno' id='Page_245'>245</span>rebates, and as they would not tell that they paid rebates, -I would be glad to know how I could obtain evidence that -they did.</p> - -<p class='c007'>“Having gotten through, Senator, with the lines between -Chicago and New York, we said perhaps this is not a fair -sample. Now, we will go up in the Northwest, and we -will take the lines that carry flour from Minneapolis east. -We instituted another investigation, and we put the railroad -and the traffic men of the millers on the stand, and -they all swore without exception that the rates were absolutely -maintained. One traffic official there, when it got a -little bit too hot for him, became sick enough so that he -threw up his dinner, but he did not throw up the truth. -We could not get the admission from any man there that -they had ever paid a rebate. We said, ‘This does for the -East; now let us go West.’ So we went into the Pacific -Coast, to Portland, Oregon, and went over exactly the -same performance there. We made one man admit that he -burned up his books rather than present them to the Commission, -but we could obtain no admission of the payment -of any rebate there.”</p> - -<p class='c007'>But the St. Louis Southwestern Traffic Committee or -Traffic Association employed a young man by the name -of Camden and instructed him to lay before the Interstate -Commission any evidence he got of the payment -of rebates. “He had not been there more than two or -three weeks before he found some evidence to the effect -that the Baltimore and Ohio Railroad had been departing -from the published rate, and he came up to Washington -and laid that evidence before the Interstate Commerce -Commission, and we began proceedings against the Baltimore -and Ohio Railroad. That was the first instance from -the time I came onto the Commission that we could obtain -any evidence of a departure from the published rate. We -directed the Baltimore and Ohio road to file a statement -showing what shipments they had made during a certain -<span class='pageno' id='Page_246'>246</span>time, and the rate of freight paid them for the transportation. -Thereupon they filed a statement showing a great -many departures from the published rate. At the same -time they sent to the Interstate Commerce Commission a -letter. They said in that letter in substance, that the roads -in the territory in which they operated had habitually -departed from the published rate; that was after they had -sworn they maintained the published rate in that territory: -‘Now, for us, the receivers of the Baltimore and Ohio, we -have gotten through, but we cannot maintain the rate -unless our competitors maintain the rate. We propose -from this time on to maintain the rate ourselves, and we -propose to see that they maintain it; but in order that we -may do that, we ask you to call a conference of the railroad -presidents in trunk-line territory.’</p> - -<p class='c007'>“Now the Commission did, acting on that suggestion, -invite every president of the trunk-line railroads to come -to Washington. They came, all of them. Mr. Calloway -was there for the New York Central; Mr. Thompson was -there for the Pennsylvania Railroad; Mr. Murray and Mr. -Cowan came there for the Baltimore and Ohio; Mr. Harris -came from the Philadelphia and Reading, and Mr. Walters -was there for the Lehigh Valley. I do not remember them -all, but they all came there. Those gentlemen all said: -‘It is true; we have departed from the published rate. -We did not like to do it, but we did. But we have gotten -through. We shall depart from the published rate no -more. If you gentlemen will only let bygones be bygones, -we assure you that in the future there will be no discrimination -under this law.’</p> - -<p class='c007'>“Well, I expect, perhaps, that we ought to have said to -them, ‘You are a pack of consummate liars; we do not believe -anything you say, and we will prosecute you if we -can. But we did not think so; we believed exactly what -they said, and we told them we did, and they went home, -and no prosecutions were begun on the facts which we had -<span class='pageno' id='Page_247'>247</span>against the Baltimore and Ohio. Then we called, at the -request of certain persons in the West, the presidents of all -those lines, and they all came. Mr. Marvin Hughitt came; -Mr. Bird, of the Milwaukee line, came; in all, 30 or 40; -and we had the same sort of an experience meeting again. -They all said: ‘We have sinned, but we have got through. -Now, gentlemen, just help us to maintain the Act to regulate -commerce.’ We said: ‘We will do it.’ And they -went home.</p> - -<p class='c007'>“Now, I do not wish to pass any criticism at all on these -gentlemen. I have not the slightest doubt that they meant -precisely what they said. I think I know something about -the difficulties under which they labored; but they did not -maintain those rates for a month, probably.... There -has not been a time since I have been an Interstate Commerce -Commissioner, when, if the traffic officers of the -trunk lines between Chicago and the Atlantic seaboard -would have consented to tell the truth under oath, the Interstate -Commerce Commission would not have stopped -the payment of rebates. I have been able to discover no -way in which to make them tell the truth.”</p> - -<p class='c007'>“<span class='sc'>Senator Newlands.</span> In regard to the future, will it -not be possible for them to commence again this system of -rebates?</p> - -<p class='c007'>“<span class='sc'>Mr. Prouty.</span> I think they pay rebates now.</p> - -<p class='c007'>“<span class='sc'>Senator Newlands.</span> You think they do?</p> - -<p class='c007'>“<span class='sc'>Mr. Prouty.</span> I think they do.”</p> - -<p class='c007'>Victor Morawetz, Chairman of the Executive Committee -of the Santa Fe, was asked if it would not be wise to require -the traffic manager of each railroad, the auditor, and -the president, to report every three months on all existing -contracts, and that there had been no violations of law, -no abuses, so far as they knew, and that they had made -diligent inquiry to ascertain if there had been. Morawetz -replied that if such a law were passed some men -would perjure themselves every three months, and others -<span class='pageno' id='Page_248'>248</span>who were thoroughly honest would simply not take -office.<a id='r359'></a><a href='#f359' class='c012'><sup>[359]</sup></a></p> - -<p class='c007'>Not all the railway officers refuse to tell the truth. -There is every reason to believe that Paul Morton and Mr. -Biddle of the Santa Fe, for example, spoke the truth in -their testimony before the Commission. But the evidence -seems to be that the habit of truth telling is not very prevalent. -And when the railroad officers determine to prevent -publicity either by falsehood or by silence they take -care to eliminate documentary evidence that might be -used to checkmate them. They destroy their records so -that they will be less liable to know anything about the -rebates they have paid, and to make it as hard as possible -for the Interstate Commerce Commission to get at the -facts.</p> - -<p class='c007'>The Commission is examining Mr. McCabe, freight traffic -manager of the Pennsylvania lines west of Pittsburg.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> Are you in the habit of -destroying records not a year old?</p> - -<p class='c007'>“<span class='sc'>Mr. McCabe.</span> Sometimes.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> But generally?</p> - -<p class='c007'>“<span class='sc'>Mr. McCabe.</span> If they are not essential or it is not -important that they should be kept.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> What would be the particular -reason for destroying these papers and records?</p> - -<p class='c007'>“<span class='sc'>Mr. McCabe.</span> Possibly because we thought you -might want them laid before you sometime.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> You destroyed the evidence -of the illegal transaction?</p> - -<p class='c007'>“<span class='sc'>Mr. McCabe.</span> Yes, sir, that is right.”<a id='r360'></a><a href='#f360' class='c012'><sup>[360]</sup></a></p> - -<p class='c007'>The general traffic manager of the Michigan Central -said that papers relating to refunds, etc., “were destroyed -because their usefulness for our purposes had gone and -passed.”</p> - -<p class='c007'><span class='pageno' id='Page_249'>249</span>“<span class='sc'>Commissioner Clements.</span> Do you destroy your -other papers as recent as these?</p> - -<p class='c007'>“<span class='sc'>Mr. Mitchell.</span> Not as a rule, sir.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> Well, I will ask you again -if you destroy these papers in order to destroy the evidence -of the transactions to which they relate?</p> - -<p class='c007'>“<span class='sc'>Mr. Mitchell.</span> Certainly we should dislike very -much to have those papers exposed to the general public.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> Why?</p> - -<p class='c007'>“<span class='sc'>Mr. Mitchell.</span> It would be an unwise thing from a -railroad standpoint to have such matters going about.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> Why would it be unwise -to disclose the method of procedure?</p> - -<p class='c007'>“<span class='sc'>Mr. Mitchell.</span> Well, on account of the Interstate -Law.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> Because it violates the -law, yes. That is what you really mean, is it not?</p> - -<p class='c007'>“<span class='sc'>Mr. Mitchell.</span> I suppose that is it, sir.”<a id='r361'></a><a href='#f361' class='c012'><sup>[361]</sup></a></p> - -<p class='c007'>The Rock Island freight traffic manager also testified -to the destruction of papers showing rebates or -concessions.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> Why are they destroyed?</p> - -<p class='c007'>“<span class='sc'>Mr. Johnson.</span> Simply for the purpose of destroying -any evidence there may be.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> All the papers you know -about or entries that you are familiar with are destroyed?</p> - -<p class='c007'>“<span class='sc'>Mr. Johnson.</span> I understand they are all destroyed.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> Have you any recent -ones?</p> - -<p class='c007'>“<span class='sc'>Mr. Johnson.</span> I do not think they are more than -thirty days old.</p> - -<p class='c007'>“<span class='sc'>Commissioner Clements.</span> You think that all up to -within thirty days are destroyed?</p> - -<p class='c007'>“<span class='sc'>Mr. Johnson.</span> That is the rule or custom.”<a id='r362'></a><a href='#f362' class='c012'><sup>[362]</sup></a></p> - -<p class='c007'><span class='pageno' id='Page_250'>250</span>The shippers who receive rebates, etc., adopt similar -measures to keep their modest affairs from the public. -In April, 1904, the newspapers reported that the Interstate -Commerce Commission was going to Boston to investigate -rebates and private car-line abuses. The office force of -the Armour office at Boston was immediately set to work -packing into barrels all letters and records that might -show a combination or understanding among the houses -or with the railroads, or other inconvenient matters, and -all these dangerous documents were incontinently fed to -the furnaces.</p> - -<p class='c007'>On the other hand, shippers who are not of the favored -class are afraid to complain for fear of persecution by delay -of freight, overcharges, prolonged litigation of every difference -or dispute, and probable intensification in some -form of the discrimination in favor of their competitors. -The Oregon Commission says: “The shipper preferred to -tamely submit to the injustice put upon him through discriminations -against him or unreasonable and extortionate -charges and exactions for transportation facilities, than to -hazard the utter ruin of his business by provoking the -animosities of managers if he carried his grievances into -the courts in order to have his rights determined and -enforced.... Besides, if the shipper went to court with -his grievances he was confronted by powerful and wealthy -corporations who contested, with the aid of the ablest -counsel money could procure, every inch of the ground in -the controversy, thus making each contest between the -individual shipper and these corporations an unequal one -in proportion to the ability of the shipper personally to -press his case as compared with the financial ability of the -corporations.”<a id='r363'></a><a href='#f363' class='c012'><sup>[363]</sup></a> In a large majority of cases the loss sustained -by the individual through favoritism or extortion is -less than the probable injury resulting from litigation with -<span class='pageno' id='Page_251'>251</span>powerful corporations employing the ablest counsel, contesting -every inch of ground, defeating or delaying redress -by every possible means, and squeezing the plaintiff meanwhile -perhaps with a grip upon his business that means -death to his prosperity, so that the shipper thinks it better -to bear the ills he has than fly to others to which he has -not been introduced.</p> - -<div class='chapter'> - <span class='pageno' id='Page_252'>252</span> - <h2 class='c005'>CHAPTER XXXII.<br /> <span class='large'>REMEDIES.</span></h2> -</div> - -<p class='c006'>Coming now to consider how railway favoritism may be -abolished, we find a wide divergence among railroad men, -law-makers, and other authorities. Some say that discriminations -cannot be stopped,<a id='r364'></a><a href='#f364' class='c012'><sup>[364]</sup></a> others declare that they have -been stopped,<a id='r365'></a><a href='#f365' class='c012'><sup>[365]</sup></a> others that present laws are ample and all -that is needed is their enforcement,<a id='r366'></a><a href='#f366' class='c012'><sup>[366]</sup></a> while others state that -present remedies are insufficient,<a id='r367'></a><a href='#f367' class='c012'><sup>[367]</sup></a> and suggest further -<span class='pageno' id='Page_253'>253</span>legislation making the long and short haul clause binding -except so far as relief is granted by order of the Interstate -Commission;<a id='r368'></a><a href='#f368' class='c012'><sup>[368]</sup></a> extending the power of the Commission to -private car-lines, fast freight and express companies, and -water carriers;<a id='r369'></a><a href='#f369' class='c012'><sup>[369]</sup></a> giving it, or a national court, authority -to fix reasonable rates in place of those which upon complaint -and investigation it finds unreasonable,<a id='r370'></a><a href='#f370' class='c012'><sup>[370]</sup></a> and to -declare that a rate resulting from any rebate or concession -to favored shippers shall be open to all shippers;<a id='r371'></a><a href='#f371' class='c012'><sup>[371]</sup></a> specifically -enacting that the payments for private cars and for -switching shall not be greater than similar payments made -by the railroads to each other;<a id='r372'></a><a href='#f372' class='c012'><sup>[372]</sup></a> legalizing combination and -<span class='pageno' id='Page_254'>254</span>pooling;<a id='r373'></a><a href='#f373' class='c012'><sup>[373]</sup></a> forbidding railroad men to have any interest in -any large producer of traffic on their lines;<a id='r374'></a><a href='#f374' class='c012'><sup>[374]</sup></a> requiring roads -to make through routes and through rates with all connecting -lines;<a id='r375'></a><a href='#f375' class='c012'><sup>[375]</sup></a> protecting our railroads against the competition -of Canadian roads; providing for the public inspection of -railroad books and accounts;<a id='r376'></a><a href='#f376' class='c012'><sup>[376]</sup></a> requiring that all railroad -monies shall be received and paid out by Government officers;<a id='r377'></a><a href='#f377' class='c012'><sup>[377]</sup></a> -or otherwise securing direct representation of the -public in the management;<a id='r378'></a><a href='#f378' class='c012'><sup>[378]</sup></a> and establishing a sliding -scale of taxation to apply in inverse ratio to the fairness -and openness of the railway administration, so that a railroad -opening its books freely to inspection and treating all fairly -and impartially would pay low taxes, while a railroad acting -on opposite principles would be taxed at a high rate.<a id='r379'></a><a href='#f379' class='c012'><sup>[379]</sup></a> -The enactment of the Commerce Act by all the States and -territories so that the State and Federal laws may be in harmony, -and State and national commissions can co-operate -in shutting out discrimination from local and through -traffic,<a id='r380'></a><a href='#f380' class='c012'><sup>[380]</sup></a> is also suggested. Another view is that only public -<span class='pageno' id='Page_255'>255</span>ownership of the railroads under thorough civil service -regulations can eliminate either the motives or the power -to discriminate,—the antagonism of public and private -interests being the tap-root of discrimination, it can be -fully overcome only by pulling up the root and making -railroad managers the agents of the public to run the roads -for the public service instead of being the agents of private -interests to operate the roads for private profit.</p> - -<p class='c007'><span class='pageno' id='Page_256'>256</span>In his message of December, 1904, President Roosevelt -urged Congress to give the Interstate Commission power -“to revise rates and regulations, the revised rate to go into -effect at once and to stay in effect, unless and until the -court of review reverses it.” He laid especial emphasis -upon the necessity of stopping rebates and unjust discriminations, -saying: “Above all else, we must strive to keep the -highways of commerce open to all on equal terms; and to -do this it is necessary to put a complete stop to all rebates.” -In his message of December, 1905, the President alters his -recommendation to the granting of power to fix a “maximum -reasonable rate, the decision to go into effect within -a reasonable time and to obtain from thence onward, subject -to review by the courts.” In case a “favorite shipper -is given too low a rate,” the President says, “the Commission -would have the right to fix this already established -minimum rate as the maximum; and it would need only -one or two such decisions by the Commission to cure railroad -companies of the practice of giving improper minimum -rates.” (See below, recommendations of the New York -Board of Trade, from which, perhaps, the President took -this suggestion.)</p> - -<p class='c007'>The President says the law should make it clear that -unfair commissions and fictitious damages, free passes, -reduced passenger rates and payments of brokerage, are -illegal; and that it might be wise “to confer on the Government -the right of civil action against the beneficiary of a -rebate for at least twice the value of the rebate; this would -help stop what is really blackmail. Elevator allowances -should also be stopped.</p> - -<p class='c007'>“All private car-lines, industrial roads, refrigerator -charges, and the like should be expressly put under the -supervision of the Interstate Commission or some similar -body.... Neither private cars nor industrial railroads, -nor spur-tracks should be utilized as devices for securing -preferential rates. A rebate in icing charges or in mileage -<span class='pageno' id='Page_257'>257</span>or in a division of the rate for refrigerating charges is just -as pernicious as a rebate in any other way.... No lower -rate should apply on goods imported than actually obtains -on domestic goods from the American seaboard to destination -except in cases where water competition is the -controlling influence.</p> - -<p class='c007'>“There should be publicity of the accounts of common -carriers.... Books or memoranda should be open to the -inspection of the Government.</p> - -<p class='c007'>“The best possible regulation of rates would, of course, -be that regulation secured by honest agreement among the -railroads themselves to carry out the law.... The power -vested in the Government to put a stop to agreements to -the detriment of the public should, in my judgment, be accompanied -by power to permit, under specified conditions -and careful supervision, agreements clearly in the interest -of the public.... But the vitally important power is the -power to fix a given maximum rate, which, after the lapse -of a reasonable time, goes into full effect, subject to review -by the courts.”</p> - -<p class='c007'>The President further says: “I urge upon the Congress -the need of providing for expeditious action.... The history -of the cases litigated under the present commerce act -shows that its efficacy has been to a great degree destroyed -by the weapon of delay, almost the most formidable weapon -in the hands of those whose purpose it is to violate the law.”</p> - -<p class='c007'>A summary of the principal provisions in some of the -rate bills that have been brought before Congress will -illustrate the various methods proposed for the better control -of railroads. The Dolliver Bill provides that, when -the Interstate Commerce Commission, after full hearing -upon complaint, is of the opinion that a rate is unjust, -unreasonable, or unduly discriminatory, it shall fix a just -and reasonable maximum rate to go into effect 30 days -after notice. The power applies to joint rates, fares, and -charges, as well as to those within a railroad system. Broad -<span class='pageno' id='Page_258'>258</span>provision is also made to cover the fixing of mileage rates, -car rentals, etc. The Commission may order a carrier to -cease and desist from any regulation and practice found -to be unjust, unreasonable, or unduly discriminatory. All -orders are to go into effect 30 days after notice unless the -Commission extends the time to 60 days, or the order has -been suspended or modified either by the Commission or by -decree of a competent court. A penalty of $5,000 for each -day an order is disobeyed, and for each separate offence, -is provided for against any carrier, officer, representative, -or agent who knowingly fails or neglects to obey any order -as aforesaid; and the Commission may also apply to the -Circuit Court for injunction, or other proper process, to -compel obedience. Appeal may be taken to the Supreme -Court. Railroads must give 10 days’ public notice of advances -in rates, and 3 days’ notice of reductions, but the -Commission may in its discretion allow changes on less -notice.</p> - -<p class='c007'>The Foraker Bill, which is understood to be preferred by -the railroads, provides for thorough inspection of books, -records, and transactions of interstate roads by agents of -the Commission; and if any rate is found to be unjust, or -unreasonable, or the carrier “is committing any discriminations -forbidden by law, whether as between shippers, -places, commodities, or otherwise, and whether affected by -means of rates, rebates, classifications, differentials, preferentials, -private cars, switching or terminal charges, elevator -charges, failure to supply shippers equally with cars, or -in any other manner whatsoever, the Commission, if the -carrier will not desist upon due notice, may state the case -to the Attorney-General, who is to bring suit in the circuit -court in any district in which the act complained of, or -part of it, was committed, and the court shall summarily -handle the case and enjoin such rate or conduct as it finds -unlawful or what is in excess of what is reasonable and -just.” Appeal shall lie to the Supreme Court. The Bill -<span class='pageno' id='Page_259'>259</span>authorizes agreements between railroads in respect to rates -or charges and their maintenance so long as the agreement -is not in <em>unreasonable</em> restraint of trade.</p> - -<p class='c007'>The provisions for inspection and combination seem to -us eminently just and useful, although the latter is strenuously -opposed by many on the ground that it authorizes -and invites all the railroads of the United States to form a -huge trust and monopoly to fix rates for the whole country. -This, it is claimed by ex-Senator Chandler, “gives away -all that has been gained by the Supreme Court decisions in -the cases of the Trans-Missouri Freight Association, the -Joint Traffic Association, and the Northern Securities Company. -In the Joint Traffic Association case the nine railroad -systems between New York and Chicago formed an -organization of three billions of capital, made all the rates, -and prohibited any one of the roads from lowering any rate -without the consent of the nine managers of the trust. The -court destroyed this three-billion monster. The Foraker -Bill creates a fourteen-billion monster, which will prevent -any railroad anywhere in the country from lowering any -rates without the consent of the traffic managers of the -combination.”</p> - -<p class='c007'>The plan of making the Interstate Commission a mere -investigating body with no power to fix a rate, but only to -state the matter to the Attorney-General, leaving the case -to be tried on his initiative piecemeal in the circuit courts -all over the country, with appeal to the Supreme Court, -seems to us much more objectionable than the permission -to form rate agreements. Under any such form of court -procedure it will be possible for the railroads to delay final -decision, fixing of a just rate, or abolition of an unjust -practice for years.</p> - -<p class='c007'>Senator Elkins’ plan is substantially the same, his idea -being to give the Commission no real power over rates, but -only the right of petition for judicial action. And suits -may be brought in the Federal courts of every district -<span class='pageno' id='Page_260'>260</span>through which the lines of the carrier in fault are operated, -with appeal on every suit to the Supreme Court of the -United States.</p> - -<p class='c007'>Mr. Hearst has introduced a hill to bring the pipe lines -carrying oil within the Interstate Act and subject them to -the jurisdiction of the Commission; and another bill enabling -the Commission to fix a rate, not merely a maximum -rate, but the actual rate that is to be used in place of any -rate found unreasonable or unjust. The order to take effect -after 30 days. A special court of interstate commerce is -provided for, which shall have exclusive jurisdiction to review -the orders of the Commission, and suspend, annul, or -enforce such orders, with an appeal to the Supreme Court -only on questions of constitutional law. These are admirable -measures in many ways, but are probably too radical -for passage through the Senate, in which railroad interests -have so large a representation.</p> - -<p class='c007'>Of the other bills the most important are the Esch-Townsend -Bill, the Interstate Commission’s Bill, and the -Hepburn Bill. The Esch-Townsend Bill was intended to -give the Interstate Commission full power to fix a specific -rate, either single or joint, in place of a rate found to be -unreasonable or unjust, and to establish a special court of -transportation to have exclusive original jurisdiction of all -suits to enforce or prevent the enforcement of orders issued -by the Commission under the act.<a id='r381'></a><a href='#f381' class='c012'><sup>[381]</sup></a> Last year this Bill -<span class='pageno' id='Page_261'>261</span>was regarded as the most important measure before Congress, -but this year, 1906, it has been superseded by the -Hepburn Bill.</p> - -<p class='c007'>The main points of the Commission’s Bill are: 1. That -power be granted the Commission, after full hearing, to fix -the rate or practice to be observed in the future in place of -the rate or practice found by the Commission to be unreasonable -or unjust.<a id='r382'></a><a href='#f382' class='c012'><sup>[382]</sup></a> 2. That the Commission shall have -authority to prescribe the form in which railway books -shall be kept, with the right to examine such books at any -and all times.<a id='r383'></a><a href='#f383' class='c012'><sup>[383]</sup></a> 3. That private car-lines, industrial railroads, -import and export rates, etc., shall be brought within -the scope of the Commission’s power. 4. That the time of -notice of tariff changes shall be extended to 60 days, subject -to modification in the discretion of the Commission, -and the Commission says: “We think that 60 days is -not too long in the great majority of cases, and that such -length of notice would add greatly to the stability of -rates.” 5. That the Commission shall have authority to -order railways to continue through routes and joint rates -and to prescribe the divisions which the several carriers -shall receive in the distribution of those rates in case they -fail to agree among themselves. At present “carriers are -<span class='pageno' id='Page_262'>262</span>under no legal obligations to establish through routes or -joint rates, and may at their pleasure withdraw from such -arrangements when they have been actually entered into,” -so that “if the Commission were to pronounce a joint rate -unreasonable and order a reduction of that rate and the -carriers parties to the rate should thereupon either cancel -all joint arrangements, or, as they might, cancel their joint -rates upon the commodity in question, the Commission -would be practically powerless to enforce the reduced rate. -When it is considered that a large part of the most important -rates of this country are joint rates, it will be seen -that the railways have it in their discretion by this means -to largely defeat the purpose of the law.”<a id='r384'></a><a href='#f384' class='c012'><sup>[384]</sup></a></p> - -<p class='c007'>The Hepburn Bill, which is one of the strongest measures -before Congress, provides that the Interstate Commission, -on complaint and proof that any railway rates -or charges, or any regulations or practices affecting such -rates are unjust, or unreasonable, unjustly discriminatory, -or unduly preferential or prejudicial, may determine and -prescribe what will, <em>in its judgment</em>,<a id='r385'></a><a href='#f385' class='c012'><sup>[385]</sup></a> be the just and -reasonable rate or charge, which shall thereafter be observed -as the maximum in such case; and what regulation -or practice in respect to such transportation is just, -fair, and reasonable to be thereafter followed. The order -is to go into effect thirty days after notice to the carrier. -And any company, officer, or agent, receiver, trustee, or -lessee who knowingly fails and neglects to obey any such -order is liable to a penalty of $5,000 for each offence; and -in case of a continuing violation each day is to be deemed -a separate offence. It is provided that the Commission -may establish maximum joint rates or through rates as -well as rates pertaining to a single company, and may -<span class='pageno' id='Page_263'>263</span>adjust the division of such joint rates if the companies -fail to agree among themselves. The Commission may -also determine what is a reasonable maximum charge for -the use of private cars and other instrumentalities and -services, such as the switching services of terminal railways, -etc. No change is to be made in any rate except -after thirty days’ notice to the Commission, unless the -Commission for good cause shown allows changes upon -shorter notice.</p> - -<p class='c007'>The Commission may petition the Circuit Court to enforce -any order the railroads do not obey. And if on hearing -“it appears that the <em>order</em> was <em>regularly made and duly -served</em>, and that the carrier is in disobedience of the same, -the <em>court shall enforce</em> obedience to such order by a writ -of injunction, or other proper process, mandatory or otherwise, -to restrain such carrier, its officers, agents, or representatives, -from further disobedience of such order, or to -enjoin upon it or them obedience to the same.” Appeal -may be taken by either party to the Supreme Court of the -United States. The Commission may in its discretion prescribe -the forms of all accounts, records, and memoranda to -be kept by the railways, and provision is made for inspection -as follows:</p> - -<p class='c007'>“The Commission shall at all times have access to all -accounts, records, and memoranda kept by carriers subject -to this Act, and it shall be unlawful for such carriers to -keep any other accounts, records, or memoranda than those -prescribed or approved by the Commission, and it may employ -special agents or examiners, who shall have authority -under the order of the Commission to inspect and examine -any and all accounts, records, and memoranda kept by such -carriers.”<a id='r386'></a><a href='#f386' class='c012'><sup>[386]</sup></a></p> - -<p class='c007'><span class='pageno' id='Page_264'>264</span>We are heartily in favor of the Hepburn Bill and would -be glad to see far stronger regulative measures passed, -but nothing more than a moderate palliation of the railway -evils under which we suffer must be expected from -such legislation. England with her rigid control has not -been able to stamp out railroad abuses, and the lesson of -English railroad regulation is that the subjecting of private -<span class='pageno' id='Page_265'>265</span>railways to a public control strong enough to accomplish -any substantial elimination of discrimination and extortion -takes the life out of private railway enterprise along with -its evils. Even Germany, with all the power its great government -was compelled to exert, could not eliminate unjust -discrimination until it nationalized the railways, and -so destroyed the root of the evil which lies in the antagonism -of interest between the public, on the one hand, and -owners of the railways and associated industries on the -other.</p> - -<p class='c007'>It will be noted that none of the plans suggested proposes -to give the Commission any general power to initiate or -originate rates, but only the power of fixing a rate in place -of one found unjust or unreasonable. So that if the railroads -obeyed the law and made no unreasonable rates or -unjust discriminations they would still have the whole rate-making -power in their own hands and the Commission -would have nothing whatever to do with fixing railroad -rates.</p> - -<p class='c007'>Let us now examine briefly the merits of the leading -remedies proposed.</p> - -<h3 class='c013'><em>Pooling.</em></h3> - -<p class='c014'>Many railroad men have advocated the legalization of -pooling and combination as a remedy for discrimination. -A number of railway presidents and managers have told -me they believed this would stop discrimination, and that -nothing else would. Others have assured me that pooling -could not stop discrimination, and even those most emphatic -at the start in the opinion that pooling is the needful -remedy have admitted on further questioning that pooling -would only stop one class of discrimination. Take for example -the statement of the president of one of the greatest -railroad systems in the country who is a strong advocate of -the legalization of pooling.</p> - -<p class='c007'>“How do you think unjust discrimination can be -stopped?” I asked.</p> - -<p class='c007'><span class='pageno' id='Page_266'>266</span>“Give the railroads a right to pool,” he said.</p> - -<p class='c007'>“Will pooling stop discriminations accorded to business -concerns in which the railways or their managers are -interested?”</p> - -<p class='c007'>“No.”</p> - -<p class='c007'>“Will it stop any kind of discrimination except those -that grow out of competition among the railroads?”</p> - -<p class='c007'>“No, I guess not.”</p> - -<p class='c007'>To another railroad man of wide experience in inter-railway -contracts, I said: “Can any pool prevent the owners -of big concerns in oil, beef, grain, steel, etc., from getting -special advantages, or abolish discrimination in the supply -of cars, quickness of carriage, division of rates, classification, -long and short haul, passes, political favors, and other -forms of favoritism originating in causes independent of -competition among the railroads?”</p> - -<p class='c007'>“No, of course it cannot,” he replied.</p> - -<p class='c007'>Such questions never fail to bring an admission that pooling -cannot be relied on for the whole of the work to be -done in this field. In fact only one of the six motives for -discrimination<a id='r387'></a><a href='#f387' class='c012'><sup>[387]</sup></a> arises from the competitive conditions -that pooling is expected to remove. Combined roads will -make discriminative rates to create new business, to solidify -traffic, to favor places or concerns in which they are interested, -to favor persons of large influence who may aid or -injure railroad interests, or to injure persons or places -that have incurred their displeasure. All but 2 of the 64 -methods of discrimination above enumerated would find -a use under a pooling system or even if combination -were complete and competition entirely done away with, -as the reader may see for himself by running over the list -on pages 229–232.</p> - -<p class='c007'>Even competitive discrimination is not eliminated by -pooling, for the railroads will not stick to the pool. A -railroad president has been known to go from the room in -<span class='pageno' id='Page_267'>267</span>which he had agreed with other railroad potentates to pool -their business and maintain rates, and hunt up at once a -big shipper, offer him a cut rate, and get a contract taking -the whole of his business away from the other roads.</p> - -<p class='c007'>Albert Fink, the greatest traffic association organizer we -have had, complained bitterly that rates agreed upon in a -convention were frequently cut before the convention had -dispersed.<a id='r388'></a><a href='#f388' class='c012'><sup>[388]</sup></a> President Tuttle of the Boston and Maine -says: “I never knew a pooling arrangement that prevented -competition or was wholly satisfactory. There was never -what was considered an equitable distribution of traffic to -anybody, because the strong lines that could control and -handle 50 percent of the traffic were always struggling -against parting with any of that 50 percent, while the -weak, 10 percent road was always trying to get 15 percent.”</p> - -<p class='c007'>The man who drew the first pooling contract made in -this country and has drawn many since says that pooling -will not stop even competitive discrimination, because the -roads will slash rates on the sly to get business. In other -words pooling does not eliminate the struggle for traffic. -Company A has 25 percent of the pool money between -certain points. It cuts rates on the quiet and gets 30 or -35 percent of the business, and then says: “Gentlemen, -I’m carrying 35 percent of the traffic and I want more of -the pool money.” The gentleman just mentioned told me -that this sort of thing had been done in every case of -pooling with which he was acquainted.</p> - -<p class='c007'>Sometimes the break in the rates is known to the Association -but assented to or tolerated because it is clear that -a break is bound to occur anyway, and may be enlarged -rather than diminished by resistance. Some years ago -when Chauncey Depew was president of the New York -Central system, he said: “Large shippers arbitrarily transfer -the whole of their business from one line to another. -That leaves a weak line denuded of its business.</p> - -<p class='c007'><span class='pageno' id='Page_268'>268</span>“A weak line is a line which is dependent largely upon -through traffic and which has not much local business. -These great shippers who control anywhere from ten to -twenty-five cars a day will take all their business off this -weak line and put it on the strongest line, which already -has all it can do.</p> - -<p class='c007'>“Then the weak line is in trouble, and it comes to these -shippers and says: ‘Well, how can we get you back?’ -The shippers say: ‘You can only get us back by giving us -five or ten cents a hundred off from the tariff.’ The weak -line invariably does it.”</p> - -<p class='c007'>Then Mr. Depew gave an instance of “one of the great -merchants of the West” who, on the organization of the -Joint Traffic Association, said:</p> - -<p class='c007'>“I never have paid within twenty-five cents a hundred -of tariff rates, and I won’t do it now.” “His business,” -continued Mr. Depew, “was on what we call one of the -weak lines. He took it off that line and put it on one of -the strongest lines. That left the weak line without any -westbound business.</p> - -<p class='c007'>“Then the weak line said: ‘We have got to have business.’ -So we simply closed our eyes while the weak line -gave a rate twenty-five cents a hundred less than the rest -of us charged, and this firm advanced while the others -were stationary or went out of business. This firm advanced -by leaps and bounds to the front rank and toward -the control of the business.” If all the roads in the field -do not come into the pool there is every temptation for the -outsider to cut rates. For example, in 1896 one of the -trunk lines outside of the Joint Traffic Association was -carrying grain from Chicago to the seaboard at 13 cents -per hundred when the established tariff, which the Association -was supposed to be maintaining, was 20 cents.<a id='r389'></a><a href='#f389' class='c012'><sup>[389]</sup></a></p> - -<p class='c007'>The whole history of the traffic associations shows that -discriminations can be guarded against by pooling only to -<span class='pageno' id='Page_269'>269</span>a very limited extent.<a id='r390'></a><a href='#f390' class='c012'><sup>[390]</sup></a> The legalization of pooling would -enable railroads that wished to insist on the maintenance -of rates to bring suit against roads disregarding the agreement. -This would make it harder to get all the railroads -into a pool, for part of the inducement is the impunity -with which the agreement may be shuffled off, while on the -other hand the degree of respect manifested by the railroads -for the law does not justify much hope that it would be -effective in holding them to any pooling contract if they -thought they could make more by breaking it than by -keeping it. The fact is that the railroads understand each -other now about as well as if pooling were legalized. They -constantly make rate agreements and have no hesitation in -securing whatever degree of unity they desire with or without -law. Pools at best do not apply to local traffic, but -only to business between competing points, so that all discriminations -in local traffic are left absolutely untouched. -And as to competitive points, pooling is far less effective -than consolidation, and consolidation has shown no -tendency to do away with any more than one of the six -classes of discrimination, while it emphasizes and extends -the discriminations in favor of the great industrial interests -whose ownership is interlocked with that of the big railroad -systems, so that the advance of consolidation means -the extension of the influence of the giant industrials in -whose favor the most grievous discriminations are granted.</p> - -<p class='c007'>Pooling and combination are good in many ways,<a id='r391'></a><a href='#f391' class='c012'><sup>[391]</sup></a> and -ought to be legalized;<a id='r392'></a><a href='#f392' class='c012'><sup>[392]</sup></a> but they cannot be relied on to -<span class='pageno' id='Page_270'>270</span>abolish discrimination,—they leave the worst forms untouched, -intensify some of them, and diminish only one -of the six classes of preference. Shippers have a strong -prejudice against pooling, and the railroads do not care so -much about it as they used to, for consolidation and mutual -understanding have enabled them to accomplish in part the -purposes they had in view in the traffic agreements of earlier -years.<a id='r393'></a><a href='#f393' class='c012'><sup>[393]</sup></a></p> - -<h3 class='c013'><em>Wrestling with the Long-Haul Abuse.</em></h3> - -<p class='c014'>In respect to the long and short haul abuse, Commissioner -Fifer, Brooks Adams, and others argue that the -practical remedy is to make the long-haul clause of the -Commerce Act binding except where the railroads come -in and get an order releasing them to a specified extent -from the operation of the clause.<a id='r394'></a><a href='#f394' class='c012'><sup>[394]</sup></a> The idea is to put the -burden of showing the need of an exception on the railroad. -At present the burden really rests on the complainant. The -railroads disregard the law with impunity. It is easy to -show dissimilar circumstances, and then it is necessary for -the plaintiff to show that the circumstances are not so dissimilar -as to warrant the discrimination made. It is very -<span class='pageno' id='Page_271'>271</span>difficult to satisfy a court on this point, and so the rates -stand and the clause is practically nullified. Forbid departure -from the clause absolutely unless the carrier has -obtained an order of release, and you put the burden of -proof where it should lie, namely, on the party that desires -to depart from the rule of equal treatment.</p> - -<h3 class='c013'><em>A Drastic Cure for Rebating.</em></h3> - -<p class='c014'>For the cure of discrimination, the Transportation Committee -of the New York Board of Trade suggests that -Congress enact a law authorizing the Interstate Commission, -in case of any rebate or other device for securing low -rates, to declare that the net rate so made by the railway -or car owners shall be the regular tariff rate, published as -such, and open to all shippers; said new rate to take effect -immediately, subject to appeal within 60 days upon questions -of law.<a id='r395'></a><a href='#f395' class='c012'><sup>[395]</sup></a> The Committee says the proposal is based -on the plan suggested by “Albert Fink, the ablest of all -American railroad managers,” and adopted by the joint -executive committee of the associated railroads in 1882.<a id='r396'></a><a href='#f396' class='c012'><sup>[396]</sup></a> -“The giving of unlawful rebates by traffic agents would be -preventable if the agent felt assured that such acts would -be followed by his dismissal, and the officers of the company -would find a way to remove an offending agent or to bring -him under control if a punishment of suitable severity were -certain to be imposed upon the road for the violation of the -law against the giving of rebates.”</p> - -<p class='c007'>This would indeed be a drastic remedy, and very effective -for the prevention of the discovery of discrimination. An -<span class='pageno' id='Page_272'>272</span>association of railroads might ferret out preferences under -such a rule, but it would be almost impossible for a public -board to do it. It has been for the most part, as we have -seen, practically impossible for the Commission to get evidence -of specific facts of discrimination, even under the -comparatively mild laws they have tried to enforce. And -under such a law the difficulty would be increased tenfold. -Moreover, if discrimination were discovered and the rule -proposed were put in action, discriminations would thereby -be crystallized and legalized, and great disturbances produced -in the business of railroads and of the community. -Suppose it were discovered that a certain shipper of wheat -from Chicago east had a 10 cent rate over the Erie, while -the published rate on all the lines was 15 cents. Immediately -the 10 cent rate would be open to all shippers over -the Erie. The Erie might be stricken with a sudden -dearth of cars, and be unable to handle the traffic at -all. It would pay the other roads to arrange with the -Erie to be stricken that way. For if the Erie handled -the traffic, the other roads would have to come down to -10 cents and suffer a severe loss, or lose the business and -suffer a severe loss that way. Moreover, the difference in -rates on wheat and flour and other commodities would constitute -serious discrimination, petrified and perpetuated by -law. Again, if many cut rates were discovered in various -lines of business and various degrees of discount, the whole -tariff would be thrown into confusion worse than the normal -chaos. Rates not in the discovered list would have to -be raised to save the revenues of the roads, the long and -short haul rule would go to the winds, and bankruptcy -would threaten not only the culprit railroads but individuals -and communities not conditioned so as to be favored -by the cut-rate lists. On the other hand, if the railroads -tried to be good, the pressure of the big shippers for concessions -would put many roads to serious inconvenience -and threaten them with dangers and losses almost as great -<span class='pageno' id='Page_273'>273</span>as those accompanying disobedience, and far more immediate -and certain. Under such circumstances the temptation -to secure secrecy at any cost, and if need be to control -the Commission and the courts, would be irresistible.</p> - -<p class='c007'>Most of those who favor further control of railroads advocate -milder methods. The favorite remedies are public -inspection and the fixing of rates by a commission or court -of arbitration or tariff revision. The facts above stated -showing the secrecy of many forms of preference and the -difficulties of enforcing the law because of the impossibility -of getting railroad officers to reveal the facts indicate the -necessity of systematic and thorough public inspection, but -also suggest a doubt as to its effectiveness. If railroad -officers destroy their papers and refuse to state the facts on -the witness stand, is it not possible that they will keep any -record of discrimination practices from appearing in the -books and papers they submit to inspection? Inspection -and publicity are excellent aids to reform, but they are -insufficient in themselves. We have had already a small-sized -ocean of publicity through the investigations of the -Interstate Commerce Commission, but the results have been -very small.</p> - -<div class='chapter'> - <span class='pageno' id='Page_274'>274</span> - <h2 class='c005'>CHAPTER XXXIII.<br /> <span class='large'>FIXING RATES BY PUBLIC AUTHORITY.</span></h2> -</div> - -<p class='c006'>For years the Interstate Commerce Commission has been -declaring that when, on complaint and investigation it finds -a rate to be unreasonable, it ought to have power to fix a -reasonable rate to take the place of the unreasonable one, -the order to be binding on the railroad for a moderate -period, subject to revision in the courts. For the first -ten years after the Interstate Commerce Act was passed no -railroad denied the right of the Commission to fix rates, -and the Commission says it was supposed that they possess -the power. But the Supreme Court finally ejected this -impression in 1896, and again in 1897, and the Commission -appealed to Congress for the restoration of the authority -that was swept away by the interpretation of the majority -of the Court. Congress for a long time paid no attention -to the Commission’s request for further powers, but President -Roosevelt took up the matter and pushed it with the -splendid vigor that characterizes all he does. In his message -of 1904, already referred to, he said: “Above all -else, we must strive to keep the highways of commerce -open to all on equal terms; and to do this it is necessary -to put a complete stop to all rebates. Whether the shipper -or the railroad is to blame makes no difference; the rebate -must be stopped, the abuses of the private car and private -terminal-track and side-track systems must be stopped, and -legislation of the Fifty-eighth Congress, which declares it -to be unlawful for any person or corporation to offer, grant, -<span class='pageno' id='Page_275'>275</span>give, solicit, accept, or receive any rebate, concession, or -discrimination in respect of the transportation of any property -in interstate or foreign commerce whereby such property -shall by any device whatever be transported at a less -rate than that named in the tariffs published by the carrier, -must be enforced.... The Government must in increasing -degree supervise and regulate the workings of the railways -engaged in interstate commerce; and such increased supervision -is the only alternative to an increase of the present -evils on the one hand or a still more radical policy on the -other. In my judgment the most important legislative act -now needed as regards the regulation of corporations is this -act to confer on the Interstate Commerce Commission the -power to revise rates and regulations, the revised rate to at -once go into effect, and to stay in effect unless and until -the court of review reverses it.” The President’s message -of December, 1905, has already been quoted at sufficient -length in Chapter XXXII.</p> - -<p class='c007'>In the last two years the legislatures of 18 States have -passed joint resolutions petitioning Congress to enact legislation -for the regulation of railroad rates; 12 States took -this action last winter, 1905, and asked their representatives -and senators to secure the enactment of such a measure. -Commercial bodies in various parts of the country have also -petitioned for such legislation, while others have protested -against it.<a id='r397'></a><a href='#f397' class='c012'><sup>[397]</sup></a></p> - -<p class='c007'>The Esch-Townsend Bill (1905) giving the Commission -power to fix rates passed the House, but failed to pass the -Senate.<a id='r398'></a><a href='#f398' class='c012'><sup>[398]</sup></a> As stated in the preceding chapter, the House -has passed the Hepburn Bill by a very large majority and -it has gone to the Senate, where a determined effort will -undoubtedly be made to secure at least a provision for judicial -review on their merits of all orders of the Commission.</p> - -<div> - <span class='pageno' id='Page_276'>276</span> - <h3 class='c013'><em>Objections of Railroad Men.</em></h3> -</div> - -<p class='c014'>Railroad men object to further regulation till the effectiveness -of the present laws has been thoroughly tested. In -answer to the question what he would do to stop discrimination, -President Tuttle of the Boston and Maine Railroad -said to me this morning: “Enforce existing laws. The -Interstate Commission can investigate the railroads. It -need not wait for complaints. It can act on its own initiative. -It can have experts examine the railroad books. It -can publish the facts, and publicity is a powerful corrective. -It can put the facts it secures in the hands of the Attorney-General, -and if the Department of Justice will prosecute -promptly discrimination can be stopped. There were no -prosecutions even after the Hutchinson salt investigation. -The law is ample. The trouble is that no adequate effort -has been made to enforce it.”</p> - -<p class='c007'>The Commission says that as a rule it cannot get the -facts. In some cases it has succeeded, but usually it is -thwarted in respect to personal discriminations (to which -President Tuttle’s argument chiefly applies) because they -are secret, and neither railroad men nor the favored shippers -will ordinarily tell the truth about them, and railroad -books do not commonly contain any record of them.<a id='r399'></a><a href='#f399' class='c012'><sup>[399]</sup></a> -<span class='pageno' id='Page_277'>277</span>Where the Commission has obtained evidence of unlawful -discrimination it has turned the facts over to the Department -of Justice, which has not prosecuted promptly, in -many cases not at all, and has sometimes prevented prosecutions -which United States district attorneys were ready -to begin.</p> - -<p class='c007'>There seems to be good reason to believe it is true that -existing laws have not been fully enforced; that in addition -to the difficulty, perhaps impossibility, of getting at -the facts in many cases, wrongdoers have escaped punishment -even where the facts were fully known; and that -a commission to investigate the Department of Justice, and -try the effect of publicity there, may be as essential as a -commission to investigate the railroads. Some criticism -seems to attach also to the Interstate Commission, as it -does not appear that they have asked the Department of -Justice to prosecute senators and congressmen, legislators, -judges, etc., well known to be riding on passes, nor to -punish the railroads for giving them.</p> - -<p class='c007'>As long as express companies and water carriers are not -within the Interstate Act, and doubt exists as to private -cars and terminal railroads, there is room for further legislation. -And in respect to excessive rates and tariff discriminations -between places and commodities, though the -facts can be easily ascertained, the remedy is regarded by -the Commission as wholly inadequate under existing laws, -because of the emasculation of the long and short haul -clause by the interpretation given it by the Supreme Court, -and because the railroads are able, whenever they choose, -to delay the enforcement of an order for years by litigation, -conceding at last perhaps only a small part of what they -<span class='pageno' id='Page_278'>278</span>should concede and so requiring further years of contest to -approach another step toward justice. So the Commission -asks for power to fix a reasonable rate in place of one -found unreasonable, and to put the new rate into effect at -once subject to subsequent revision on appeal by the -carrier.</p> - -<p class='c007'>The railroads seriously object, first, to the fixing of their -rates by anybody but themselves, and second, to the putting -of such rates into effect before they are tested in court. -The immediate enforcement of a rate order is most strenuously -opposed, and with much force of reason. The railroad -people say that rate-making is very difficult and many -mistakes are likely to be made. Railroad history certainly -affords ample ground for this conclusion. But they say, or -imply, that the Commission makes more mistakes than they -do. They declare that only trained traffic experts can deal -successfully with rate questions; that the Commission has -made so many errors that almost every one of its decisions -that has gone to the courts has been overruled; and that -great havoc would have been wrought if these decisions had -been put into effect at once without judicial review. “Take -for example, the Maximum Rate Case where the Commission -ordered the rates from Cincinnati to important Southern -points cut down 15 or 20 percent. This change in rates to -the basing-points would have affected two or three thousand -rates. Some of the railroads didn’t have a margin of -more than 15 or 20 percent and they determined to fight -the case. It is true that the Commission exercised the -power to fix rates a number of times in the first ten years, -but the cases were comparatively insignificant and the railroads -said, ‘Oh, well, let it go. We’ll take the rate the -Commission wants.’ But when it came to the Cincinnati -case the situation was serious and the railroads said, -‘These fellows haven’t got the power to make rates. In -the debates on the Commerce Bill in Congress it was distinctly -declared that no such power was intended to be -<span class='pageno' id='Page_279'>279</span>given. We’ll take the question to the courts.’ And the -courts sustained the railroads. Now what would have been -the consequence if the Commission could have put its order -into effect at once? The railroads would have been subjected -to serious losses during all the time that might -elapse before they could get a decision reversing the order -of the Commission. It often takes years to get a final -judgment and there would be no way for the railroads to -recover for the losses entailed by erroneous orders.” This -is the argument substantially as presented to me by President -Tuttle and there is great weight in it.</p> - -<h3 class='c013'><em>Alleged Errors of the Commission.</em></h3> - -<p class='c014'>Another railroad president turns the lime-light of mathematical -analysis on the errors of the Commission. David -Willcox, President of the Delaware and Hudson, says: -“About 93 percent of the decisions of the Commission -which have been passed upon by the courts have been held -to be erroneous. In case, therefore, the Commission had -the future rate-fixing power, so far as its decisions were in -force until the courts passed upon them, injustice would be -accomplished in 93 percent of the cases. For this there -would be no remedy, because no recovery could be had -from those whose goods had been carried at unjustly low -rates.”<a id='r400'></a><a href='#f400' class='c012'><sup>[400]</sup></a></p> - -<p class='c007'>We shall see that this statement gives too strong an -impression of the capacity of the Commission for mistakes, -but there is no doubt that it has made mistakes, that any -person or persons attempting to fix rates, even the railroad -managers themselves, are liable to make mistakes, and that -losses result to the roads from their own mistakes and -might naturally result from the mistakes of a commission -or court if its erroneous orders were enforced upon them.</p> - -<p class='c007'>It may be said that if the orders of the Commission went -into force immediately it would be the interest of the railroads -<span class='pageno' id='Page_280'>280</span>to hasten the proceedings in court instead of prolonging -them indefinitely as they are too apt to do, and that -with reasonable provisions for prompt adjudication and the -stimulus of powerful railroad interests in that direction, -the delay of the law, or this branch of it, at least, would -vanish. It may also be said that the railroads could recoup -themselves for the losses under discussion by curtailing the -service they render for the new rates, or by raising other -rates not fixed by the Commission. But the Commission -might veto the raising of other rates, and the entailment of -service would be very undesirable. The question arises -whether it would not be fair for the public to stand any -loss clearly resulting from an improper order of its Commission, -or else require that any order the validity of which -is questioned should be passed upon by the court before it -is put into effect? The Commission is itself perhaps a -sufficient court in respect to questions of fact, and if it -were arranged that in case of dispute on a question of law -the Commission might call upon the Supreme Court for an -immediate interpretation of the law, the rulings of the -Commission could be squared with the law at the start, -and the danger of loss from an erroneous order would be -reduced to a minimum.</p> - -<p class='c007'>As above remarked, the mistakes of the Commission -have not been so vast as the reader might infer from the -percentage of overruled cases stated by President Willcox.</p> - -<p class='c007'>The work of the Commission may be summarized as -follows:</p> - -<p class='c007'>It has received about 3,726 informal complaints relating -to overcharges, classification, rates, etc. Most of -these, perhaps 3,200, have been disposed of by correspondence -or some mild form of arbitration, very many have -been settled satisfactorily, some have been abandoned, and -some have crystallized into formal complaints. The total -number of formal complaints has been about 854, including -those that were formal at the start and those that started -<span class='pageno' id='Page_281'>281</span>as informal complaints and grew to be formal through -failure of adjustment by conciliatory methods. “From -1887 to October, 1904, the Commission rendered 297 decisions -involving 353 cases, two or more cases being heard -and decided together in some instances. About 55 percent, -or 194, of the decisions were in favor of the complainant -and 45 percent in favor of the railroads.<a id='r401'></a><a href='#f401' class='c012'><sup>[401]</sup></a> Mandatory -orders were issued to the number of 170. Of these 94 -were complied with by the railroads, 55 were disobeyed, -and 21 were partly complied with and partly disregarded. -Some 43 suits were instituted to enforce the orders of the -Commission; and 34 of these have been finally adjudicated.” -The Commission claims that 8 cases of excessive -rates and unjust discrimination have been decided in its -favor, while President Willcox says that the courts have -sustained the Commission on the merits in only 3 cases.<a id='r402'></a><a href='#f402' class='c012'><sup>[402]</sup></a> -<span class='pageno' id='Page_282'>282</span>Mr. H. T. Newcomb, who appeared before the Senate Committee -as the representative of several railroads, gives a -table showing that in the circuit courts the Commission -has been sustained 7 times and reversed 24 times, the Circuit -Court of Appeals has sustained the Commission 4½ -times and reversed it 11½ times and the United States -Supreme Court has partly sustained the Commission in -one case and reversed it in 15.<a id='r403'></a><a href='#f403' class='c012'><sup>[403]</sup></a></p> - -<p class='c007'>Several comments are necessary. First, about ⅘ of the -Commission’s decisions have been right on the railroad’s -own showing. They claim only 32 reversals out of 170 -orders—nearly all the rest have been accepted by the railroads -or enforced upon them by the courts. Second, the -reversals have been based on questions of law in respect to -which the courts disagreed among themselves. The Commission -has not been overruled in respect to questions of -fact, but on the application of what it believed to be law -(and what the framers of the law believed to be law) to -the removal of economic abuses. Third, the points of law -in respect to which it has been overruled are very few. -The decisions have gone in bunches. For instance while -the Alabama Midland long and short haul case was pending -in the courts a number of other long-haul cases were decided -by the Commission, and when, after several years, the Supreme -Court gave final judgment, a whole block of the -Commission’s rulings on this point were discredited and -subsequent reversals were simply repetitions involving no -new error. So the question of power to fix rates covers a -<span class='pageno' id='Page_283'>283</span>cluster of cases all thrown down in reality by one ruling.<a id='r404'></a><a href='#f404' class='c012'><sup>[404]</sup></a> -And these two questions represent nearly the whole difference -between the courts and the Commission. The 15 reversals -in the Supreme Court do not mean 15 errors, even -in respect to legal points, but only a very few errors if any. -Fourth, the higher court reversed the lower in 9 out of the -17 cases that went up from the Circuit Court, and in three -of these cases the Supreme Court reversed both the Circuit -Court and the Court of Appeals. Fifth, it is by no means -certain that the Commission was wrong and the court -right. The fact is that the Supreme Court has not interpreted -the law according to its manifest and well-known -intent, but in a narrow, technical way that has defeated in -large part the real purpose of the law. It is an absurdity -to rule that the law is valid and then to decide that the -railroads may escape from the long-haul section by means -of dissimilar circumstances created by themselves. And -many believe it to be an equal absurdity to declare that the -Commission may order the discontinuance, of an excessive -rate or unjust discrimination, but cannot fix a reasonable -rate.</p> - -<p class='c007'>Take the Kansas oil rate for example. The railroads -at the dictation of the Combine raised the rate, as we have -seen, from 10 to 17 cents. Suppose the Commission had -ordered the roads to cease charging 17 cents, that being -found to be unreasonable. The railroads could appeal and -appeal, and if after several years the case went against -them they could make a rate of 16½ cents. Then a new -investigation could be begun, the Commission could make -a new order, and after years in the courts the rate might -come down another half cent perhaps. And so on; even if -all the decisions went against the railroads it would take -<span class='pageno' id='Page_284'>284</span>105 years to reduce the rate to 10 cents again, calculating -on the basis of the average period of 7½ years required for -final litigation. Why not sum up the process in a single -order for the 10 cent rate and if objected to by the railroads -have one judicial contest and finish the business. By -the indirect method of declaring one rate after another to -be unreasonable the Commission has now the power at last -to fix the rate. The proposition to allow it to name a reasonable -rate is only putting in direct, brief, effective form -the power it now has in indirect, diffused, and ineffective -form. The railroads might not act in the way described, -but the point is that they could do so; there is no power -in the law as it stands to-day to compel them to adopt a -reasonable rate within a reasonable time.</p> - -<p class='c007'>Again, consider the predicament Commissioner Prouty -presents.<a id='r405'></a><a href='#f405' class='c012'><sup>[405]</sup></a> If the Commission, considering all the circumstances -including railroad competition, finds that the rates -from certain points to W should not be higher than the -rates to O and orders the railroads to discontinue the discrimination -between the two cities, the court will sustain -the order and grant an injunction to enforce it. But if the -Commission finds that there should be some difference between -the rates to the two places, though not so much -difference as there is, and it orders the rates to W down so -that they will be fair, the courts will annul the order because -the Commission has no power to fix rates in the -opinion of the Supreme Court.</p> - -<p class='c007'>The railways contend that a relative order would be -sufficient. The Commission could say what percentage -of the Omaha rate the advance for Wichita should be, and -in the Kansas case the rate on oil could be determined in -reference to the rates on other commodities. It is true -that a relative order could be made, but it might be more -embarrassing to the railroads to have a group of rates tied -up by each decision so that they could not vary any of -<span class='pageno' id='Page_285'>285</span>them without changing the rest, than it would be to have -one rate definitely fixed; the subtraction from elasticity -might be greater, and the difficulty of determining the true -relations between various rates might be far more serious -than the fixing of a reasonable rate in the particular case. -It would be possible to give the Commission the option to -make a relative order or to definitely fix a reasonable rate -providing that it should carefully consider the preference -of the carrier as to the form of order, the reasons for that -preference, and the guarantee the carrier may be willing to -give as to <em>bona fide</em> compliance with the order, and then -make up its judgment in the light of the circumstances in -such a way as to accomplish the purpose in view with the -greatest certainty and the least friction or interference with -the freedom of railroad management.</p> - -<p class='c007'>But the railroads object to the fixing of rates in any -manner by a public board,<a id='r406'></a><a href='#f406' class='c012'><sup>[406]</sup></a> declaring that such a board -could not be in sufficiently close touch with traffic conditions -all over the country to adapt their rulings to the -needs of business, that tariffs would lose the elasticity -<span class='pageno' id='Page_286'>286</span>requisite to keep them in harmony with changing economic -conditions. A rate that is reasonable to-day may be unreasonable -to-morrow. It is said that it keeps several hundred -men, 500 to 700 skilled traffic men, working all the time -on the adjustment of rates, and that it is beyond the power of -half a dozen men to pass on the rate question of a country like -this; that Congress cannot delegate to a commission the -power to fix rates; that it would destroy the initiative of -railroads and hurt their power of borrowing money for improvements, -injure investors, and throw the whole railroad -world out of gear; that the centralization of power would -be dangerous, the disturbance of business and interference -with development disastrous, and the practical confiscation -of railroad properties and values unjust; that a flood -of litigation would follow, and that discrimination would -not be removed, for agents hustling for business would -cut under commission-made rates as quickly as they cut -railroad-made rates.</p> - -<p class='c007'>There is much force in some of these points, none at all -in others. There is no reasonable doubt that Congress -can authorize a commission to fix rates. Railway Commissions -in 21 States have power to fix rates, either absolute or -maximum, and some of them have exercised the power vigorously, -and a national commission may be given the same -power over interstate commerce that a State commission -may have over State commerce.</p> - -<p class='c007'>There is more force in the objection based on the lack of -elasticity in commission-made rates. Elasticity, however, -may easily be overdone and much of the present elasticity -is very undesirable. Many flying tariffs and unfair discriminations -lurk under cover of that reputable word -elasticity. Moreover the Commission would not interfere -with any fair rate-making by the railroads. The bulk of -the rates would not be touched but only those that were -unjust. So that it would depend entirely on the railroads -how much of the flexibility they so much admire should be -<span class='pageno' id='Page_287'>287</span>kept in their own hands. They would keep it all unless -they were guilty of dishonest flexibility, in which case the -elasticity, which, according to impartial judgment, exceeded -the bounds of justice, would be checked.</p> - -<p class='c007'>In reference to the alleged necessity of flexibility in -tariffs and the ability of traffic managers to accommodate -the rates to fluctuating commercial conditions, Chairman -Knapp of the Interstate Commission says that there need -not be any tendency to iron-clad rules or undue emphasis -of the mileage basis on the part of a Government board, -but that the necessity of frequent changes in tariffs is -greatly overdrawn. He states that the railroads have kept -the same basis of rates since 1887 throughout the most important -part of the United States, the “official classification -territory” or the section north of the Ohio and Potomac -and east of the Mississippi, and that “the class rates which -govern most merchandise and articles of manufacture and -ordinary household consumption have remained unchanged -in all that territory.” The railroads changed the classification -of many articles about 1900, “but they did not change -the rates or the adjustments between localities.”</p> - -<p class='c007'>“I take it there is no agricultural product the price of -which has shown such wide fluctuations in the last few -years as cotton. It is one of the great staple articles of the -country; the most valuable per pound of anything that -grows out of the ground in large volume. More than half -of it is exported and you know the price has gone from -scarcely above 5 cents to 16 or 17 cents. And if there is any -article which would seem to be susceptible to market fluctuations -and the changes in commercial conditions, it must be -cotton. But an inspection of the tariffs will show you that -the rates on cotton have not been changed in ten years.</p> - -<p class='c007'>“There has been no material change, I think, in any -cotton rate in more than ten years, except that certain -reductions have been made in the State of Texas by the -commission of that State.</p> - -<p class='c007'><span class='pageno' id='Page_288'>288</span>“Now, when I observe instances of that kind, when the -ablest and most experienced traffic officials tell me that -there is no sort of reason for 500 to 1,000 changes in interstate -tariffs every twenty-four hours, as our files show there -are, you must not be surprised if I fail to accept at par value -all that is said here about the necessity of adapting rates to -commercial conditions. Undoubtedly, when you take a considerable -period of time, great influences do operate to an -extent which may justly require material modifications in -freight charges, but to my mind it is quite unsuitable that -the little surface fluctuations in trade should find expression -in extended changes in the daily tariffs. I believe -that those surface currents should adjust themselves to the -tariffs, and not the tariffs to the currents. And I am saying -this, gentlemen, not as a result so much from my own -observation or from any <i><span lang="fr" xml:lang="fr">à priori</span></i> view of the case as because -of the statements made and arguments submitted to me by -practical railroad men of the highest distinction.”<a id='r407'></a><a href='#f407' class='c012'><sup>[407]</sup></a></p> - -<p class='c007'>To lay stress on the number of men required to arrange -the details of tariffs might seem to imply the belief that -a very large part of existing railroad rates will be found -unreasonable and need the attention of the Commission. -It may however imply merely that there is likely to be a -very large number of complaints. The fact is that the -fixing of rates is a complex business, with a considerable -percentage of guesswork, experiment, broad judgment, and -arbitrary decision. There are some general principles of -cost, distance, what the traffic can pay and move, what -shippers demand, what other carriers are charging, what -rates are necessary to create new business and fill up the -cars both ways, etc., but they are like the principles of law, -you can come to any conclusion you wish and then find a -principle that will back up your decision. Railroad men -do not trouble themselves about consistency. They do not -and cannot adjust rates with reference to just relations -<span class='pageno' id='Page_289'>289</span>between places and commodities. They are looking for -dividends and they make the best rates they can with that -object in view. The chief traffic officer of one of the trunk -lines, being pressed by the Commission as to his method of -making rates, said: “We make rates very much as the -honey bee makes its cells, by a sort of instinct.” When we -look at his rates we find that he is not so successful as the -honey bee in respect to symmetry and balance. Another -traffic manager whose skill brings him a salary of $50,000 -a year, testifying as to the reasonableness of his grain rates, -was asked question after question as to methods of determination, -till finally he said: “To tell you the truth, gentlemen, -we get all we can.” Now it is because the railroads -know that the Commission would refuse to adopt this time-honored -principle and would aim primarily not at profit to -the railroads, but at just and impartial rates—it is this -knowledge which more than anything else impels the railroads -to such strenuous opposition to any proposal for the -fixing of rates by a public board. The matter is of such -moment that, when I asked one of our leading railroad -presidents what would happen if the rate-making power -were put in the hands of a commission, he said: “The -stake would be so great that the commission would have -to be controlled, that’s all.”</p> - -<p class='c007'>The railroads have the Senate, and the Senate must -confirm all nominations to the Interstate Commission. -Aside from the appointment of Judge Cooley all nominations -to the Commission from 1887 down have been due, -said this railroad president, not to any special fitness for -the work, but to political pull. If a commissioner is -appointed from a certain State, the senators from that -State regard the place as a part of their patronage, and -when the term of his appointment expires they insist on -the nomination of another man from their State. They -say: “The place belongs to our State,” and it is always -their man, a man they want on the board, who is presented -<span class='pageno' id='Page_290'>290</span>by them for nomination. Vermont for example has had -three members on the Commission in succession, Walker, -Veazie, and Prouty; each time a vacancy has occurred in -the Vermont representation it has been filled at the dictation -of the senators from that State; “even President -Roosevelt did not appoint for fitness. When a vacancy -occurred he did not look for the man best fitted to serve -on such a Commission, but appointed Senator Cockrell -of Missouri, a nice old man of 70 that everybody liked, -but without any special qualification for the work. The -election went to the Republicans in Missouri, so Cockrell -couldn’t go back to the Senate. He has many friends. -The senators all like him, Republicans as well as Democrats, -and they said to Roosevelt: ‘You must do something -for Cockrell; here’s a democratic vacancy on the -Interstate Commission, put him in there,’ and Roosevelt -put him in.”</p> - -<p class='c007'>This railroad president is a man of the highest character -and of very extensive information. Whether or no he is -rightly informed in respect to the appointment of commissioners, -it is clear that the railroad representation in -the Senate could bring tremendous pressure to bear to -secure the appointment of men approved by railroad interests, -that they could block the appointment of any other -sort of men even if nominated, and that the temptation to -exert this power to secure men who could be controlled -would be practically irresistible if the Commission were -given the rate-making power.</p> - -<p class='c007'>The fear of confiscation does not seem to be well -founded on the part of the railroads; there is more to -justify such a fear on the part of companies and localities -unfairly treated by the railroads. The Commission will -have no motive to make confiscatory orders, and the courts -will protect the roads from everything that is doubtful in -the slightest degree as they have done in the past. The -real danger of confiscation of values lies in leaving the -<span class='pageno' id='Page_291'>291</span>railroads free to make such orders as those in the San -Antonio case or the Kansas oil case which destroyed the -business of independent operators. Adding 25 cents a ton -to the coal rates from San Antonio practically confiscated -the coal mines at that point, and raising the oil rates in -Kansas from 10 to 17 cents practically confiscated, during -the continuation of the order, the product of the independent -oil wells.</p> - -<p class='c007'>That some disturbance of tariffs and business might -result from conferring the rate-fixing power on a public -board is quite likely. There is a good deal of business -that ought to be disturbed; that of the Beef Trust and the -Oil Trust for example would be the better for a thorough -house-cleaning. And the tariffs need considerable disturbance -to bring them into close relations with the principles -of justice. But the disturbance <em>might</em> be more than is needful. -Our railroads say that Government boards the world -over show a tendency to adopt some sort of a mileage -basis, in the shape of a zone system or some other form -of distance tariff. This would interfere with the equalization -of rates, which is one of the best elements in -American railroading. The fruits of California are carried -all over the country at low blanket rates that enable them -to be sold in every hamlet in the country at prices the -common people can afford to pay. New England shoes are -carried to St. Louis at 1½ cents a pair and to San Francisco -for 2 cents a pair. Milk is brought into the cities at the -same rate for many miles out. So with the pulp mills in -the forests of New York, Vermont, and Maine. The railroads -give them all equal rates to the great cities. When -the big mill at Millinocket, Me., was being planned the -promoters went to the railroads for rates. To make the -product cheap they must build on a large scale, and to -justify this they must be able to reach many markets; -they must be able to supply newspapers in Boston, New -York, Philadelphia, and Chicago. So the railroads gave -<span class='pageno' id='Page_292'>292</span>them rates that enabled them to send their paper 1,500 -miles to Chicago and sell it to newspapers there at the -same price they would have to pay for paper that came -only 500 miles.<a id='r408'></a><a href='#f408' class='c012'><sup>[408]</sup></a> This destroys nature’s discriminations -due to distance, and places men on an equality in the -market to win by their merits, not by natural advantages -or disadvantages of location. This is in many ways a -beneficent process and if the railways did not create -new artificial discriminations of their own they would be -entitled to be placed among the great equalizers of the age.</p> - -<p class='c007'>Years ago there was a vigorous argument about the rates -on wire from Worcester, Mass., to Chicago, and from Pittsburg -to Chicago. The wire mills of Worcester had a good -business, employing some 5,000 men, and marketing mostly -in the West. Mills were built in Pittsburg, and being much -nearer Chicago got a lower rate to that city. The New -York Central at once met the rates so that the Worcester -Mills could get to market on a level with the Pittsburg -people, who still had the advantage of nearness to the coal -and iron mines. Not satisfied with this, however, they carried -the question to the Traffic Association, claiming that -as they were 500 miles nearer Chicago, they should have a -lower freight rate than the Worcester mills. But they -didn’t get it. The New York Central said: “Here are -5,000 men at work in Worcester. What are they going to -do if we let you crowd them out of Chicago, which is their -principal market? We shall stand by them and meet any -rate you make from Pittsburg.” That was fine, as good -as the raising of a rate to kill the San Antonio mine was -bad; the railroads can save industrial life as well as commit -industrial murder.</p> - -<p class='c007'>It is said that government rate-fixing would not meet -such cases; that the principle of equalization is not recognized, -and both justice and business development would -suffer thereby.</p> - -<p class='c007'><span class='pageno' id='Page_293'>293</span>It is not true that government rate-fixers do not recognize -the equalization principle. The national post-office -has carried it to the limit, and has based its business upon -it to such an extent that it is known as the post-office principle. -It is applied in government telegraph and telephone -systems much more fully than in our private systems. -Even the State railways make considerable use of it. -Although the tendency is to adopt some sort of distance -system as the main basis of the tariff, there is constant -recognition in Germany, Belgium, Denmark, Switzerland, -and the Australasian States, and it is announced as a definite -policy that so far as reasonably possible rival industries -shall be placed on an equality in the market. “We mean -to bring the manufacturer who is 100 miles away into the -market on a level with the man who is 10 miles away,” -said the manager of one of these government systems to -me, and there is more or less of the same spirit and purpose -in all the government systems I am acquainted with. -The fact is that a movement toward the equalization of -rates through application of the principle to one commodity -after another, or the gradual extension of zone distances -in a zone tariff, offers the only hope of attaining a really -just and scientific system of rates. Any sudden adoption -of such a system would disturb the values of real estate, etc., -beyond all reason, but it can be gradually approached, and -that is what the railroads in this and other countries are -doing.</p> - -<p class='c007'>Our Interstate Commission has, I believe, shown too -little appreciation of this fact, too much tendency to insist -that a town or city is entitled to the benefit of its geographical -position. It is entitled to the benefit of its geographical -position to the extent that no place more distant from -its market should have lower rates to and from that market, -but the right to claim that the rates shall not be equal -is very questionable, and frequently it is clear that no such -right exists. The Commission has recognized this point -<span class='pageno' id='Page_294'>294</span>in several cases. For example, in the Business Men’s -Association of St. Louis <em>v.</em> the Santa Fe, Northern Pacific, -Union Pacific, and other roads,<a id='r409'></a><a href='#f409' class='c012'><sup>[409]</sup></a> the Commission sustained -a blanket rate on many commodities from the Pacific Coast -to all points east of the Missouri River. And in the Orange -Rate Case<a id='r410'></a><a href='#f410' class='c012'><sup>[410]</sup></a> decided last year, a blanket rate of $1 per -hundred on lemons from Southern California to all points -east of the Missouri was approved. In the milk case, however, -it held that “A blanket rate on milk on all the Delaware, -Lackawanna’s lines, New Haven road, Reading, -Erie, New York Central, and West Shore and other roads -regardless of distance, viz., 32 cents on milk and 50 cents -on cream per can of 40 quarts, is unjust to producers and -shippers of the nearer points. There should be at least -four divisions of stations,—the first extending 40 miles -from the terminal in New Jersey, the second covering a -distance of 60 miles and ending about 100 miles from such -terminal, and the third covering the next 90 miles, and the -fourth covering stations more than 190 miles from the terminal. -The rates on milk in 40–quart cans should not -exceed 23 cents from the first group of stations, 26 cents -from the second group, 29 cents from the third, and the -present rate of 32 cents from the fourth group.”<a id='r411'></a><a href='#f411' class='c012'><sup>[411]</sup></a></p> - -<p class='c007'>It is quite possible that the Commission made a mistake -in this case, though it is not easy for any but a railroad -man, with a ravenous appetite for tonnage and reckless of -the waste of economic power, to see any sense in arranging -rates so as to take milk to New York from points -near Buffalo while Buffalo gets milk from places east of -points shipping to New York; but if the Commission did -fall into error in this case, the mistake of refusing to allow -<span class='pageno' id='Page_295'>295</span>the distant man to come into the metropolitan market on -equal terms with the nearer man is nothing compared to -the mistake the railroads so frequently commit of allowing -some Chicago or Kansas City man to come into New York -at lower rates than the New York, Ohio, Pennsylvania, and -New England producers have to pay.</p> - -<p class='c007'>In respect to the distance tariff question, Chairman -Knapp of the Commission says: “I am very far from -believing that there should be anything more than the -most inconsiderable tendency, if any at all, toward the adjustment -of rates on a mileage basis, and I think the -prosperity of the railroads, the development of the different -sections of the country and their industries, justify -the making of rates upon what might be called a commercial -basis rather than any distance basis; but do you -realize what an enormous power that is putting into the -hands of the railroads? That is the power of tearing down -and building up. That is the power which might very -largely control the distribution of industries. And I want -to say in that connection that I think on the whole it is remarkable -that that power has been so slightly abused. But -it is there.... It comes back to the question which -Senator Dolliver asked, are the railroads to be left virtually -free to make such rates as they conceive to be in their interests? -Undoubtedly their interest in large measure and -for the most part is the interest of the communities they -serve. Undoubtedly in large measure and for the most -part they try as honestly and as conscientiously as men can -to make fair adjustments of their charges. But suppose -they do not. Is there not to be any redress for those who -suffer? That is really the question.... Suppose it were -true that a more potent exercise of government authority -and the adjustment of rates tended somewhat to increase -the recognition of distance with the result of producing a -greater diffusion of industry rather than its concentration.... -I cannot believe that all those institutions, laws, -<span class='pageno' id='Page_296'>296</span>administrations which operate to the concentration of industries -and population are altogether to be commended. -I doubt if they result in happier homes, better lives, greater -social comfort.”</p> - -<p class='c007'>A public board might not be willing to apply the equalization -principle without limitation under competitive conditions. -It might put the sash and door makers of Michigan -and Vermont on an equality in New York City, and yet -not think it best to enable the Vermont manufacturers -to send sash to Michigan and Indiana points at the same -rates the Michigan manufacturers pay, while the Michigan -factories get the same rates to Vermont and Massachusetts -points as the Vermont people; nor to arrange matters so -that a train-load of bananas from the port of New York to -Boston would pass a train-load of bananas going from the -port of Boston to New York. It takes a lot of railroads -working for profit, regardless of the waste of industrial -force, to see the wisdom of such cross-hauling. A public -board would be likely to recognize not merely the principles -of profit, equalization, and development of traffic, but -also the principles of economy from a national standpoint, -the adaptation of special localities to special work, the -value of diversification of industry, etc., etc.</p> - -<p class='c007'>It is entirely possible to avoid such mistakes as those -attributable to the Commission in its geographical cases, -and other mistakes that may come from lack of thorough -acquaintance with practical transportation problems, by -putting on the Commission two or three traffic men of high -character and long experience in the business of making -rates.</p> - -<p class='c007'>And as the business of the Commission would not be to -make rates in the first instance, but only to revise them on -complaint, much as the chief officers of railway departments -do now, only with a public motive and point of view -instead of a private one, there is every reason to believe -that the work of revision could be intrusted to a well-selected -<span class='pageno' id='Page_297'>297</span>commission, with great advantage to the public. -The very existence of an effective power of revision ought -to go a long way toward making the use of the power -unnecessary. And it is wholly just and practicable that -monopoly charges should be subject to the veto of a public -board that is in a position to take a broad, disinterested -view of rates and other transportation questions.</p> - -<p class='c007'>How superior the Commission’s methods are in many -ways to those in use on our railways can hardly be appreciated -by one who is not familiar with the unscientific, -chaotic rate-making practices everywhere in vogue in this -country, and also with the breadth and system that marks -the work of the Commission.</p> - -<p class='c007'>An illustration may help to make the contrast clear. -Take the case of Kindel <em>v.</em> Boston & Albany, and other -railroads, decided by the Commission, December 28, 1905. -The railroads were charging $2.24 per hundred on cotton-piece -goods from Boston, New York, and other eastern -points to Denver, and $1.50 on the same goods from the -East clear through to San Francisco. The local rate from -Omaha or Kansas City to Denver was $1.25, the same as -the rate on first-class goods, and the rate from the Atlantic -to Denver was made by adding the said local rate to the -rate from the East to the Missouri River. Kindel complained -that the rate to Denver was unreasonable and -unjust. The Commission carefully studied the facts, took -into consideration the relation between cotton rates and -first-class rates on various routes throughout the country, -put the data on a chart, a facsimile of which accompanies -this description, and came to the conclusion that “the -exaction of first-class rates on cotton-piece goods between -Missouri River points and Denver, in view of the long -prevailing differentials in other parts of the country and -other existing conditions, is unjust and unreasonable; and -that the result of the excessive rate on cotton-piece goods -between the Missouri River and Denver and the application -<span class='pageno' id='Page_298'>298</span>of full locals in making up the through combination -rate from New York, Boston and other eastern points -taking the same rates to Denver is to make the through -rate excessive, and that such through rate to Denver to be -reasonable should not exceed $1.50 per hundred pounds.”<a id='r412'></a><a href='#f412' class='c012'><sup>[412]</sup></a></p> - -<div class='figcenter id001'> -<img src='images/i_298.jpg' alt='' class='ig001' /> -</div> - -<p class='c007'>If the reader will examine the chart he will see that the -cotton figures (which are placed below the route-lines) are -less than the first-class rates (which are printed above the -route-lines) in every case except between the Missouri -River and Denver, and in some cases the cotton rates -are only half the first-class rates. In view of the practically -universal custom of the railroads in this relation, the -deviation in the case of Denver amounted to a practical -discrimination against that city and any shippers who -desired to lay down cotton goods in Colorado. The railroads -carried the goods from Boston to Chicago for 55 -cents, while charging $1.25 from Omaha to Denver, more -than double the charge for half the distance.</p> - -<p class='c007'><span class='pageno' id='Page_299'>299</span>Railroad rate-makers do not base their tariffs on broad -considerations of justice, but get what they can out of the -traffic for their own lines, while the Commission asks what -rate will yield a fair profit, and will be just to the public -and to the individuals and localities involved, considering -all the circumstances and their relation to transportation -conditions throughout the country.</p> - -<p class='c007'>At best, however, it cannot be denied that great inconvenience -and some injustice might be inflicted upon the -railroads by public rate revision. It seems to come down -to the choice of the least of two evils. The President and -the people say that if the railroads are left free to make the -rates they do not deal fairly; experience shows that they -discriminate unjustly between persons and places, and put -some rates too high and others too low. The railroads say -that if a public board should make the rates the companies -might not be treated fairly. Both statements are true. But -it is clear that somebody must make the rates. And it is -equally clear that there is no system of rate-making that -will do perfect justice. I know of no railway minister or -traffic manager in Europe or America who even dreams he -knows of any method of rate-making that will do justice -all round under present industrial conditions. The post-office -principle may ultimately be applied to diffuse the -burden of distance over the whole community, but it is not -practicable at present. If then a certain amount of injustice -is unavoidable, and we must choose between injustice -to a small group of stockholders or to eighty millions of -people, which alternative shall we accept? If there is no -way to solve this problem that will not work injustice -somewhere, shall it be to the little group of profit-makers -or to the great public, the people of the United States?</p> - -<p class='c007'>Besides this quantitative comparison, there is a qualitative -comparison that is still more weighty. Such injustice -as may be done to the railways is merely a matter of diminished -dividends on stocks, a very large part of which is -<span class='pageno' id='Page_300'>300</span>water; while the false rates and unfair discriminations -made by the railway managers not only affect property -interests many times greater than railway stocks, but deny -equal opportunity and undermine morals, manhood, government, -civilization, and progress,—values far higher -than any financial items whatever. Moreover, it is not -unlikely that a board constituted somewhat differently -from the present one might eliminate most of the errors -of the Interstate Commission as well as those of the railway. -What are the causes at work in the case? The -reason the Commission has made some injurious rulings -is that they lack the thorough acquaintance with traffic -conditions that the railway managers possess. And the -reason the railway managers make rates that are contrary -to public policy is that they are more or less influenced by -motives that are antagonistic to the public interest. The -Commission is disinterested; it has no wish or personal -interest leading to unfairness either to the railroads or the -public; its motive is right, but its knowledge is imperfect. -The railway traffic managers, on the other hand, have much -more perfect understanding of the transportation business, -but their interest is not altogether in harmony with justice -and the public good. Is it not possible to create a board -that shall have the thorough knowledge of first-class railway -experts, together with the high motives and unmixed -interests of an honorable public commission or court, and -so remove the chief causes that have worked injustice in -the past?</p> - -<p class='c007'>It is possible that there may be another fair solution,—that -the rates may be made neither by the railroads themselves -nor by a body representing the public alone. As -there are three partners in the railroad business, as -in every great industry,—viz., labor, capital, and the -public,—it may be regarded as a case for arbitration, -or for decision, not by any one partner alone, but by a -board representing all three partners. Should there not -<span class='pageno' id='Page_301'>301</span>be a board on which the railways have a right to representation, -the workers being represented too, and the public -also having fair representation upon the board? Then -the decision would represent the co-ordination of thought -and interest of the three great parties concerned in the -railway problem. Perhaps such a solution would be superior -in its justice to decision either by the railways alone -or by a body representing the public only.</p> - -<p class='c007'>But it is clear that the final power to pass on transportation -rates must rest somewhere. That railways are public -highways, and transportation charges in the nature of taxes, -are settled principles of law and economics. That governments -have a right to regulate railroad rates is everywhere -recognized. But how is the right to be effectively exercised? -If legislative bodies attempt to exercise it directly, -the lack of detailed information as to specific cases and the -failure of elasticity and adaptation to the needs of business, -urged against Commission work, would be emphasized a -hundred fold. There is no way but to delegate the power to -an expert board, not with the expectation of perfect justice, -but of the greatest attainable justice.</p> - -<p class='c007'>The most important question of all in this connection -remains to be considered, viz., would the possession of the -rate-fixing power enable a regulative board to stop discriminations? -Practically every rate question but one -involves the question of discrimination. The exception is -the query: “Are the total charges unreasonable?” It is -conceivable that the relations of the various rates might be -fair but the whole tariff might be pitched too high or too -low; then the reasonableness of that tariff would be the -only question on which action would be requisite. But in -practice there are always some rates that are low enough, -some too low, and some too high. And there are always -two active questions in reference to any rate: 1. Is it fair -in relation to the rates accorded to other persons, places, or -commodities? 2. Is it reasonable? In other words, is it -<span class='pageno' id='Page_302'>302</span>such that if other rates stood in true relations with it the -total margin of profit would yield a fair return and no more -than a fair return on the investment? Both questions are -very difficult, especially the latter. The reasonableness -of each particular rate depends not only on its own individual -circumstances, but on a comparison with all other rates -and a consideration of the company’s entire business. Difficult -as it is, it would seem necessary to try to answer it -in a broad way, at least in respect to the tariff as a whole, -for the failure to answer it may mean unjust taxation of -industry, inflation of capital values, dividends on watered -stock, vast accumulations of wealth in the hands of railway -owners, political corruption, and the whole train of evils -that follow in the wake of industrial aggression. Yet -deeply important as it is to secure reasonable rates, how -futile it would appear to attempt to do it by means of a -board making orders as to this, that, and the other rate -complained of, but without power to revise the tariff as a -whole, or to require any particular standard of service in -return for the rate decided upon. For every cent cut off -the rate by the Commission, the railways, if they are agreed -to act in harmony, can easily withdraw two cents’ worth of -facilities. Suppose the Commission can fix a reasonable -rate, what is the use of it unless it can schedule to its -judgment a minute specification of the quantity and quality -of service to be rendered in return for that rate? And it -would have to schedule also the price level, the crops, and -all the conditions of home and foreign markets and adjust -the rate on a sliding scale, else the rate that is reasonable -now may become very unreasonable in a few weeks or -months from now. And if, instead of this patchwork, the -public board attempts to revise the tariff as a whole and -fix the services to be rendered, it will either get itself captured -by the railroads or it will cripple railroad enterprise. -Railroad men are not going to work with much spirit if -you take the control of rates and service out of their hands, -<span class='pageno' id='Page_303'>303</span>and if you leave them control of either they will have you -instead of your having them. It always means a struggle -for mastery where a body that does not own seeks to control. -The body that owns and has possession will evade, -pervert, defy if possible, and if overborne will lose initiative -and energy and take on the air of a conquered province.</p> - -<p class='c007'>The case is no better in respect to discrimination. In -the first place it is clear that, as railroad managers have -testified, it would be just as easy to cut rates made by a -commission as to disregard the rates made by the railways -and published by them and thereby made obligatory under -the law. Mr. J. H. Hiland, head of the traffic department -of the Chicago, Milwaukee and St. Paul, says: “I can cut -a rate or give a rebate on a rate fixed by a commission just -as easily as though I had made the rate myself.”<a id='r413'></a><a href='#f413' class='c012'><sup>[413]</sup></a> Mr. -W. D. Hines, till recently Vice-President of the Louisville -and Nashville, says: “The Townsend Bill made no provision -whatever which looked to the prevention of rebates. It -provided that the Commission should fix rates, but there -would have been the same facilities and the same inducements -to cut the rates made by the Commission as to cut -the rates established by the railroads.”<a id='r414'></a><a href='#f414' class='c012'><sup>[414]</sup></a> President Tuttle -of the Boston and Maine puts the case in this way. “A -big shipper says to the managers of the A, B, & C railroads -‘Give me a cut rate.’ They refuse. Pretty soon all -P’s business is going by the X line. The A, B, & C -folks notice that they are losing traffic and they say ‘Look -here, where’s all that business we used to get? The X -line is getting it all. P’s got a concession over there!’ -Maybe he has and maybe he hasn’t, but you can’t make -those fellows on A, B, & C believe that he hasn’t. They -<span class='pageno' id='Page_304'>304</span>go to P and say: ‘What are you giving all your business -to the X line for?’ P says, ‘Well, I asked you to give -me a lower rate and you wouldn’t do it.’ He don’t say -he’s got a lower rate on X, and maybe he hasn’t, but the -effect on A, B, & C is the same as if he had. They say, -‘What do you want?’ P says, ‘Give me 2 cents a hundred -off the rate and I’ll distribute my business as I did before.’ -So they give him 2 cents off and they get the tonnage.”</p> - -<p class='c007'>Mr. E. P. Vining, a former railroad manager, says that -the reduction of a rate found unreasonable by the Commission -may result in new discriminations unless other rates -are reduced in fair proportion.<a id='r415'></a><a href='#f415' class='c012'><sup>[415]</sup></a> It is also clear that in -many cases the reduction of other rates by the railroads -may nullify the effect of the Commission’s order in respect -to the rate complained of. Take, for example, the railroads -leading from the wheat belt to Minneapolis and to -Milwaukee. Excepting the Chicago, Milwaukee and St. -Paul the roads that lead to Minneapolis are not the same -roads that lead to Milwaukee. The Commission found -that the rates on grain to Milwaukee and Minneapolis subjected -the former to undue prejudice and disadvantage, but -if the Milwaukee roads were ordered to reduce their rates -to a given level the Minneapolis roads could neutralize the -order by reducing their rates below the said level.<a id='r416'></a><a href='#f416' class='c012'><sup>[416]</sup></a> In -other words no mere right to designate a reasonable rate -in place of a rate complained of and found unreasonable can -prevent unfair discrimination between places.</p> - -<p class='c007'>Nothing short of a general rate-making power can do the -work properly. Particular rate-fixing alone means patchwork -and inefficiency, easy evasion and new discriminations -in place of the old ones. On the other hand, to give a -public board general power to revise rates would if effective -be tantamount to taking possession of the railroads without -<span class='pageno' id='Page_305'>305</span>compensation, and if ineffective would amount to little -in the way of stopping discrimination. If the tariffs were -made by or subject to the revision or approval of a public -commission and the rates so made were enforced, the most -vital element in the ownership of the roads would be made -public. And if the rates were disregarded or the power -not vigorously and intelligently exercised the evils we are -considering would still continue.</p> - -<div class='chapter'> - <span class='pageno' id='Page_306'>306</span> - <h2 class='c005'>CHAPTER XXXIV.<br /> <span class='large'>CAN REGULATION SECURE THE NEEDFUL DOMINANCE OF PUBLIC INTEREST?</span></h2> -</div> - -<p class='c006'>It is questioned whether any form of regulation can overcome -discriminations. One of the ablest members of the -Interstate Commerce Commission said to me: “No, regulation -can never stop discrimination.” And the man who -is regarded by many as the leading railroad expert in the -country replied to my question in substantially the same -way. “Regulation properly so-called cannot eliminate -discrimination, though it may greatly diminish it.”</p> - -<p class='c007'>What he meant was that a control strong enough to -eliminate discrimination, would not be regulation, but ownership -or quasi-ownership. So long as men representing -private interests continue to possess control over rates and -services they will continue to discriminate, for private interests -demand discrimination. And if control of rates or -services or both is placed in a public body, public ownership -or quasi-public ownership is thereby established, for control -is the essence of ownership. It makes little difference -who has the title to a farm if I have the control of it and -can determine the way in which the work shall be done -and the price at which the crops shall be sold. The -“owner” in such case is little more than a mortgagee—he -has the interest on his capital, whatever I choose to -allow him, and that’s all. It would seem that if the -people wish to control the railroads, they should buy them -at a fair value, and not establish complete or quasi-ownership -<span class='pageno' id='Page_307'>307</span>without compensation, under the name of regulation -and control.</p> - -<p class='c007'>This is an interesting line of thought, and philosophically -has considerable force in respect to control extending beyond -what the public may have a right to claim as a partner -by reason of the bestowal of franchises and other benefits. -It is also important to note that only substitution of managers -owing allegiance to the public interest in place of -managers representing private interests can eliminate the -motives to discrimination, and remove the antagonism of -interest between the owners and the public, which is the -root of all railroad evils.</p> - -<p class='c007'>This is a practical world, however, and the practical facts -are that the difficulties in the way of public ownership of -railways in this country at present are very great, and that -much good may be accomplished by judicious regulation. -The long and short haul clause may be made effective; the -railroads can be prevented from paying shippers more for -cars or switches than they would pay each other; private car-lines, -express companies, and water carriers can be brought -within the Commerce Act; the Commission can be given -power to name a reasonable rate or practice in place of one -found unjust, and either put it in force at once, subject to -revision in a special court devoted to transportation cases, -and acting promptly on all appeals, or themselves take the -facts and their conclusions at once to the court and get a -ruling before putting the order into effect; and railroad -managers can be prohibited from having any interest in any -concern that can be aided by transportation favors over -their roads, as is already the case on James J. Hill’s Great -Northern, except with respect to Mr. Hill himself.</p> - -<p class='c007'>Besides all this it may be possible to make the law so -clear that the courts cannot twist it out of shape, and the -States might be got to pass laws in complete harmony with -the Federal statutes. Railroads and trusts can be subjected -to public inspection, and to the pressure of damage suits, -<span class='pageno' id='Page_308'>308</span>injunctions, and progressive taxation. If need be the public -could demand representation on the boards of direction of -all the railroads, or the traffic managers could be made -public servants and required, as receivers are now, to report -semi-occasionally to the Federal courts, and to State -courts also, perhaps, with the power of judicial removal in -case of misconduct. There is a practical warrant for demanding -representation in the management of the roads, in -the fact that the franchises bestowed on them by the public -represent a large part, probably half, of their market values. -The public is entitled, as we have said, to be regarded as a -partner in the railroads.</p> - -<p class='c007'>If after thorough trial, regulation proves insufficient or -unsatisfactory, public ownership remains.<a id='r417'></a><a href='#f417' class='c012'><sup>[417]</sup></a> The movement -of thought in that direction in the last few years is very -remarkable. In whatever way relief may come, whether -by regulation or public ownership, <em>the essential fact is the -dominance of public interest over private interest at the points -where private departs from public interest, and the essential -instrumentality for the realization of this fact in a republic -is the actual, complete, and continuous control of the Government -by the people</em>.</p> - -<p class='c007'>That unjust discrimination in railroad rates and service can -be abolished, we know from the experience of other nations. -Studying the railways of ten countries on the ground, examining -the railway literature and talking with leading authorities -of twenty-six countries, and analyzing the writings of -the principal critics of the various systems, I find that the -railroads of the United States are unique in two respects—the -efficiency of the service they render, and the extent and -viciousness of the discriminations they make. If efficiency -<span class='pageno' id='Page_309'>309</span>and injustice were essentially related, we might look with -some degree of leniency on the evils of railway favoritism, -though the wise would prefer justice even at the sacrifice -of some degree of efficiency. But there is no such relation. -Efficiency is due to national characteristics and economic -conditions. In Italy I found the least efficiency coexisting -with the greatest development of railway favoritism that I -discovered anywhere in Europe, while the German roads -are highly efficient and absolutely free from favoritism. All -over Europe shippers and railway men assured me that no -concessions could be obtained on the German railroads, and -that they were the best managed roads in Europe. The -railways of France and England are less efficient than those -of Germany, and are tainted with discrimination to a degree -that is insignificant compared with the phenomena in that -line over here, but is very emphatic when compared with -the German standards. The press of Great Britain has for -years been holding up the management of the German roads -as a model to be followed in England, and attributing the -success that Germany is having in superseding English -goods with her own in many leading markets to the efficient -and far-sighted policy of her railway management.</p> - -<p class='c007'>There does not seem to be any clear connection between -efficiency and the form of ownership. The private roads -of America are the most efficient and the private roads of -Italy<a id='r418'></a><a href='#f418' class='c012'><sup>[418]</sup></a> the least efficient I have examined. The public -roads of Germany and Belgium, though less efficient than -our private roads, are more efficient than the private roads -of France and England. In the same country, under like -economic conditions, either private ownership or public -ownership may secure the best management and most efficient -service according to the stage of development. In -the United States under existing political conditions the -<span class='pageno' id='Page_310'>310</span>managers of our railways have many facts on which to base -an argument that Government operation of railroads would -be less efficient than private operation; and the fact that -our adverse political conditions are due in large part to the -private ownership of public service monopolies does not -destroy the whole force of the argument, since our rings, -bosses, party machines, spoils system, etc., are due in part -to other causes. But where public affairs can be managed -with the purity and business sense that characterize the -railway managements of Germany, Belgium, Denmark, -New Zealand, and South Africa, there is equally little reason -to doubt that public operation is the more economical -and efficient.</p> - -<p class='c007'>The low average freight rate in the United States is often -adduced as conclusive proof of the efficiency of private -management. But the average freight rate in England -and France is higher than in Germany or Belgium.</p> - -<p class='c007'>If it is a valid argument to say that the low average -freight rate in the United States under private ownership -proves the case as against the higher average freight rate -under the public systems, then why is it not fair to say that -the high rates in Great Britain and France under private -ownership in their turn prove the case for public ownership. -The average passenger rate in the United States and in -Great Britain is twice as high as in some of the public -systems of the continent. If the low freight rate proves -the case for private ownership, why doesn’t the low passenger -rate in Germany and Belgium prove the case for public -ownership? The fact is that such comparisons of average -rates prove nothing as to the management. Differences in -the density of traffic, grades, curves, length of haul, wages, -capitalization, etc., enter as plural causes and make it impossible -to ascertain the effect of the element under consideration. -Mr. Fink found that the ton-mile cost varied -eightfold on different lines in his own system, all under the -same management—700 percent more in some cases than -<span class='pageno' id='Page_311'>311</span>in others. In view of that fact, of what use is it to try to -draw inferences from the average rate?</p> - -<p class='c007'>Underneath our low average freight rate there are not -only vast masses of low grade freight, coal, iron, lumber, -etc., on very long hauls, but a traffic of great density -between the great cities, and innumerable discriminations -in favor of big shippers and big cities. Local rates in many -rural districts are very high, almost as high in some cases -as in the old stage-coach days. Labor is more efficient in -this country than in Europe; for example, it takes, according -to Mulhall, 2 men in England; 3 in France or Germany, -and 4½ in Europe on the average, to produce the same -agricultural product as 1 man in the United States. In -manufactures and construction work the ratios of efficiency -are nearly the same; 1 man in the United States does -almost as much as 2 men in England, 3 in France or Germany, -and 5 in Italy or Hungary. Again our Government -subsidizes the railroads by paying very large sums for the -carriage of mails, while in Europe the railways are required -to carry the mails free or for a very small payment. Moreover -our railway capitalization, though larger than it ought -to be by the amount of watered stock and fictitious securities, -is nevertheless considerably below the capitalization -of European roads. In the United States, the railways -were mostly built through a new country thinly settled in -comparison with Europe, and in many cases not settled at -all. The right of way cost practically nothing as compared -with the cost in Europe. The Government aided the construction -of a number of giant systems by enormous grants -of land and loans of money. Few roads were built that did -not receive large donations from the cities and towns which -they pass. And the abolition of grade crossings and other -safety requirements in Europe entail vast expenses from -which our roads are comparatively free.</p> - -<p class='c007'>If Government operation were established in this country -under good political conditions and reasonable safeguards -<span class='pageno' id='Page_312'>312</span>that would secure efficient management, rates could be -lower than they are now; for hundreds of millions that go -for profits on watered stock, legislative and legal expenses, -exorbitant salaries, competitive advertising, and agencies, -etc., etc., would be saved. The abolition of free passes -and freight concessions would permit a further reduction -of the tariff; so that the published rates the general -public would pay could be much lower, and even the ton-mile -average would be somewhat lower than at present.</p> - -<div class='chapter'> - <span class='pageno' id='Page_313'>313</span> - <h2 class='c005'>CHAPTER XXXV.<br /> <span class='large'>HINTS FROM OTHER COUNTRIES.</span></h2> -</div> - -<p class='c006'>Germany tried private railways for 25 years, and Austria -tried them over a quarter of a century, and they have tried -the two methods side by side ever since the public system -was organized. In New Zealand, also, and Australia the -two systems have been tried side by side. And in every -one of these countries where they have thoroughly tried -both systems the conclusion by an overwhelming consensus -of opinion is that public railways serve the public interests -best, and also make lower rates and serve the people at less -total cost. Switzerland, after a careful study of both systems -in various parts of the world, came to the same conclusion, -and her people voted 2 to 1 to transfer the railways -to public ownership and operation. All this is very strong -evidence, and if we turn from the tangled web of an international -comparison of averages and look at the principles -and causes at work in the case, it will be clear that public -ownership tends to lower rates as well as to conserve the -higher wealth.</p> - -<p class='c007'>In the same country and under similar conditions otherwise -than in respect to ownership and control, public -ownership tends as a rule to make lower rates than private -ownership. This tendency results from the fundamental -difference of aim between the two systems. Private monopoly -aims at dividends for stockholders; public ownership -aims at service for all. A normal public institution aims at -the public good, while a normal private monopoly aims at -private profit. It serves public interest also, but such -<span class='pageno' id='Page_314'>314</span>service is incidental, and not the primary purpose. It -serves the public interest so long as it runs along in the -same direction and is linked with private profit, but when -the public interest departs from or runs counter to the -interests owning or controlling the system, the public -interests are subordinated.</p> - -<p class='c007'>The conflict between public and private interest is specially -strong in the matter of rates. The rate-level that -yields the greatest profit is much higher than the rate-level -that affords the greatest service, or the greatest -service without deficit; and since private monopoly aims -at profit it seeks the higher rate-level. Public ownership -aims at service, not at profit, and therefore gravitates -to the lower rate-level, where traffic and service are -greater.<a id='r419'></a><a href='#f419' class='c012'><sup>[419]</sup></a></p> - -<p class='c007'><span class='pageno' id='Page_315'>315</span>There need be no hesitation, therefore, on economic -grounds about pressing toward the dominance of public interest, -either in the form of regulation, or, when political -conditions justify it, in the more complete form of public -ownership. And this dominance of public interest is the -only thing that can eliminate unjust discrimination and -establish an impartial railway service.</p> - -<p class='c007'>The State railways of Germany, Austria, Switzerland, -Belgium, Denmark, and the Anglo-Saxon republics of -South Africa and Australasia are absolutely free from unjust -discrimination. There are no complaints or suspicions -on that score. Shippers know to a certainty that their -rivals are paying the same charges that they are. Even the -most strenuous opponents of public railways do not accuse -them of favoritism. The railways privately operated in -Holland, Denmark, Sweden and Norway, are also free from -discrimination. Thorough public control, natural honesty, -and lack of overwhelming temptation have combined to produce -a pure administration. In Prussia, the Government, -strong as it was, did not succeed in preventing discrimination -on the private railways. President A. T. Hadley, -of Yale, says: “Where the system of granting special rates -becomes deeply rooted a great many are given without any -principle at all, through the caprice or favoritism of the railroad -companies and their agents.” The revelations made -before the Hepburn Committee, as to the practice of railroads -in the matter of secret rates were simply appalling. -This is the most indefensible part of the whole system of -<span class='pageno' id='Page_316'>316</span>railroad management. It is characteristic that Bismarck, -who always chose his fighting ground with skill, made -this a main base of operations in his contest against private -railroad policy in Prussia. The Prussian Cabinet in the -argument for the nationalization of the railways submitted -to the Parliament in 1879 made the following statement:</p> - -<p class='c007'>“The principles of the publicity of the rates and the -equal treatment of all shippers which are embodied in the -railroad legislation of all countries, are liable, as experience -has shown, to be circumvented on account of the competing -interests of the railroads, and also by individual interests -which have influence with the managements. The granting -of these secret advantages in transportation in the most -diversified ways to individual shippers, and in particular -the so-called rebate system, is the most injurious misuse of -the powers granted to railroad corporations. It renders -government control of rates impossible, makes the competition -between the different lines, as well as that of the -shippers dependent on them, dishonorable and unfair, -carries corruption among the railroad employés, and leads -more and more to the subordination of the railroad management -to the special interests of certain powerful cliques. -It is the duty of the government to oppose this evil, to uphold -the principle of the equal treatment of all shippers, -and to enforce the legislative regulations on this subject. -The importance of this problem is only equalled by the -difficulty of its solution.”</p> - -<p class='c007'>The problem was not solved till the railways were -nationalized, and then discrimination disappeared completely. -I was not able to find a shipper in Germany nor -anywhere in Europe who knew, or had heard or had even -a suspicion, of the granting of any rebate or concession of -any kind by the German roads. Many of them did not -stop with negative statements but asserted positively that -concessions could not be obtained. The nearest I came -in my search for a German fraud was the discovery of -<span class='pageno' id='Page_317'>317</span>an English-Italian fraud on the German roads. Leading -business men in Italy told me that while they could get -no concessions from the German roads directly, they could -do it indirectly on transcontinental shipments by means of -a trick of the English traffic managers. They made their -bargains with the English manager, and he would pay a -fictitious claim for damages in transit, and then write -the German office that he paid so much for damages to -the goods and that as it was not known in what part of the -journey the goods were injured the German system must -stand its part of the loss. They have to resort to fraud to -get a discount on the German railways. The principal -motives to discrimination are absent and the dangers to -the guilty official are very great. His employers, the railway -management, and the Government back of it, are -unalterably opposed to the granting of unjust favors to any -shipper. If a traffic man should depart from the path of -impartiality the public examiners would be certain to find -it out, and the traffic man would lose his job. The railway -management is in the closest touch with the people -through the local and national councils representing commercial -bodies, labor, manufacturing, agricultural, and other -industrial interests. The law requires the railway managers -to consult these representative councils, and their -recommendations as to rates, time-tables, and other matters -of public interest are carefully considered and acted upon -so far as reasonably possible.</p> - -<p class='c007'>In France the first railway manager I asked about secret -discriminations said: “There is no such thing in France. -The criminal law is very severe and it would mean imprisonment. -There were complaints of favoritism a dozen -years ago, but there have been none in recent years.” -Other railway men told me substantially the same thing. -But very different ideas were expressed by representatives -of shipping interests and others. Here are some of their -statements: “The railroads hold manufacturers and merchants -<span class='pageno' id='Page_318'>318</span>at their mercy. They favor the great, and put the -burdens on the little fellows. The tariffs are full of special -rates, and 80 or 85 percent of these special rates are -made simply for some favored merchant or manufacturer. -The minister can reject or approve a tariff as a whole, but -has no detailed power over one bad rate. If he retires a -tariff the old one comes into effect. It is true that complaints -are not made. What is the use? The danger is too -great. Where is the merchant who dare undertake a campaign -against the great companies?” I was assured that -the statement of M. Cawes, vol. iv, p. 136, of the “Cours -d’Économique politique,” was still true: “The benefit -of reduced tariffs is accorded upon secret approaches -and solicitations; the companies dispense at their will industrial -prosperity and ruin.” The discrimination between -localities is very great, owing largely to the way in which -the railways are laid out. And “the companies defeat the -national protective tariff by letting foreign goods ride more -cheaply than French goods.” For example, American -wheat from Havre to Paris pays 18 francs per ton, while -French wheat from Ferte-Bernard to Paris, 37 miles less -distance, pays 20 francs a ton. If the nation desires to -favor the importation of foreign products, well and good, -but it is a curious state of things for the Government to -adopt a protective policy and then permit private railways -to reverse, overrule, and nullify that policy.</p> - -<p class='c007'>We have already had occasion to throw a side light on -English railroad methods in describing the way in which -Italian rebaters use the elasticity of the English railway -system to get fictitious damages. I had to go to Italy to -find the true character of the English railway conscience. -The railway men in England won’t tell. And nobody else, -who will tell, knows. Yet the English traffic man, though -willing to pay fake damage claims on proper occasions, is -innocent of “flying tariffs,” terminal railway abuses, -systematic underbilling, classification jugglery, and other -<span class='pageno' id='Page_319'>319</span>preferential paraphernalia that belong to an up-to-date -railway system over here. The last case of personal discrimination -in rates that caused any stir was tried about -6 years ago and the preference was so small that one of -our trust magnates, used to looking at large concessions, -would not have been able to find it without a microscope. -Nevertheless a considerable number of complaints (more -than a hundred a year on the average) came before the -Board of Trade and the Railway Commissioners under the -traffic acts of 1888 and 1894. The Secretary of the Board -of Trade tells me that these complaints relate chiefly to -“high rates, poor facilities, and discriminations.” About -half the complaints charge excessive rates which amount -in most cases, on the face of the complaint, to discrimination -between places or commodities. A large number -of complaints concern higher charges for short hauls than -for longer hauls on the same line, and another large group -allege disproportionate charges or higher rates for shorter -distances as compared with the rates on other lines. A -fourth group, containing about 25 percent of all the cases, -includes complaints of delay, overcharges, refusal of facilities -or privileges accorded others, personal preferences -in rates, etc. For example the London and Northwestern -charged the complainant 12 cents a ton up to 20 miles -for hauling coal, while charging the complainant’s competitors -only 9 cents. Preferential treatment was alleged -in the rates given to rival shipping companies for the -conveyance of goods from Hull to places in Yorkshire. A -coal shipper complained that the Midland Railway had -for many years made a practice of allowing a rebate of 6 -cents a ton to large dealers, and that in the lists of rates -furnished the complainant no mention was made of this -rebate or allowance, though other rebates were mentioned. -The Midland replied that the system had been in operation -since 1889, when the company gave notice as required -by law, in the public rate-books, that they would -<span class='pageno' id='Page_320'>320</span>allow a rebate to traders whose annual tonnage exceeded -25,000 tons.</p> - -<p class='c007'>The English law does not object to the paying of a commission -on a large amount of traffic provided the same -discount is given to all shippers who attain the stated -volume of business, but a higher commission to one big -shipper than to another big shipper is vigorously repressed. -A case of this kind was decided by the Railroad Commission -in 1901. The court found that the Midland Railway -had given Rickett, Smith & Company, coal dealers, a preference -of ¼ of one percent in rebates on their annual traffic -account, and it enjoined the railway and allowed damages -to the complaining shippers. Some 75 suits were entered -by different shippers for this one cause. In the same -report 28 cases are listed relating to discrimination in -brewery traffic, and 16 other applications for injunctions -against undue preference in respect to facilities, rates on -coke, brick, flour and grain, and other commodities to certain -shippers or particular places, and one request from -the Inverness Chamber of Commerce for an order enjoining -the railways from selling season tickets to big shippers -(with a traffic worth $1,200 to $5,000 or more a year) at -lower rates than they will sell them to ordinary passengers. -This last application was dismissed by the court. England -does not object to premiums on volume, provided all -shippers of equal size receive the same treatment. That’s -the principle the Trusts believe in; if vigorously worked -the principle is a powerful trust builder.</p> - -<p class='c007'>The English Commission has power to enjoin undue -preference in rates or facilities and give damages for the -same, to fix reasonable charges in some cases, and to order -rates increased since the revision of 1892 to be reduced to -the previous level on proof of unreasonableness.</p> - -<p class='c007'>In the last report at hand, dated 1903, and relating to the -year 1902, there are 270 odd cases, 95 of which charge -undue preference, and as these matters come first before -<span class='pageno' id='Page_321'>321</span>the Board of Trade, which does not grant an appeal to the -Commission unless it believes there is cause of action, the -probability is that all or nearly all of these applications are -based on a real discrimination.<a id='r420'></a><a href='#f420' class='c012'><sup>[420]</sup></a> It appears that 72 of the -suits are for damages growing out of the Rickett rebate -case; the rest are scattering. A few examples will show -their character: 1. Application for order enjoining railways -to desist from undue preference to complainant’s -competitors through rebates on flour. 2. For injunction -against railways granting preferences to the firm of Leethan -& Sons on their traffic. This case was tried, the preference -found, and the injunction granted. 3. Undue preferences -to certain manufacturers of pig iron in the rates -on coke. 4. Undue preference to a certain shipping company -through superior facilities and lower rates than were -given to others on the same goods and the same routes. -Case settled before trial. 5. Undue preference to Corral -& Company by rebates on coal to certain stations while -refusing to make the same allowances to other shippers. -6. Charging higher rates than E. on coal to the same -point. Case tried, undue preference found. 7. Refusal -of allowances for cartage made to others. 8. Refusal to -supply cars in due proportion. 9. Preference of competing -millers and subjecting traffic of applicant to undue -prejudice. 10. Preference of brewers at Burton and Lichfield -by low rates and terminal allowances. 11. Preferences -in favor of brick-makers in Nuncaton and Tamworth -by assessing the weights of their bricks lower than the -bricks of complainants. 12. Allowing 93 cents a ton for -services in loading and unloading, etc., and refusing similar -<span class='pageno' id='Page_322'>322</span>allowances for similar services by other shippers. 13. Undue -preference through higher rates on coal for domestic -use than on coal for export, etc.</p> - -<p class='c007'>The English Railway Act of 1888 provides that “no railway -company shall make any difference in the tolls, rates -or charges made for, or any difference in the treatment of -home and foreign merchandise, in respect of the same or -similar services.” But this part of the law has been -constantly and vigorously violated as we shall see in a -moment. The main aim of the English Government has -been to keep the railways from lifting the rates or overcharging, -and it has carried this to a point which, with the -strenuous provisions against grade crossings and in respect -to fencing and other safety measures, has gone far to discourage -English railway development. The companies -submit classifications and schedules of maximum rates and -charges to the Board of Trade, which hears all objections -and tries to arrive at an agreement with the companies. -The agreed tariffs, or, in cases where no agreement is -reached, the tariffs the Board thinks ought to be adopted, -are embodied in Bills, introduced to Parliament, and after -hearing if need be enacted into law. Thus Parliament -enacts a tariff of maximum charges, and the law forbids -discrimination, and “whenever it is shown that any railway -company charges one trader or class of traders, or the -traders in any district, lower tolls, rates, or charges for the -same or similar merchandise, or lower tolls, rates, or -charges for the same or similar services, than they charge -to other traders, or classes of traders, or to the traders in -another district, or make any difference in treatment in -respect of any such trader or traders, the burden of proving -that such lower charge or difference in treatment does -not amount to an undue preference shall lie on the railway -company.” The long-haul abuse is met by a provision -free from any ambiguous “similar circumstances and conditions” -clause. “The Commissioners shall have power -<span class='pageno' id='Page_323'>323</span>to direct that no higher charge shall be made to any person -for services in respect of merchandise carried over a less -distance than is made to any other person for similar services -in respect of the like description and quantity of -merchandise carried over a greater distance on the same -line of railway.” Section 31, provides that if any person -believes a railway is making an unreasonable charge, or -treating him in any respect in an oppressive or unreasonable -manner he may complain to the Board of Trade, which -shall endeavor to settle the difficulty by conciliation and -arbitration. If this is not possible, and the case comes -within the jurisdiction of the Railway Commission the -Board will give the plaintiff a certificate to take the matter -before the Commission for adjudication. Under Section -1 of the Act of 1894 complaints may be made of the -unreasonable increase of any rate, directly or indirectly, -since December 31, 1892, and if the Board cannot effect an -amicable settlement the complainant may submit the case -to the Railway Commission for judgment. Some Northampton -traders at once began proceedings under this law, -and after 2 years of litigation at a cost to the plaintiffs -of $10,000 they got a verdict, but the companies declined -to accept the case as a test, so that any one who feels -aggrieved by an excessive rate must spend the time and -money necessary to carry his case through the Commissioners’ -Court to a decision.</p> - -<p class='c007'>The Board of Trade reports to Parliament every few -years all the complaints presented to it and the disposition -thereof. By the last report at hand, issued in 1902 and -covering the years 1899, 1900, and 1901, it appears that -nearly 3,000 complaints (2,946) have been filed from 1888 -to 1902,—2,032 related to “unreasonable increase of rates” -since 1892, and in 101 of these cases, when no amicable -settlement could be made, the Board gave certificates of -appeal to the Commission, but only a few of the complaints -were carried up. Complaint of excessive rates -<span class='pageno' id='Page_324'>324</span>(not cases of increase) numbered 423, 88 of them in -the last 3 years reported: higher charge for shorter distance -than for a longer haul on the same line, 66, 11 of -them in the last 3 years; disproportionate rates, or higher -charge for a given distance on one line than on another -157, 37 of them in the last 2 years; and 268 miscellaneous -cases, 95 of which were entered in the last 3 years. About -4 percent of the complaints relate to canals, the rest are -railway cases. It takes 50 large pages to state the 325 -complaints entered in the last 3 years. A very large part, -practically all in fact, are either in form or in substance, -cases of discrimination; even in complaints of excessive -rates the gist of the charge is usually that the rates complained -of are excessive as compared with other rates -the companies make.<a id='r421'></a><a href='#f421' class='c012'><sup>[421]</sup></a></p> - -<p class='c007'>A few further concrete illustrations from recent years -may be of interest. 1. Refusal of free cartage to a manufacturer -though another mill further away had the benefit -of free delivery. 2. Refusal of allowance for loading, etc., -on private siding though such allowance was made to a -rival firm. 3. Rates on coal from mines at Leigh and -Abram to Winnington, 26 miles, were 50 cents a ton -against 42 cents from the mine at Haydock, 29 miles. 4. -Complaints of delay, insufficient facilities, etc. 5. Fourteen -complaints of increased charges for conveyance of -small parcels in freight-train transportation and that companies -were not following a decision of the Railway -Commission. One of the complaints on the ground just -stated was filed against the railways generally by the -Co-operative Wholesale Society with practically 10,000,000 -<span class='pageno' id='Page_325'>325</span>people back of it in interest and sympathy. The companies -revised the schedule and reduced the rates. 6. -Refusal to grant complainant the same facilities for warehousing -traffic as are granted to their competitors. The -Board succeeded in removing the preference without trial. -7. A rate of $11.25 on india-rubber goods from Birmingham -to Newcastle-on-Tyne against $8.95 on the same goods -intended for export. 8. One shipper stated that he was -charged $9.75 for a carload of coal (6 tons) from Cork to -Baltimore, while the Baltimore Fishery Schools were -charged only $5.10 for the same service. After the usual -correspondence by the Board of Trade the matter was -settled by the railroads agreeing to give the plaintiff the -same rate as the Fishery Schools. 9. Another shipper -alleged that since he had sent his traffic from Methven via -the North British route from Perth instead of the Caledonian, -the company had delayed his traffic at Perth while -other traffic was sent on; that the company had deprived -him of the use of facilities formerly enjoyed, and had -stopped his credit. This reads almost like an American -case.</p> - -<p class='c007'>The long and short haul cases also remind one of home -in about the same ratio that a raspberry bush reminds one -of a full grown oak. Both personal preference and the -long-haul discrimination are comparatively rare in England. -The greatest resemblance to America is in the rates on -imports. The English railway manager has as good an -appetite for foreign goods as any American manager, and -in this matter the law does not tie him up as it does in so -many respects with its maximum rates and large discretion -in the Railway Commissioners to prevent excessive rates -and undue preference. Foreign linen goes from Liverpool -to London for $6.10 a ton while home linen pays $9.25 or -50 percent more. Foreign woolen and worsted goods are -carried from Manchester to London for $6.10, against -$9.75 or 60 percent more for English goods. Foreign -<span class='pageno' id='Page_326'>326</span>timber travels from Hartlepool to Wimeaton for $3.12 a -ton while English timber pays $7.50 or 130 percent more. -English dressed meats from Liverpool to London $12.50 -a ton, American meat $6.25, just half the home charge. -American cattle slaughtered at the wharf in Glasgow, -$11.25 to London, home beef, $19.25. Cheese goes all the -way from New York past Chelford and other English -stations for less than the rate from those stations to -London.</p> - -<p class='c007'>“Foreign hops are conveyed from Boulogne, via Folkestone, -to London at $4.37 per ton, while the charge from -Ashford, on the same line of railway and much nearer to -London, is $8.75—or just twice the amount for about half -the distance.... The rates for imported butter, cheese, -bacon, lard, and wool from Southampton Docks to London, -distance seventy-six miles, is $1.50 per ton. From Botley -in the same county, and a similar distance, the rate for all -these goods is $4.80, or 219 percent more than for foreign -stuff. The difference in rates between Southampton Dock -station (foreign) and the Southampton Town station -(home) is as follows: Hops $1.50 and $5; apples $1.25 -and $3.22; pressed hay $1.25 and $2.50; eggs $1.66 and -$5. Further, Professor Hunter showed that while French -fruit is charged at the rate of 4½ cents per ton per mile to -London by the South Eastern, the same company charge -Kentish farmers 11 cents per ton per mile, or more than -double.”<a id='r422'></a><a href='#f422' class='c012'><sup>[422]</sup></a> The London <cite>Times</cite> declares that “there are -no arguments within the range of human ingenuity that -will convince a Sussex hop-grower of the equity of an -arrangement by which foreign hops are brought from the -other side of the Channel for less than he has to pay to get -across Surrey.... For nothing can shake the belief of the -home producer, and in our view nothing ought to shake it, -<span class='pageno' id='Page_327'>327</span>in the argument that if these low rates pay the companies, -he is shamefully overcharged, while if they do not pay, he -is still overcharged to cover the loss and bring up the -average.”</p> - -<p class='c007'>It is evident that England is far from being free from -unfair discrimination. A system of maximum rates, with -penalties for undue preference, and a commission able -to countermand an unreasonable increase of rates, is not -sufficient.</p> - -<p class='c007'>In Canada a railway commission of three appointed by -the Governors in Council for ten years (but removable at -any time by the Governors in Council for cause) has absolute -power over rates, classification, speed, safety appliances, -etc.<a id='r423'></a><a href='#f423' class='c012'><sup>[423]</sup></a> The railways may submit tariffs, but the Board -can approve or disapprove of them in whole or in part, and -prescribe such rates and classification as it deems best, and -the railroads cannot charge either more or less than the -rates authorized by the Commission. All undue preferences -between persons and localities in rates or facilities is forbidden, -but “the tolls for larger quantities, greater numbers, -or longer distances may be proportionately less than -the tolls for smaller quantities or numbers, or shorter distances, -if such tolls are, under substantially similar circumstances, -charged equally to all persons. The Board shall not -approve or allow any toll, which for the like description of -goods or for passengers, carried under substantially similar -circumstances and conditions in the same direction over the -same line, is greater for a shorter than for a longer distance, -the shorter being included in the longer distance, unless the -Board is satisfied that, owing to competition, it is expedient -to allow such a toll.” The burden of proof is on the company -to show that any difference of treatment does not -amount to an unjust discrimination. And “the Board may -determine, as questions of fact, whether or not traffic is or -has been carried under substantially similar circumstances -<span class='pageno' id='Page_328'>328</span>and conditions, and whether there has, in any case, been -unjust discrimination, or undue or unreasonable preference -or advantage, or prejudice or disadvantage, within the -meaning of this Act, or whether in any case the company -has or has not complied with the provisions of this and -the last preceding section; and may by regulation declare -what shall constitute substantially similar circumstances -and conditions, or unjust or unreasonable preferences, advantages, -prejudices, or disadvantages within the meaning -of this Act, or what shall constitute compliance or noncompliance -with the provisions of this and the last preceding -section relating to discrimination, long-haul,” etc. -No Supreme Court rulings can knock out this Commission, -for it has clear authority in the law to interpret its provisions -as it deems best, to accomplish the purpose in view. -Whether this law will work well or ill is not yet apparent.</p> - -<p class='c007'>In Holland, where the railways are owned by the State -and operated by private companies under lease from the -Government, the Ministry assured me that unfair discriminations -between persons and places do not exist, and I have -every reason to believe they are right. The President of -the Government railways in Denmark said: “There are -no discriminations either on the public or company railroads. -It would not be possible to give such favors in -Denmark.” And in reference to my description of some -of the American methods of favoritism, he said that nothing -of the kind had been attempted; and if it should be, every -one concerned in the transaction would be punished, and -the guilty officials would lose their positions.</p> - -<p class='c007'>Railway men and publicists of Norway and Sweden tell -me that there is no discrimination. It would not be permitted. -There are no provisions against it in the law. -Nothing of the kind has ever been known.</p> - -<p class='c007'>A high official of the Japanese Government, whom I -met in this country a few months ago, said in answer to -a question in which I stated some of our discrimination -<span class='pageno' id='Page_329'>329</span>methods, large and small: “The government fixes maximum -and minimum rates, and the companies are free between -these limits, except that the Minister keeps control -sufficient to compel fair rates if the companies should try -to discriminate or otherwise make unjust rates. We have -had nothing like the Beef Trust or Standard Oil discriminations -you describe, nor any personal favoritism in -rate-making, but the government means to prevent the -possibility.”</p> - -<p class='c007'>The railways of New Zealand are not troubled with -complaints of discrimination, nor those of New South -Wales or Queensland or Victoria. And in these boiling -and bubbling republics, if there were the slightest suspicion -of a reason for attacking the Government management -on this ground, it would be done by the political -opponents of the administrations. South Australia has -had one case of alleged favoritism. The complaint was -that the Railway Commissioner gave a reduced rate on -carload lots of certain goods to certain points, to meet -water competition. A shipper, desiring to send his goods -at low rates in the opposite direction, asked the Commission -to give him a reduction equal to that accorded on -the traffic above mentioned. The Commissioner said he -would give the same reductions if the shipments were -made in carload lots. The complaining shipper could -not do this, as his trade was not sufficient. The matter -was brought before Parliament, and Parliament sustained -the Commissioner. The Parliament of each of these republics -acts as the people’s board of directors of all public -works, calling the managers to account; and any member, -from the remotest rural district, can ask the Ministry and -the railway management any question he chooses, and -compel full disclosure of the facts. Secrecy is practically -impossible.</p> - -<p class='c007'>The Government railways of Natal and Central South -Africa are equally free from secret concessions and favoritisms -<span class='pageno' id='Page_330'>330</span>of every kind. In talking with the manager of the -Central South African Government railway, I explained -the nature of the favors granted to the big shippers in the -United States, using the Beef Trust, Salt Trust, Oil Trust, -Fuel Company, etc., as illustrations, and said: “Suppose a -big concern tried to get special rates or concessions of some -kind on your railroads, and made a secret agreement with -the railway management?”</p> - -<p class='c007'>“They couldn’t do it.”</p> - -<p class='c007'>“Why not? Human nature is the same in South Africa -as in America. Suppose they made some traffic man a partner -in their profits or brought pressure enough on him in -some way to get a concession?”</p> - -<p class='c007'>“It wouldn’t be possible.”</p> - -<p class='c007'>“Well, why? Suppose it were possible, what would -happen?”</p> - -<p class='c007'>“The Government auditors would find it out, and the -manager would lose his position.”</p> - -<p class='c007'>“Couldn’t he cover up the thing?”</p> - -<p class='c007'>“Not for any length of time.”</p> - -<p class='c007'>“The people would have a fit if anything like that were -attempted,” said a member of the manager’s staff.</p> - -<p class='c007'>“You have no attempts to secure preference, then?”</p> - -<p class='c007'>“No it is not even attempted.”</p> - -<p class='c007'>If those who employ and discharge the traffic managers -desire discrimination or aim at results which can be forwarded -by discrimination, then discrimination will exist -unless the public control is strong enough to keep the big -shippers and the people in possession of the railroads from -carrying out their purposes.</p> - -<p class='c007'>If, on the other hand, those who employ and discharge -the traffic men are sincerely opposed to discrimination and -aim at results that can only be secured by just and impartial -management, then the traffic man who is guilty of -favoritism will lose his job, and the utmost possible -discouragement is put upon unjust discrimination.</p> - -<p class='c007'><span class='pageno' id='Page_331'>331</span>Once more the vital conclusions seem to be, the necessity -of the dominance of public interest, and the value of being in -possession or having your own servants in possession instead -of merely giving orders to the servants of another in possession -who may or may not obey, and who are in no danger -of losing their positions by disobeying you and may gain -greatly by it—the value of having public interest at the -helm to steer the vessel in a safe course, instead of keeping -private interest at the wheel while public interest stands on -a steam tug with a big whistle and shouts orders through -the fog to the steersman on the passenger liner who is more -than half inclined to steer the ship as he pleases, and gets -his pay and employment from men who do not wish the -public orders carried out, and whose instructions vary -widely therefrom. You cannot expect the servants of -others to obey your orders as well as your own servants, -especially if the said servants of others are employed by -persons whose interests are largely contrary to your own. -Neither can a commander be as sure of winning a victory -at the head of an army trained in the camp of the enemy -owing allegiance to them, and constantly receiving orders -from them, as he could at the head of his own proper troops.<a id='r424'></a><a href='#f424' class='c012'><sup>[424]</sup></a></p> - -<p class='c007'>Is it fair to try to control in your own interest property -that does not belong to you? It is fair to try to exert -sufficient control to secure impartial treatment of persons, -places, and industries; but can this be done without fixing -rates, and if this is resorted to will it not result either in -squeezing the life out of railway enterprise or in a vicious -struggle for mastery with new evasions of law and further -intensification of political evils, and corporate control of -Government? You will either deprive the owner of the -right to determine the price at which the product of his -plant shall be sold, thus controlling his profit and sapping -<span class='pageno' id='Page_332'>332</span>his energy and incentive, or you will put a premium on -political corruption by making it necessary for the railroad -owner to control the Government in order to control his -business and its profits. You will check the development -of railways and drive capital into industries where the -owners are free to fix prices, or you will check the movement -toward political purity. Public control in some form -is absolutely necessary in order to safeguard the public -interest. The only question relates to the form and degree. -Is effective and adequate public control of transport, with -the unity, freedom, and hearty co-operation that should -characterize all business ventures, possible without public -ownership? And if not, isn’t it true that the economic -and governmental changes necessary to make public ownership -safe and successful constitute the essence of the -ultimate railroad problem?</p> - -<p class='c007'>If the railways were united into a national system -under a great leader like James J. Hill, or A. J. Cassatt, -free to operate the roads on business principles, untrammelled -by the spoils system or any political control, backed -by a public interest that would not tolerate favoritism, -partyism, political influence or graft in any form, working -with public aims and public motives instead of private -aims and motives, managing the roads for the whole people -as stockholders instead of for a small part of the people as -stockholders, paid, in common with the whole body of -employees, on the basis of a fixed remuneration plus an -additional compensation proportioned to efficiency, and in -constant consultation with local and national councils representing -commercial, manufacturing, mining, labor, and -agricultural organizations and interests, we should have a -railway system and management whose efficiency would -astonish the world, whose methods would bear the light, -and whose administration would be an honor to twentiethcentury -civilization.</p> - -<div class='chapter'> - <span class='pageno' id='Page_333'>333</span> - <h2 class='c005'>APPENDIX</h2> -</div> - -<div> - <span class='pageno' id='Page_335'>335</span> - <h3 class='c013'>A.<a id='AppendixA'></a>—THE COAL-CARRYING DECISION, U. S. SUPREME COURT.</h3> -</div> - -<p class='c014'>Since this book was put in type the United States Supreme -Court has sustained the Interstate Commerce Commission -in an important suit brought by the Commission against -the Chesapeake and Ohio Railroad, and the New York, -New Haven and Hartford Railroad under the Elkins Act. -The Chesapeake and Ohio agreed to deliver at New Haven -60,000 tons of coal at an aggregate cost which, after deducting -the market price of the coal at the mines and the -cost of transportation from Newport News to Connecticut, -would leave the Chesapeake and Ohio Railway only about -28 cents a ton for carrying the coal to Newport News, -while the published tariff was $1.45 per ton. Suit was -brought by the Interstate Commission to enjoin the carrying -out of this contract. The Government challenged the -right of an Interstate carrier to perform a contract to sell -and deliver merchandise (coal) whenever the price to be -received by the railway is inadequate to cover its actual -outlay, plus the published freight rates, upon the ground -that the actual result would be discrimination and failure -to collect the published tariff, in violation of the Interstate -Commerce Law. The answer of the railway company was -in effect that it charged the full rate for transportation, but -sold the coal at less than market rates, at a price in fact -which involved a loss, and that special circumstances justified -it in so doing. The companies maintained that, when -acting in good faith, they had, as dealers, the right to make -<span class='pageno' id='Page_336'>336</span>contracts at a fixed price for sale and delivery extending -over a series of years and then go into the market, buy the -merchandise, and deliver it at destination, notwithstanding -that what they received therefor might not be sufficient to -yield them a net sum equal to the published freight rate, -according to which shippers generally were charged.</p> - -<p class='c007'>In a strong decision rendered February 19, 1906, the -Supreme Court upheld the contention of the Government, -declaring that a carrier cannot deal in the goods it carries -in such a way as to evade the provisions of the Interstate -Commerce Act, and therefore a railway cannot buy and -sell and underbid other owners of similar goods who are -dependent on the railroad for the transportation of their -goods to market. “The existence of such a power would -enable a carrier, if it chose to do so, to select the favored -persons from whom he would buy and the favored persons -to whom he would sell, thus giving such persons an advantage -over every other, and leading to a monopolization in -the hands of such persons of all the products as to which -the carrier chose to deal.... Because no express prohibition -against a carrier who engages in interstate commerce -becoming a dealer in commodities moving in such commerce -is found in the act, it does not follow that the provisions -which are expressed in that act should not be applied and -be given their lawful effect.”</p> - -<p class='c007'>The Court quotes an English case, Attorney General v. -The Great Northern Railway, in which the Vice-Chancellor -decided on common-law principles that a railway could not -deal in coal because such dealing was incompatible with -its duties as a public carrier and calculated to inflict injury -on the public.</p> - -<p class='c007'>The decision is important, and the railways, it is said, -have already begun to part company with their coal mines. -But it must not be expected that the evil at the bottom of -this case can be so easily eradicated. It will be a simple -matter to put the coal mines in the hands of special companies -<span class='pageno' id='Page_337'>337</span>controlled by the same men who control the railways, -and the coal company and the railway can together -continue to do precisely what the railway alone has been -doing in the double capacity of dealer and carrier.</p> - -<p class='c007'>Within a week of its decision sustaining the Commission -in the coal-carrying case, the Supreme Court has reversed -the Commission and the Circuit Court in the orange routing -case. In 1899 all the railways of Southern California -fixed a through rate of $1.25 per hundred on oranges from -California to the Missouri River and the East, reserving -the right to route the freight. The Fruit Growers Association -complained of this as depriving shippers of their -right to route their shipments and as virtually constituting -a pooling agreement or combination in violation of the -Interstate Act. The Commission and the Circuit Court -sustained this contention, but the U. S. Supreme Court has -now (March, 1906) sustained the railroad plea that they -have a right to fix through rates on condition of determining -the routing themselves.</p> - -<h3 class='c013'>B.<a id='AppendixB'></a>—REGULATION OF RATES.</h3> - -<p class='c014'>In the Boston <cite>Transcript</cite> for February 24, 1906, President -Hadley, of Yale University, criticises the Hepburn -Bill because it makes “the decision of the Commission itself -final on all questions of fact,” and he predicts that if -such a bill is enacted into law it will be a failure, although -he does not believe it practicable to obtain a better measure -now.</p> - -<p class='c007'>President Hadley bases his prediction of failure on his -interpretation of the experience of England. He says -that the English Railway Act, 1873, “had many points of -resemblance to the Hepburn bill. It provided for a commission -which, besides ascertaining the rates charged by -railroads and making reports to Parliament concerning -their management, should also be empowered to investigate -<span class='pageno' id='Page_338'>338</span>complaints concerning unjust rates of discrimination -in facilities and give adequate and speedy relief. It was -intended to have the quick jurisdiction of these Commissioners -supplant the slow jurisdiction of the older courts.”</p> - -<p class='c007'>“The twenty-sixth section of the act undertakes to restrict -narrowly the opportunity for appeal from the judgment -of the Commission. The Commissioners themselves -may state a case; on the case thus stated, and no further, -the courts on appeal may decide what is the law. This -was intended not only to shut out the retrial of questions -of fact, but to give to the Commission, as far as the circumstances -admitted, the power of deciding which were -questions of fact and which were not.”</p> - -<p class='c007'>The Committee of 1883 is quoted as finding that “a -case has been made out for granting to litigants before the -Railway Commission a right of appeal,” and we are told -that the Committee were “all agreed that the attempt to -prevent appeals from the Commissioners’ decisions had -been a complete failure.”</p> - -<p class='c007'>President Hadley further says: “Parliament has abandoned -the theory on which the act (of 1873) was based, -because the courts did not carry out the law, but insisted -on retrying questions in their entirety, instead of acquiescing -in the attempt to separate the law from the facts.”</p> - -<p class='c007'>And we are told that “the evil effects of the attempt -to give the English Railroad Commission power of fixing -rates did not stop here. The attempted performance of -this duty took up so much of their time that they failed to -perform other duties, which under more favorable circumstances -they might have carried out efficiently and usefully. -They did not have that influence on the formation of railroad -tariffs which their experience and high position would -otherwise have secured.”</p> - -<p class='c007'>Now as a matter of fact the English law never attempted -to give the Railway Commission power to fix rates, except -a very limited power in relation to through rates when the -<span class='pageno' id='Page_339'>339</span>companies cannot agree, nor was it intended that the Commission -should have anything to do with the “formation of -tariffs.” Rates are fixed, not by the Commission, but by -Parliament with the advice of the Board of Trade. When -Parliament orders a revision of the maximum rates, the -railways and the Board of Trade try to agree on new -schedules, and the Board embodies its conclusions in Provisional -Orders or rate bills which are passed by Parliament -with or without amendment as it sees fit. This was -true in 1873 and has been true ever since. The Commission’s -duty in this connection was and is to hear complaints -of undue preference, and rates alleged to exceed the maxima -fixed by Parliament. If a through rate proposed by -any company is objected to by any forwarding company, the -Commission has power to allow or reject the rate subject -to the limitation that it cannot require a company to carry -at lower mileage rates than it is legally charging for like -business on any other line between the same points. (Sections -11, 12, Railway Act of 1873.) The Commission may -also determine the division of through rates if the companies -cannot agree. Since the Railway Act of 1894 the -Commission has jurisdiction under Section 1 to order a return -to former rates charged by the company in case complaint -is made of an increase above the rates charged in -1892 (the date of the last Provisional Orders or tariff revision), -and the burden of proof is on the company to show -that the increase is reasonable. This puts a limitation on -the companies’ rate-making power in addition to the limit -of the parliamentary maxima, for no matter how much below -the maximum a rate in actual use in 1892 might have -been, it cannot be increased if the Commission on complaint -and hearing forbids it.</p> - -<p class='c007'>Further, it is not the case that Parliament “abandoned -the theory of the act of 1873” in the sense the reader -might gather from the statements made by President Hadley. -On the contrary, the Railway Act of 1888 (which -<span class='pageno' id='Page_340'>340</span>resulted from the investigation of 1882, quoted by Hadley) -distinctly provides in section 17 that “no appeal shall lie -from the Commissioners upon a question of fact.” Subject -to this provision an appeal was given to a superior court -of appeal, the change being that under the old law the case -went up on a statement by the Commission, which could -therefore itself determine what were questions of law and -what were questions of fact, while under the new law the -case went up on the record and the court above determined -what questions of law were involved. But the new law is -exactly like the old in making the judgment of the Commission -final on all questions of fact.</p> - -<p class='c007'>The truth is that England never attempted anything -like the system of regulation embodied in the Hepburn -Bill; never delegated to any commission the power to fix -reasonable rates or make reasonable regulations in place of -rates or regulations found on complaint and hearing to be -unjust, but she has done and continues to do the other -thing that President Hadley gives us to understand she -has tried and abandoned, viz., the intrusting of power to a -Railway Commission to render final decision on questions -of fact.</p> - -<p class='c007'>In the <cite>Transcript</cite> of April 1, 1905, President Hadley -says he “urged that a single hearing in the railroad court -was better than two successive hearings by two different -kinds of bodies. Mr. Hepburn’s committee desires to avoid -the double hearing, but it undertakes to do it by eliminating -the court instead of the Commission. There is reason -to fear that this plan will not work.”</p> - -<p class='c007'>That may be true. There is reason to fear that no plan -for government control of these giant interests will work -so long as the ownership is divorced from the said control. -As stated in the text, one of the ablest and most honorable -of our railroad presidents, in answer to my question as to -what would happen if the Interstate Commission were -really given power to fix rates, replied, “The Commission -<span class='pageno' id='Page_341'>341</span>would have to be controlled, that’s all.” And when I -quoted this to one of the leading members of the Interstate -Commission his comment was, “I always said the -railroads would own the Commission as soon as it was -worth owning.”</p> - -<p class='c007'>Even without owning the Commission the railroads can -block it pretty effectually by secret practices, extensive -forgetfulness on the witness stand, persistent persecution -of shippers who make complaint, cunning evasions, and interminable -litigation. It is quite likely the proposed regulation -will not realize what is hoped for from it, but we -cannot predict such failure from English experience as -President Hadley does when he says, “The history of -English railroad regulation shows that a similar measure, -passed under closely analogous circumstances, failed to do -the good which its advocates expected. The same failure -is likely to be repeated in the United States.” The Hepburn -Bill in its scope and directness is very different from -anything that England has attempted. It is quite likely -that England may try some more vigorous measure than -she has yet adopted, but in spite of all her efforts at regulation -Mr. W. M. Acworth, the classic railway writer of -England from the railway standpoint, corresponding to -President Hadley in this country, told me a few months -ago that dissatisfaction with the railway situation is so -great in England that “9 out of 10 would vote for public -ownership of the roads if the question were submitted -to-morrow.”</p> - -<p class='c007'>The general failure of regulation in England to accomplish -what was expected of it, may suggest a broad conclusion -as to this country, but a specific conclusion from -any parallel to the Hepburn Bill is not possible, because no -such parallel has been tried.</p> - -<p class='c007'>President Hadley thinks one hearing is enough, provided -it is a hearing before a court, not before the Commission. -Like the railroads, President Hadley has no use for the Commission. -<span class='pageno' id='Page_342'>342</span>The reason perhaps is the conscious or subconscious -appreciation of the fact that rate-making involves a -vigorous <em>administrative</em> element, which the Commission has -shown a tendency to use with great effectiveness, while a -body constituted as a court, by its very nature and traditions, -is loath to exercise administrative power or in any way -disturb its exercise by the companies except on the clearest -kind of proof of the adequacy of the new rate or condition -proposed, which cannot in many cases be obtained at all -except by <em>bona fide</em> trial of the new rate or regulation, -since a rate that is even below the present operating cost -may develop traffic enough to give it ample justification. -Courts do not like to trust to future proof. If rates do -not seem justified on existing facts as shown by accounts -presented by the companies, the courts are apt to turn the -new rates down without a trial, as the United States Supreme -Court did in the Nebraska case when the law of that -State fixing rates on local traffic was declared unconstitutional. -The companies made the division between through -local costs to suit themselves, and the Court not only -accepted their figures, but neglected to take into account -the fact that lower rates might easily develop new traffic -enough to cover the slight additional margin needed even -on the companies’ own showing.</p> - -<p class='c007'>President Hadley says: “What the United States needs -is an act under which the Commission will take part in the -making of tariffs and give effect to the public interest in -the general questions of railroad management, leaving the -specific cases of violation to be stopped or punished by the -courts.” Very good. But how is the Commission to take -part in the making of tariffs? If it is to do any more than -to give advice (the efficacy of which is nil when it comes -up against the Beef Trust, Standard Oil, or other big -private interest), it must have authority, general or particular, -to fix rates when the railways do not make them just -and reasonable. In England Parliament fixes maximum -<span class='pageno' id='Page_343'>343</span>rates on the basis of Board of Trade studies, and the commission -acts as a court. The plan has not prevented either -discrimination or extortion, but has taken the life out of -the railways to a large extent. In this country it is proposed -to try the plan of letting a public board fix individual -maximum rates when injustice is shown. As there is -an appeal to the Federal courts and as Hadley declares -that the courts insist on retrying questions in their entirety, -it would seem that the very system President Hadley advocates -would really come into being under the Hepburn -Bill,—the Commission will have a part in fixing the rates, -and violations of law will really be determined by the -courts.</p> - -<div class='chapter'> - <span class='pageno' id='Page_345'>345</span> - <h2 class='c005'>INDEX</h2> -</div> - -<div class='nf-center-c0'> -<div class='nf-center c002'> - <div><span class='pageno' id='Page_347'>347</span><span class='small'>[References are to pages.]</span></div> - </div> -</div> - -<ul class='index'> - <li class='center'>A</li> - <li class='c028'>ACWORTH, W. M., Appendix <a href='#AppendixB'>B</a>.</li> - <li class='c028'>ALABAMA MIDLAND CASE, <a href='#Page_95'>95</a>.</li> - <li class='c028'>ARMOUR CAR-LINES, <a href='#Page_151'>151</a>, <a href='#Page_174'>174</a>–207. - <ul> - <li>mileage, <a href='#Page_175'>175</a>, <a href='#Page_188'>188</a>, <a href='#Page_190'>190</a>.</li> - <li>speed of cars, <a href='#Page_177'>177</a>, <a href='#Page_178'>178</a>.</li> - <li>passes, <a href='#Page_180'>180</a>.</li> - <li>exclusive contracts, <a href='#Page_177'>177</a>, <a href='#Page_180'>180</a>, <a href='#Page_182'>182</a>, <a href='#Page_190'>190</a>.</li> - <li>icing charges, <a href='#Page_181'>181</a>–186, <a href='#Page_194'>194</a>–196.</li> - <li>espionage, <a href='#Page_185'>185</a>.</li> - <li>fixing rates, <a href='#Page_186'>186</a>–189.</li> - <li>lax inspection, <a href='#Page_188'>188</a>–189.</li> - <li>low minimum carload, <a href='#Page_189'>189</a>.</li> - <li>rebates and profits, <a href='#Page_190'>190</a>, <a href='#Page_191'>191</a>, <a href='#Page_194'>194</a>.</li> - <li>cipher code, <a href='#Page_197'>197</a>.</li> - </ul> - </li> - <li class='c028'>AUSTRIA, <a href='#Page_315'>315</a>.</li> - <li class='center'>B</li> - <li class='c028'>BACON, E. P., - <ul> - <li>testimony, <a href='#Page_111'>111</a>.</li> - </ul> - </li> - <li class='c028'>BAKER, RAY STANNARD, - <ul> - <li>on Beef Trust, <a href='#Page_153'>153</a>.</li> - </ul> - </li> - <li class='c028'>BALTIMORE, - <ul> - <li>discriminated against, <a href='#Page_226'>226</a>.</li> - </ul> - </li> - <li class='c028'>BARBED WIRE CASE, <a href='#Page_88'>88</a>.</li> - <li class='c028'>BASING-POINT SYSTEM, <a href='#Page_98'>98</a>, <a href='#Page_208'>208</a> <em>et seq.</em></li> - <li class='c028'>BEEF, - <ul> - <li>billed for export, <a href='#Page_225'>225</a>.</li> - </ul> - </li> - <li class='c028'><span class='pageno' id='Page_348'>348</span>BEEF TRUST. (See <span class='sc'>Armour</span>.) - <ul> - <li>controls rates, <a href='#Page_152'>152</a>.</li> - <li>runs private cars, <a href='#Page_176'>176</a>.</li> - <li>intimidates roads, <a href='#Page_177'>177</a>.</li> - <li>discriminations, advantages, etc., <a href='#Page_176'>176</a>–207.</li> - <li>shipments of, <a href='#Page_179'>179</a>.</li> - <li>favored by rates, <a href='#Page_186'>186</a>–187.</li> - <li>Boston books destroyed, <a href='#Page_250'>250</a>.</li> - <li>packer and road director, <a href='#Page_76'>76</a>.</li> - </ul> - </li> - <li class='c028'>BELGIUM, <a href='#Page_315'>315</a>.</li> - <li class='c028'>BIDDLE OF SANTA FE, - <ul> - <li>testimony, <a href='#Page_114'>114</a>, <a href='#Page_124'>124</a> <em>et seq.</em></li> - <li>in salt case, <a href='#Page_169'>169</a>.</li> - </ul> - </li> - <li class='c028'>BISMARCK, <a href='#Page_316'>316</a>.</li> - <li class='c028'>BLANCHARD, GEORGE R., - <ul> - <li>quoted, <a href='#Page_107'>107</a>.</li> - <li>on ticket scalping, <a href='#Page_20'>20</a>.</li> - </ul> - </li> - <li class='c028'>“BLIND BILLING,” - <ul> - <li>Standard’s cars, <a href='#Page_75'>75</a>.</li> - </ul> - </li> - <li class='c028'>BOOKS DESTROYED, <a href='#Page_248'>248</a>–250.</li> - <li class='c028'>BOSTON & ALBANY, <a href='#Page_105'>105</a>–107.</li> - <li class='c028'>BOWIE COMPRESS, <a href='#Page_68'>68</a>.</li> - <li class='c028'>BRICK CASE, - <ul> - <li>New Jersey to North Carolina, <a href='#Page_157'>157</a>.</li> - </ul> - </li> - <li class='c028'>BROKERS, TICKETS, <a href='#Page_20'>20</a>.</li> - <li class='center'>C</li> - <li class='c028'>CALEDONIAN COAL CO., <a href='#Page_126'>126</a>–129.</li> - <li class='c028'>CALIFORNIA FRUIT TRANS. CO., <a href='#Page_180'>180</a>.</li> - <li class='c028'>CAMDEN IRON WORKS, - <ul> - <li>rebates, <a href='#Page_122'>122</a>.</li> - </ul> - </li> - <li class='c028'>CANADA, <a href='#Page_327'>327</a>.</li> - <li class='c028'>CANNON FALLS CASE, <a href='#Page_212'>212</a>.</li> - <li class='c028'>CAPITAL CITY GAS COMPANY’S REBATES, <a href='#Page_164'>164</a>.</li> - <li class='c028'>CARLOAD, MINIMUM, <a href='#Page_189'>189</a>.</li> - <li class='c028'>CARLOADS & L. C. L., <a href='#Page_156'>156</a>.</li> - <li class='c028'>CAR-MILEAGE, - <ul> - <li>Pullman cars, express, refrigerator cars, etc., <a href='#Page_58'>58</a>.</li> - <li>oil, <a href='#Page_73'>73</a>.</li> - <li>Armour, <a href='#Page_175'>175</a>, <a href='#Page_188'>188</a>, <a href='#Page_190'>190</a>.</li> - <li>Mr. Hill on, <a href='#Page_178'>178</a>.</li> - </ul> - </li> - <li class='c028'><span class='pageno' id='Page_349'>349</span>CARS DENIED, <a href='#Page_66'>66</a>, <a href='#Page_160'>160</a>.</li> - <li class='c028'>CASSATT, A. J., - <ul> - <li>rebates, <a href='#Page_77'>77</a>.</li> - <li>testimony, <a href='#Page_32'>32</a>–33.</li> - </ul> - </li> - <li class='c028'>CHAOS OF RATES, <a href='#Page_156'>156</a>, <a href='#Page_157'>157</a>.</li> - <li class='c028'>CHARLOTTE, N. C., CASE, <a href='#Page_208'>208</a>.</li> - <li class='c028'>CHATTANOOGA CASE, <a href='#Page_97'>97</a>.</li> - <li class='c028'>CHESAPEAKE & OHIO, - <ul> - <li>discriminations, <a href='#Page_64'>64</a>.</li> - <li>coal-carrying case, Appendix <a href='#AppendixA'>A</a>.</li> - </ul> - </li> - <li class='c028'>CINCINNATI MAXIMUM RATE CASE, <a href='#Page_218'>218</a>.</li> - <li class='c028'>CIPHER CODE, - <ul> - <li>Armour, <a href='#Page_197'>197</a>.</li> - </ul> - </li> - <li class='c028'>CITIES, - <ul> - <li>growth of, at expense of country, <a href='#Page_219'>219</a>.</li> - </ul> - </li> - <li class='c028'>CLASSIFICATION, - <ul> - <li>flour and wheat, <a href='#Page_70'>70</a>.</li> - <li>soap, Pearline, patent medicines, <a href='#Page_71'>71</a>.</li> - <li>railroad ties and lumber, <a href='#Page_72'>72</a>.</li> - <li>discrimination by, <a href='#Page_70'>70</a>, <a href='#Page_155'>155</a>.</li> - </ul> - </li> - <li class='c028'>COAL, - <ul> - <li>cars denied, <a href='#Page_66'>66</a>, <a href='#Page_160'>160</a>–162.</li> - <li>loading by tipple, <a href='#Page_140'>140</a>.</li> - <li>Chesapeake & Ohio Case, Appendix <a href='#AppendixA'>A</a>.</li> - </ul> - </li> - <li class='c028'>COCKRELL, COMMISSIONER, - <ul> - <li>on quantity allowances, <a href='#Page_149'>149</a>.</li> - <li>appointed to commission, <a href='#Page_290'>290</a>.</li> - </ul> - </li> - <li class='c028'>COLORADO FUEL & IRON CO., - <ul> - <li>rebates, etc., <a href='#Page_124'>124</a>–141.</li> - </ul> - </li> - <li class='c028'>COMMODITY, - <ul> - <li>rates, <a href='#Page_70'>70</a>.</li> - <li>discriminations, <a href='#Page_150'>150</a>.</li> - </ul> - </li> - <li class='c028'>COMMON LAW, - <ul> - <li>requires impartiality, <a href='#Page_1'>1</a>.</li> - </ul> - </li> - <li class='c028'>CONFISCATION, - <ul> - <li>fears of, ungrounded, <a href='#Page_290'>290</a>.</li> - </ul> - </li> - <li class='c028'>CONTRACTS, - <ul> - <li>Armour’s exclusive, <a href='#Page_177'>177</a>, <a href='#Page_180'>180</a>, <a href='#Page_182'>182</a>, <a href='#Page_190'>190</a>.</li> - </ul> - </li> - <li class='c028'>COOLEY, THOMAS M., <a href='#Page_43'>43</a>. - <ul> - <li>as arbitrator, <a href='#Page_152'>152</a>.</li> - </ul> - </li> - <li class='c028'>CORDELE, GA., <a href='#Page_100'>100</a>.</li> - <li class='c028'>CORRIGAN OF CLEVELAND, <a href='#Page_34'>34</a>.</li> - <li class='c028'><span class='pageno' id='Page_350'>350</span>COTTON-SEED-OIL CASE, <a href='#Page_162'>162</a>.</li> - <li class='c028'>COYNE BROS., <a href='#Page_183'>183</a>.</li> - <li class='c028'>CUMMINS, GOVERNOR, <a href='#Page_117'>117</a>, <a href='#Page_211'>211</a>.</li> - <li class='center'>D</li> - <li class='c028'>DANVILLE, VA., <a href='#Page_209'>209</a>.</li> - <li class='c028'>DAVIES OF CHICAGO, - <ul> - <li>strawberries carried free, <a href='#Page_145'>145</a>.</li> - </ul> - </li> - <li class='c028'>DAVIS, C. WOOD, - <ul> - <li>passes cost $33,000,000, <a href='#Page_12'>12</a>.</li> - </ul> - </li> - <li class='c028'>DEAD-HEAD, - <ul> - <li>passenger cars, <a href='#Page_18'>18</a>.</li> - <li>passengers, <a href='#Page_2'>2</a>–15, <a href='#Page_46'>46</a>, <a href='#Page_49'>49</a>, <a href='#Page_50'>50</a>, <a href='#Page_180'>180</a>.</li> - </ul> - </li> - <li class='c028'>DECADE OF FEDERAL REGULATION, <a href='#Page_104'>104</a>–109.</li> - <li class='c028'>DEFIANCE OF LAW, <a href='#Page_238'>238</a>–240.</li> - <li class='c028'>DEMURRAGE, <a href='#Page_143'>143</a>.</li> - <li class='c028'>DENMARK, <a href='#Page_315'>315</a>, <a href='#Page_328'>328</a>.</li> - <li class='c028'>DENVER, - <ul> - <li>discriminated against, <a href='#Page_92'>92</a>–94, <a href='#Page_212'>212</a>, <a href='#Page_297'>297</a>–298.</li> - </ul> - </li> - <li class='c028'>DEPEW, CHAUNCEY, - <ul> - <li>on pooling, <a href='#Page_267'>267</a>.</li> - </ul> - </li> - <li class='c028'>DEPRECIATION OF LANDS CAUSED BY REBATES, <a href='#Page_26'>26</a>.</li> - <li class='c028'>DISCRIMINATION, - <ul> - <li>motives for, <a href='#Page_23'>23</a>.</li> - <li>history and investigations, <a href='#Page_24'>24</a>, <a href='#Page_120'>120</a>.</li> - <li>early cases, <a href='#Page_25'>25</a>.</li> - <li>varieties discovered by I. C. C. first year, <a href='#Page_47'>47</a>.</li> - <li>H. F. Douseman, <a href='#Page_54'>54</a>.</li> - <li>passes, <a href='#Page_2'>2</a>–15.</li> - <li>reasons for, <a href='#Page_2'>2</a>.</li> - <li>C. & O. coal, <a href='#Page_64'>64</a>, Appendix <a href='#AppendixA'>A</a>.</li> - <li>great number of, <a href='#Page_2'>2</a>.</li> - <li>in facilities, <a href='#Page_66'>66</a>.</li> - <li>by classification, <a href='#Page_70'>70</a>, <a href='#Page_155'>155</a>.</li> - <li>confiscates land values, <a href='#Page_26'>26</a>.</li> - <li>Hepburn cases, <a href='#Page_27'>27</a> <em>et seq.</em></li> - <li>Standard Oil, <a href='#Page_73'>73</a>–76.</li> - <li>beef, <a href='#Page_76'>76</a>–83.</li> - <li>between localities, <a href='#Page_87'>87</a>–94.</li> - <li>in favor of long hauls, <a href='#Page_95'>95</a>–103.</li> - <li>Industrial Commission on, <a href='#Page_108'>108</a>.</li> - <li><span class='pageno' id='Page_351'>351</span>“all stopped,” etc., <a href='#Page_113'>113</a>.</li> - <li>under Elkins Bill, <a href='#Page_115'>115</a>–118.</li> - <li>Colorado F. & I. Co., <a href='#Page_124'>124</a>.</li> - <li>various other forms, <a href='#Page_142'>142</a>–149.</li> - <li>commodity, <a href='#Page_150'>150</a>.</li> - <li>horses, cattle, and Jersey brick, <a href='#Page_156'>156</a>–157.</li> - <li>to Beef Trust, <a href='#Page_151'>151</a>–152.</li> - <li>oranges, <a href='#Page_153'>153</a>.</li> - <li>hay and lumber, <a href='#Page_154'>154</a>.</li> - <li>routing, <a href='#Page_159'>159</a>–160.</li> - <li>refusal to furnish cars, <a href='#Page_160'>160</a>–161.</li> - <li>cotton oil case, <a href='#Page_162'>162</a>.</li> - <li>division of rates to fake terminals, <a href='#Page_166'>166</a>–173.</li> - <li>in refrigerator charges, <a href='#Page_181'>181</a>–186.</li> - <li>against independent oil, <a href='#Page_201'>201</a>–205.</li> - <li>against non-competitive points, <a href='#Page_208'>208</a>–215.</li> - <li>against New England, <a href='#Page_217'>217</a>.</li> - <li>against rural points, <a href='#Page_219'>219</a>.</li> - <li>against certain cities, <a href='#Page_216'>216</a>–217.</li> - <li>in favor of foreign commerce, <a href='#Page_221'>221</a>–226.</li> - <li>summary of methods and results, <a href='#Page_228'>228</a> <em>et seq.</em></li> - <li>$10 apiece for hams? 232.</li> - <li>defended, <a href='#Page_233'>233</a>.</li> - <li>disturbance of business, <a href='#Page_236'>236</a>.</li> - <li>“cannot be stopped,” <a href='#Page_237'>237</a>.</li> - <li>difficulties of abolishing, <a href='#Page_241'>241</a>–251, <a href='#Page_272'>272</a>–273.</li> - <li>countries where there is none, <a href='#Page_315'>315</a>, <a href='#Page_317'>317</a>.</li> - </ul> - </li> - <li class='c028'>DISTANCE TARIFF, <a href='#Page_287'>287</a>, <a href='#Page_291'>291</a>, <a href='#Page_293'>293</a>, <a href='#Page_295'>295</a>.</li> - <li class='c028'>DIVISION OF RATE. (See <span class='sc'>Terminal Railways</span>.)</li> - <li class='c028'>DOLLIVER BILL, <a href='#Page_257'>257</a>.</li> - <li class='c028'>DOLLIVER, SENATOR, - <ul> - <li>on recent rebates, <a href='#Page_116'>116</a>.</li> - <li>non-competitive points, <a href='#Page_219'>219</a>.</li> - </ul> - </li> - <li class='c028'>DOUGLAS, GOVERNOR, - <ul> - <li>pays his fare, <a href='#Page_11'>11</a>.</li> - </ul> - </li> - <li class='c028'>DOUSEMAN, H. F., <a href='#Page_54'>54</a>.</li> - <li class='c028'>DRESSED MEAT, - <ul> - <li>rates, <a href='#Page_151'>151</a>, <a href='#Page_186'>186</a>–189.</li> - <li>billed for export, <a href='#Page_225'>225</a>.</li> - </ul> - </li> - <li class='c002'><span class='pageno' id='Page_352'>352</span>%center%E</li> - <li class='c028'>“ELASTICITY” IN RATES, <a href='#Page_286'>286</a>.</li> - <li class='c028'>ELEVATOR ALLOWANCES, <a href='#Page_62'>62</a>, <a href='#Page_148'>148</a>. - <ul> - <li>Industrial Commission on, <a href='#Page_63'>63</a>.</li> - </ul> - </li> - <li class='c028'>ELKINS ACT, - <ul> - <li>effect, <a href='#Page_110'>110</a>.</li> - <li>in Wisconsin, <a href='#Page_121'>121</a>, <a href='#Page_122'>122</a>.</li> - <li>discriminations since, <a href='#Page_140'>140</a>.</li> - <li>opinions as to efficiency, <a href='#Page_252'>252</a>, <a href='#Page_253'>253</a>.</li> - <li>only one case under, <a href='#Page_253'>253</a>.</li> - </ul> - </li> - <li class='c028'>ELKINS, SENATOR, <a href='#Page_111'>111</a>–112.</li> - <li class='c028'>EMPIRE CO., <a href='#Page_31'>31</a>.</li> - <li class='c028'>EMPORIA, KAN., <a href='#Page_91'>91</a>.</li> - <li class='c028'>EMPTIES, - <ul> - <li>returned free for Standard, <a href='#Page_33'>33</a>.</li> - <li>Armours’, rushed back and paid for, <a href='#Page_175'>175</a>.</li> - </ul> - </li> - <li class='c028'>ENGLAND, <a href='#Page_318'>318</a>–327.</li> - <li class='c028'>EQUALIZATION OF RATES, <a href='#Page_291'>291</a>–296.</li> - <li class='c028'>ERIE ROAD, - <ul> - <li>early cases, <a href='#Page_28'>28</a>.</li> - </ul> - </li> - <li class='c028'>ESCH-TOWNSEND BILL, - <ul> - <li>supporters lost passes, <a href='#Page_10'>10</a>.</li> - <li>provisions, <a href='#Page_260'>260</a>.</li> - </ul> - </li> - <li class='c028'>ESPIONAGE, ARMOUR, <a href='#Page_185'>185</a>.</li> - <li class='c028'>EXCLUSIVE CONTRACTS, - <ul> - <li>Armour cars, <a href='#Page_177'>177</a>, <a href='#Page_180'>180</a>, <a href='#Page_182'>182</a>, <a href='#Page_190'>190</a>.</li> - </ul> - </li> - <li class='c028'>EXPENSE BILL SYSTEM, <a href='#Page_62'>62</a>, <a href='#Page_143'>143</a>.</li> - <li class='c028'>EXPORT RATES, - <ul> - <li>low, <a href='#Page_84'>84</a>, <a href='#Page_221'>221</a>–226.</li> - <li>not fair to all ports, <a href='#Page_86'>86</a>.</li> - <li>on flour, <a href='#Page_86'>86</a>.</li> - </ul> - </li> - <li class='center'>F</li> - <li class='c028'>FACILITIES DENIED, <a href='#Page_66'>66</a>, <a href='#Page_88'>88</a>, <a href='#Page_160'>160</a>.</li> - <li class='c028'>FALSE BILLING, <a href='#Page_61'>61</a>, <a href='#Page_144'>144</a>.</li> - <li class='c028'>FERGUSON, E. M., <a href='#Page_199'>199</a>.</li> - <li class='c028'>FICTITIOUS CLAIMS, <a href='#Page_143'>143</a>.</li> - <li class='c028'>FINK, ALBERT, <a href='#Page_267'>267</a>, <a href='#Page_271'>271</a>.</li> - <li class='c028'><span class='pageno' id='Page_353'>353</span>FISH, STUYVESANT, - <ul> - <li>on scalping, <a href='#Page_19'>19</a>.</li> - <li>discriminations, <a href='#Page_237'>237</a>.</li> - </ul> - </li> - <li class='c028'>FLAT RATES, <a href='#Page_291'>291</a>–295.</li> - <li class='c028'>FLOUR AND WHEAT, <a href='#Page_70'>70</a>.</li> - <li class='c028'>FOLK, GOVERNOR, - <ul> - <li>on passes, <a href='#Page_6'>6</a>.</li> - </ul> - </li> - <li class='c028'>FORAKER BILL, <a href='#Page_258'>258</a>.</li> - <li class='c028'>FOREIGN COUNTRIES, HINTS FROM, <a href='#Page_313'>313</a>–330. - <ul> - <li>Austria, Switzerland, Denmark, Hungary, etc., <a href='#Page_313'>313</a>–315.</li> - <li>Germany, <a href='#Page_313'>313</a>.</li> - <li>France, <a href='#Page_317'>317</a>.</li> - <li>England, <a href='#Page_318'>318</a>.</li> - <li>Canada, <a href='#Page_327'>327</a>.</li> - <li>Holland, <a href='#Page_328'>328</a>.</li> - <li>Norway and Sweden, <a href='#Page_328'>328</a>.</li> - <li>New Zealand, <a href='#Page_329'>329</a>.</li> - <li>Australia, <a href='#Page_329'>329</a>.</li> - <li>South Africa, <a href='#Page_330'>330</a>.</li> - </ul> - </li> - <li class='c028'>FOREIGN MANUFACTURES FAVORED, <a href='#Page_84'>84</a>.</li> - <li class='c028'>FRANCE, <a href='#Page_317'>317</a>.</li> - <li class='c028'>FREE CARTAGE, <a href='#Page_59'>59</a>. - <ul> - <li>St. Louis cases, <a href='#Page_142'>142</a>.</li> - </ul> - </li> - <li class='c028'>FREE FREIGHT, NO BILLS, <a href='#Page_145'>145</a>.</li> - <li class='c028'>FREE STORAGE, <a href='#Page_60'>60</a>.</li> - <li class='center'>G</li> - <li class='c028'>GEORGIA, - <ul> - <li>Railroad Commission cases, <a href='#Page_98'>98</a>.</li> - </ul> - </li> - <li class='c028'>GERMANY, <a href='#Page_316'>316</a>.</li> - <li class='c028'>GLASGOW, <a href='#Page_314'>314</a>.</li> - <li class='c028'>GOVERNMENT, - <ul> - <li>rates not on mileage principle alone, <a href='#Page_287'>287</a>, <a href='#Page_291'>291</a>–295.</li> - <li>ownership of railways, <a href='#Page_313'>313</a>–317, <a href='#Page_328'>328</a>–332.</li> - </ul> - </li> - <li class='c028'>GOWAN, FRANKLIN B., - <ul> - <li>on railway favoritism, <a href='#Page_235'>235</a>.</li> - </ul> - </li> - <li class='c028'>GRAIN, - <ul> - <li>price controlled by roads, <a href='#Page_63'>63</a>.</li> - </ul> - </li> - <li class='c028'>GRANGER LAWS, <a href='#Page_26'>26</a>.</li> - <li class='c028'>GRANT CHEMICAL CO., - <ul> - <li>free cartage, <a href='#Page_142'>142</a>.</li> - </ul> - </li> - <li class='c028'><span class='pageno' id='Page_354'>354</span>GROSSCUP, JUDGE, - <ul> - <li>on discrimination, <a href='#Page_233'>233</a>.</li> - </ul> - </li> - <li class='c028'>GULF PORTS, <a href='#Page_225'>225</a>.</li> - <li class='center'>H</li> - <li class='c028'>HADLEY, A. T., <a href='#Page_14'>14</a>, <a href='#Page_219'>219</a>–315. - <ul> - <li>on Hepburn Bill, Appendix <a href='#AppendixB'>B</a>.</li> - </ul> - </li> - <li class='c028'>HARVESTER CASE, <a href='#Page_135'>135</a>. - <ul> - <li>terminal road, <a href='#Page_169'>169</a>.</li> - </ul> - </li> - <li class='c028'>HAZEN’S SWITCH CASE, <a href='#Page_141'>141</a>.</li> - <li class='c028'>HEARST’S BILL, <a href='#Page_260'>260</a>.</li> - <li class='c028'>HEPBURN BILL, <a href='#Page_262'>262</a>, Appendix <a href='#AppendixB'>B</a>.</li> - <li class='c028'>HEPBURN REPORT, <a href='#Page_27'>27</a>.</li> - <li class='c028'>HILL, JAMES J., - <ul> - <li>discrimination, <a href='#Page_115'>115</a>, <a href='#Page_237'>237</a>.</li> - <li>refrigerators, <a href='#Page_175'>175</a>, <a href='#Page_178'>178</a>.</li> - </ul> - </li> - <li class='c028'>HINTS FROM OTHER COUNTRIES, <a href='#Page_313'>313</a>–330.</li> - <li class='c028'>HOLLAND, <a href='#Page_328'>328</a>.</li> - <li class='c028'>HOPE COTTON OIL CASE, <a href='#Page_162'>162</a>.</li> - <li class='c028'>HORSES, CHAOS OF RATES, <a href='#Page_156'>156</a>.</li> - <li class='c028'>HUNGARY, <a href='#Page_314'>314</a>.</li> - <li class='c028'>HUTCHINSON SALT CASE, <a href='#Page_167'>167</a>–169.</li> - <li class='center'>I</li> - <li class='c028'>ICING CHARGES, <a href='#Page_181'>181</a>–186, <a href='#Page_194'>194</a>–196.</li> - <li class='c028'>IMPORT RATE CASE, <a href='#Page_85'>85</a>.</li> - <li class='c028'>IMPORTS AND EXPORTS, <a href='#Page_84'>84</a>.</li> - <li class='c028'>INDUSTRIAL COMMISSION, - <ul> - <li>on discrimination, <a href='#Page_108'>108</a>.</li> - <li>on exports, <a href='#Page_221'>221</a>.</li> - <li>on elevator rebates, <a href='#Page_63'>63</a>.</li> - <li>on passes, <a href='#Page_228'>228</a>.</li> - </ul> - </li> - <li class='c028'>INGALLS, M. E., <a href='#Page_104'>104</a>, <a href='#Page_239'>239</a>.</li> - <li class='c028'>INSPECTION, - <ul> - <li>of Armour cars, lax, <a href='#Page_188'>188</a>–189.</li> - </ul> - </li> - <li class='c028'>INTERSTATE COMMERCE ACT, <a href='#Page_41'>41</a>. - <ul> - <li>effects of, <a href='#Page_49'>49</a>.</li> - <li>amendment of, <a href='#Page_48'>48</a>, <a href='#Page_89'>89</a>.</li> - <li>does not cover express companies, etc., <a href='#Page_277'>277</a>.</li> - </ul> - </li> - <li class='c028'><span class='pageno' id='Page_355'>355</span>INTERSTATE COMMERCE COMMISSION, - <ul> - <li>created, <a href='#Page_41'>41</a>.</li> - <li>chapter on, <a href='#Page_43'>43</a>.</li> - <li>first report, <a href='#Page_43'>43</a>–46.</li> - <li>on long haul, <a href='#Page_96'>96</a>, <a href='#Page_102'>102</a>.</li> - <li>overruled by Supreme Court, <a href='#Page_96'>96</a>.</li> - <li>orders disobeyed, <a href='#Page_100'>100</a>, <a href='#Page_153'>153</a>.</li> - <li>rates condemned by, <a href='#Page_102'>102</a>.</li> - <li>ten years of regulation, <a href='#Page_104'>104</a>–109.</li> - <li>complaints received since Elkins Act, <a href='#Page_117'>117</a>.</li> - <li>on effect of Elkins Act, <a href='#Page_118'>118</a>.</li> - <li>on terminal roads, <a href='#Page_170'>170</a>.</li> - <li>railways public facility, <a href='#Page_234'>234</a>.</li> - <li>bill before Congress, <a href='#Page_261'>261</a>.</li> - <li>criticised, <a href='#Page_276'>276</a>.</li> - <li>alleged errors of, <a href='#Page_279'>279</a>.</li> - <li>work of, <a href='#Page_280'>280</a>.</li> - <li>appointments to, controlled by Senate, <a href='#Page_289'>289</a>.</li> - <li>on equalization of rates, <a href='#Page_293'>293</a>.</li> - </ul> - </li> - <li class='c028'>INVESTIGATIONS, <a href='#Page_24'>24</a>, <a href='#Page_120'>120</a>. - <ul> - <li>(See <span class='sc'>Interstate Commission</span>.)</li> - </ul> - </li> - <li class='c028'>IOWA LONG AND SHORT HAUL CASES, <a href='#Page_211'>211</a>.</li> - <li class='center'>J</li> - <li class='c028'>JAPAN, <a href='#Page_328'>328</a>.</li> - <li class='c028'>JUDSON & HARMON REPORT ON SANTA FE, <a href='#Page_133'>133</a>.</li> - <li class='center'>K</li> - <li class='c028'>KANSAS, - <ul> - <li>oil fight, <a href='#Page_203'>203</a>, <a href='#Page_283'>283</a>.</li> - </ul> - </li> - <li class='c028'>KAOLIN, <a href='#Page_225'>225</a>.</li> - <li class='c028'>KEARNEY, NEB., <a href='#Page_90'>90</a>.</li> - <li class='c028'>KELLOGG ELEVATOR CASE, <a href='#Page_148'>148</a>.</li> - <li class='c028'>KINDEL OF DENVER, <a href='#Page_93'>93</a>, <a href='#Page_297'>297</a>.</li> - <li class='c028'>KNAPP, I. E., <a href='#Page_204'>204</a>.</li> - <li class='c028'>KNAPP, MARTIN A., - <ul> - <li>government officials have passes, <a href='#Page_13'>13</a>.</li> - <li>on government rates, <a href='#Page_287'>287</a>.</li> - <li>on distance tariff, <a href='#Page_295'>295</a>.</li> - </ul> - </li> - <li class='c002'><span class='pageno' id='Page_356'>356</span>%center%L</li> - <li class='c028'>LA FOLLETTE, GOVERNOR, - <ul> - <li>investigations, <a href='#Page_120'>120</a>.</li> - </ul> - </li> - <li class='c028'>LAKE SHORE, - <ul> - <li>cuts beef rates, <a href='#Page_80'>80</a>.</li> - </ul> - </li> - <li class='c028'>LARRABEE, GOVERNOR, <a href='#Page_27'>27</a>.</li> - <li class='c028'>LAW, DEFIANCE OF, <a href='#Page_238'>238</a>–240.</li> - <li class='c028'>LAWSON, THOMAS W., <a href='#Page_228'>228</a>.</li> - <li class='c028'>LINCOLN (NEB.) PACKING CO., <a href='#Page_82'>82</a>.</li> - <li class='c028'>LOCALITY DISCRIMINATIONS, - <ul> - <li>barbed wire, <a href='#Page_88'>88</a>.</li> - <li>Grinnell factory, <a href='#Page_87'>87</a>.</li> - <li>Norfolk, Neb., <a href='#Page_88'>88</a>.</li> - <li>ruining small towns, <a href='#Page_89'>89</a>.</li> - <li>promoting towns, <a href='#Page_89'>89</a>, <a href='#Page_90'>90</a>.</li> - <li>Kearney & Omaha, <a href='#Page_90'>90</a>.</li> - <li>St. Cloud, <a href='#Page_90'>90</a>.</li> - <li>Emporia, <a href='#Page_91'>91</a>.</li> - <li>Spokane, <a href='#Page_91'>91</a>.</li> - <li>rails to Colorado, <a href='#Page_92'>92</a>.</li> - <li>against Denver, <a href='#Page_93'>93</a>. - <ul> - <li>(See <span class='sc'>Chapter on Long-Haul Decision</span>, <a href='#Page_95'>95</a>–103.)</li> - </ul> - </li> - </ul> - </li> - <li class='c028'>LOMBARD, JOSIAH, - <ul> - <li>testimony, <a href='#Page_32'>32</a>.</li> - </ul> - </li> - <li class='c028'>LONG AND SHORT HAUL CASES, <a href='#Page_25'>25</a>, <a href='#Page_27'>27</a>, <a href='#Page_29'>29</a>, <a href='#Page_47'>47</a>, <a href='#Page_76'>76</a>, <a href='#Page_87'>87</a>, <a href='#Page_91'>91</a>, <a href='#Page_92'>92</a>, <a href='#Page_95'>95</a>–103, <a href='#Page_208'>208</a>–215.</li> - <li class='c028'>LONG HAUL, - <ul> - <li>decisions of Supreme Court, <a href='#Page_95'>95</a>–103.</li> - <li>prohibition of abuse, <a href='#Page_270'>270</a>.</li> - </ul> - </li> - <li class='center'>M</li> - <li class='c028'>MAINE, - <ul> - <li>legislators have passes, <a href='#Page_8'>8</a>.</li> - </ul> - </li> - <li class='c028'>MASS. RAILWAY COMMISSION, - <ul> - <li>report on Boston & Albany, <a href='#Page_106'>106</a>.</li> - </ul> - </li> - <li class='c028'>MAXIMUM RATE CASE, <a href='#Page_218'>218</a>.</li> - <li class='c028'>McCABE, A. C., <a href='#Page_56'>56</a>, <a href='#Page_77'>77</a>.</li> - <li class='c028'>MEAD, J. D., & CO., <a href='#Page_184'>184</a>.</li> - <li class='c028'><span class='pageno' id='Page_357'>357</span>“MEM. BILL” METHOD, <a href='#Page_163'>163</a>.</li> - <li class='c028'>MESSAGES, - <ul> - <li>President Roosevelt’s, <a href='#Page_256'>256</a>.</li> - </ul> - </li> - <li class='c028'>MIDGLEY, J. W., - <ul> - <li>testimony, <a href='#Page_188'>188</a>, <a href='#Page_199'>199</a>.</li> - </ul> - </li> - <li class='c028'>MIDNIGHT TARIFFS, <a href='#Page_76'>76</a>, <a href='#Page_147'>147</a>.</li> - <li class='c028'>MILEAGE PAYMENTS ON CARS, - <ul> - <li>Pullman, etc., <a href='#Page_58'>58</a>.</li> - <li>oil, <a href='#Page_73'>73</a>.</li> - <li>Armour, <a href='#Page_175'>175</a>, <a href='#Page_178'>178</a>, <a href='#Page_188'>188</a>.</li> - </ul> - </li> - <li class='c028'>MILK RATES, - <ul> - <li>flat, <a href='#Page_294'>294</a>.</li> - </ul> - </li> - <li class='c028'>MILLING-IN-TRANSIT, <a href='#Page_145'>145</a>.</li> - <li class='c028'>MINER, D. W., <a href='#Page_163'>163</a>.</li> - <li class='c028'>MINNESOTA, - <ul> - <li>investigation, <a href='#Page_122'>122</a>.</li> - </ul> - </li> - <li class='c028'>MISSOURI, - <ul> - <li>eliminating pass evil, <a href='#Page_7'>7</a>.</li> - </ul> - </li> - <li class='c028'>MOFFAT, E. O., - <ul> - <li>elevator allowances, <a href='#Page_149'>149</a>.</li> - </ul> - </li> - <li class='c028'>MONOPOLY ELEMENT IN RAILWAY BUSINESS, <a href='#Page_233'>233</a>.</li> - <li class='c028'>MORAWETZ, VICTOR, <a href='#Page_115'>115</a>, <a href='#Page_131'>131</a>, <a href='#Page_247'>247</a>.</li> - <li class='c028'>MORGAN, J. PIERPONT, <a href='#Page_64'>64</a>.</li> - <li class='c028'>MORRIS, NELSON, - <ul> - <li>stock yards, <a href='#Page_68'>68</a>.</li> - </ul> - </li> - <li class='c028'>MORTON, PAUL, - <ul> - <li>testimony, <a href='#Page_81'>81</a>, <a href='#Page_84'>84</a>.</li> - <li>reasons for passes, <a href='#Page_13'>13</a>.</li> - <li>fuel and iron case, <a href='#Page_131'>131</a>.</li> - <li>letter to Roosevelt, <a href='#Page_132'>132</a>.</li> - <li>Chicago <cite>Daily News</cite>, <a href='#Page_136'>136</a>.</li> - <li>letter from, <a href='#Page_138'>138</a>.</li> - </ul> - </li> - <li class='center'>N</li> - <li class='c028'>NEWCOMB, H. T., <a href='#Page_104'>104</a>, <a href='#Page_282'>282</a>.</li> - <li class='c028'>NEW ENGLAND, - <ul> - <li>high rates, <a href='#Page_217'>217</a>.</li> - </ul> - </li> - <li class='c028'>NEW YEAR’S RESOLUTIONS, <a href='#Page_79'>79</a>.</li> - <li class='c028'>NEW YORK CENTRAL, - <ul> - <li>early cases, <a href='#Page_28'>28</a>.</li> - </ul> - </li> - <li class='c028'><span class='pageno' id='Page_358'>358</span>NEW YORK, NEW HAVEN & HARTFORD RAILROAD, - <ul> - <li>on peaches, <a href='#Page_150'>150</a>.</li> - <li>coal, <a href='#Page_217'>217</a>.</li> - </ul> - </li> - <li class='c028'>NEW ZEALAND, <a href='#Page_313'>313</a>, <a href='#Page_329'>329</a>.</li> - <li class='c028'>NORFOLK (NEB.) CASE, <a href='#Page_88'>88</a>.</li> - <li class='c028'>NORTHERN GRAIN COMPANY, - <ul> - <li>rebates $30,000 a year, <a href='#Page_18'>18</a>.</li> - <li>fought La Follette, <a href='#Page_122'>122</a>.</li> - </ul> - </li> - <li class='center'>O</li> - <li class='c028'>OIL. (See <span class='sc'>Standard Oil Company</span>, <span class='sc'>Texas Oil</span>, <span class='sc'>Kansas</span>.)</li> - <li class='c028'>ORANGE, - <ul> - <li>rate, <a href='#Page_153'>153</a>.</li> - <li>routing case, <a href='#Page_160'>160</a>, Appendix <a href='#AppendixA'>A</a>.</li> - </ul> - </li> - <li class='c028'>OUTLOOK, THE, - <ul> - <li>quoted, <a href='#Page_238'>238</a>.</li> - </ul> - </li> - <li class='center'>P</li> - <li class='c028'>PASSENGER REBATES, <a href='#Page_17'>17</a>.</li> - <li class='c028'>PASSES, <a href='#Page_2'>2</a>, <a href='#Page_15'>15</a>. - <ul> - <li>and politics, <a href='#Page_3'>3</a>.</li> - <li>Pennsylvania Railroad, <a href='#Page_3'>3</a>.</li> - <li>reasons for, <a href='#Page_2'>2</a>, <a href='#Page_9'>9</a>, <a href='#Page_10'>10</a>, <a href='#Page_13'>13</a>.</li> - <li>legislators, congressmen, etc., <a href='#Page_3'>3</a>, <a href='#Page_5'>5</a>, <a href='#Page_8'>8</a>, <a href='#Page_10'>10</a>.</li> - <li>refused, <a href='#Page_5'>5</a>.</li> - <li>Governor Folk on, <a href='#Page_6'>6</a>.</li> - <li>Governor Douglas, <a href='#Page_11'>11</a>.</li> - <li>jurors, <a href='#Page_8'>8</a>.</li> - <li>judges, <a href='#Page_9'>9</a>.</li> - <li>auditors, etc., <a href='#Page_9'>9</a>.</li> - <li>Missouri, <a href='#Page_7'>7</a>.</li> - <li>Maine, <a href='#Page_8'>8</a>.</li> - <li>Stickney’s sheriff story, <a href='#Page_11'>11</a>; Washington address, <a href='#Page_13'>13</a>.</li> - <li>Martin A. Knapp, <a href='#Page_13'>13</a>.</li> - <li>Paul Morton on, <a href='#Page_13'>13</a>.</li> - <li>A. T. Hadley, <a href='#Page_14'>14</a>.</li> - <li>C. Wood Davis, <a href='#Page_12'>12</a>.</li> - <li>in foreign countries, <a href='#Page_14'>14</a>, <a href='#Page_15'>15</a>.</li> - <li>held unlawful, <a href='#Page_46'>46</a>.</li> - <li>within a State, <a href='#Page_49'>49</a>, <a href='#Page_50'>50</a>.</li> - <li>owners of private cars, <a href='#Page_180'>180</a>.</li> - </ul> - </li> - <li class='c028'><span class='pageno' id='Page_359'>359</span>PATENT MEDICINE CLASSIFICATION, <a href='#Page_71'>71</a>.</li> - <li class='c028'>PEARLINE CLASSIFICATION, <a href='#Page_71'>71</a>.</li> - <li class='c028'>PENNSYLVANIA RAILROAD, - <ul> - <li>passes, <a href='#Page_3'>3</a>.</li> - <li>passes in 1906, <a href='#Page_4'>4</a>.</li> - <li>rebate war, <a href='#Page_31'>31</a>.</li> - <li>stand by any rate, <a href='#Page_56'>56</a>.</li> - <li>favors foreign trade, <a href='#Page_84'>84</a>.</li> - <li>cuts beef rate, <a href='#Page_78'>78</a>.</li> - <li>milling-in-transit discrimination, <a href='#Page_146'>146</a>.</li> - <li>sued for failure to accord car service, <a href='#Page_160'>160</a>.</li> - </ul> - </li> - <li class='c028'>PENNSYLVANIA STATE CONSTITUTION, - <ul> - <li>prohibits passes, <a href='#Page_3'>3</a>.</li> - </ul> - </li> - <li class='c028'>PHILADELPHIA, - <ul> - <li>passenger case, <a href='#Page_217'>217</a>.</li> - </ul> - </li> - <li class='c028'>PHILADELPHIA NORTH AMERICAN, - <ul> - <li>passes, <a href='#Page_4'>4</a>.</li> - <li>stop-overs, <a href='#Page_217'>217</a>.</li> - </ul> - </li> - <li class='c028'>PLACE DISCRIMINATIONS, - <ul> - <li>long hauls, <a href='#Page_208'>208</a>–215.</li> - <li>against St. Louis and other places, <a href='#Page_216'>216</a>.</li> - </ul> - </li> - <li class='c028'>POOLING, - <ul> - <li>advocated, <a href='#Page_265'>265</a>.</li> - <li>difficulties of, <a href='#Page_266'>266</a>–270.</li> - </ul> - </li> - <li class='c028'>PRIVATE CARS, - <ul> - <li>to favored individuals, <a href='#Page_18'>18</a>.</li> - <li>passenger, <a href='#Page_58'>58</a>.</li> - <li>freight, <a href='#Page_118'>118</a>.</li> - <li>abuses, <a href='#Page_174'>174</a>.</li> - <li>advantages, <a href='#Page_174'>174</a>–175.</li> - <li>increase of, <a href='#Page_198'>198</a>.</li> - </ul> - </li> - <li class='c028'>PROCTOR & GAMBLE CASE, <a href='#Page_155'>155</a>.</li> - <li class='c028'>PROTECTIVE TARIFF, - <ul> - <li>for England, <a href='#Page_86'>86</a>.</li> - <li>nullifying, <a href='#Page_221'>221</a>.</li> - </ul> - </li> - <li class='c028'>PROUTY, COMMISSIONER, - <ul> - <li>on the Elkins bill, <a href='#Page_112'>112</a>.</li> - <li>on Santa Fe case, <a href='#Page_133'>133</a>.</li> - <li>on the Colorado F. & I. case, <a href='#Page_139'>139</a>.</li> - <li>on free wheat, <a href='#Page_145'>145</a>.</li> - <li>on train loads, <a href='#Page_234'>234</a>.</li> - <li>railway officials would not tell truth, <a href='#Page_243'>243</a>–247.</li> - <li>commission rates, <a href='#Page_284'>284</a>.</li> - </ul> - </li> - <li class='c028'><span class='pageno' id='Page_360'>360</span>PRUSSIAN CABINET STATEMENT, <a href='#Page_316'>316</a>.</li> - <li class='c028'>PUBLIC v. PRIVATE INTEREST, <a href='#Page_308'>308</a>.</li> - <li class='c028'>PULLMAN CARS, - <ul> - <li>mileage rate, <a href='#Page_58'>58</a>.</li> - </ul> - </li> - <li class='center'>R</li> - <li class='c028'>RAILWAY OFFICIALS, - <ul> - <li>as law breakers, <a href='#Page_238'>238</a>–240.</li> - </ul> - </li> - <li class='c028'>RATE REGULATION, - <ul> - <li>pros and cons, <a href='#Page_253'>253</a>.</li> - <li>advocated by President Roosevelt, <a href='#Page_256'>256</a>.</li> - <li>by Interstate Commission, <a href='#Page_261'>261</a>, <a href='#Page_274'>274</a>.</li> - <li>by 18 States, <a href='#Page_275'>275</a>.</li> - <li>opposed by railroad men, <a href='#Page_276'>276</a>, <a href='#Page_278'>278</a>, <a href='#Page_285'>285</a>.</li> - <li>merits of controversy, <a href='#Page_299'>299</a>.</li> - </ul> - </li> - <li class='c028'>RATE SCHEDULES DECEPTIVE, <a href='#Page_148'>148</a>.</li> - <li class='c028'>RATES, - <ul> - <li>fixed to suit the Standard, <a href='#Page_75'>75</a>.</li> - <li>condemned by I. C. C., <a href='#Page_102'>102</a>.</li> - <li>on packing-house products and fruit, <a href='#Page_186'>186</a>.</li> - <li>fixed by Government not strictly mileage, <a href='#Page_287'>287</a>.</li> - <li>complexity of, <a href='#Page_288'>288</a>.</li> - <li>making by “instinct,” <a href='#Page_289'>289</a>.</li> - <li>all the traffic will bear, <a href='#Page_289'>289</a>.</li> - <li>equalization of, <a href='#Page_291'>291</a>–295.</li> - </ul> - </li> - <li class='c028'>REAGAN CASE, <a href='#Page_285'>285</a>.</li> - <li class='c028'>REBATES, - <ul> - <li>on tickets, <a href='#Page_19'>19</a>.</li> - <li>substitutes for, <a href='#Page_57'>57</a>.</li> - <li>New York investigation of, <a href='#Page_27'>27</a>.</li> - <li>on beef, <a href='#Page_76'>76</a>, <a href='#Page_79'>79</a>.</li> - <li>Wisconsin investigation, <a href='#Page_120'>120</a>.</li> - <li>to Armours from “C. & A.” and “U. P.,” <a href='#Page_191'>191</a>.</li> - <li>Santa Fe car-line, <a href='#Page_193'>193</a>–194.</li> - <li>cost to railways, <a href='#Page_235'>235</a>–236.</li> - </ul> - </li> - <li class='c028'>RECORDS DESTROYED, <a href='#Page_248'>248</a>–250.</li> - <li class='c028'>REFRIGERATION CHARGES, <a href='#Page_181'>181</a> <em>et seq.</em></li> - <li class='c028'>REFRIGERATOR CARS, <a href='#Page_174'>174</a>–207.</li> - <li class='c028'>REFUSAL, - <ul> - <li>to haul goods, <a href='#Page_68'>68</a>, <a href='#Page_162'>162</a>.</li> - <li>to furnish cars, <a href='#Page_66'>66</a>, <a href='#Page_160'>160</a>.</li> - </ul> - </li> - <li class='c028'><span class='pageno' id='Page_361'>361</span>REGULATION OF RAILWAYS, - <ul> - <li>work of I. C. C., <a href='#Page_104'>104</a>.</li> - <li>Texas Railway Commission, <a href='#Page_105'>105</a>.</li> - <li>efforts at, <a href='#Page_254'>254</a>–255.</li> - <li>difficulties of, <a href='#Page_264'>264</a>–265, <a href='#Page_272'>272</a>–273.</li> - <li>by State commissions, <a href='#Page_254'>254</a>–255.</li> - <li>can it succeed? 306.</li> - <li>in England, <a href='#Page_319'>319</a>–327.</li> - <li>in Canada, <a href='#Page_327'>327</a>.</li> - </ul> - </li> - <li class='c028'>REMEDIES, <a href='#Page_252'>252</a>, <a href='#Page_300'>300</a>.</li> - <li class='c028'>RICE, GEORGE, - <ul> - <li>story of, <a href='#Page_34'>34</a>–36.</li> - <li>denied car-mileage, <a href='#Page_74'>74</a>, <a href='#Page_75'>75</a>.</li> - </ul> - </li> - <li class='c028'>RIPLEY, PRESIDENT E. P., <a href='#Page_135'>135</a>. - <ul> - <li>in Chicago <cite>Inter-Ocean</cite>, <a href='#Page_137'>137</a>.</li> - <li>letter from, <a href='#Page_137'>137</a>.</li> - <li>on packing-house business, <a href='#Page_187'>187</a>.</li> - <li>discriminations permanent, <a href='#Page_237'>237</a>.</li> - </ul> - </li> - <li class='c028'>RIPLEY, PROFESSOR W. Z., <a href='#Page_116'>116</a>, <a href='#Page_208'>208</a>.</li> - <li class='c028'>ROBBINS OF ARMOUR CAR-LINES, <a href='#Page_192'>192</a>.</li> - <li class='c028'>ROGERS COAL COMPANY, - <ul> - <li>denied cars, <a href='#Page_66'>66</a>.</li> - </ul> - </li> - <li class='c028'>ROOSEVELT, PRESIDENT, - <ul> - <li>favors rate regulation, <a href='#Page_115'>115</a>.</li> - <li>messages, <a href='#Page_256'>256</a>.</li> - <li>ruling on Paul Morton, <a href='#Page_135'>135</a>.</li> - <li>letter to Paul Morton, <a href='#Page_136'>136</a>.</li> - </ul> - </li> - <li class='c028'>ROUTING, - <ul> - <li>fees for, <a href='#Page_159'>159</a>.</li> - <li>orange routing case, <a href='#Page_160'>160</a>, Appendix <a href='#AppendixA'>A</a>.</li> - <li>by railroads unlawful, <a href='#Page_160'>160</a>.</li> - </ul> - </li> - <li class='center'>S</li> - <li class='c028'>SALT LAKE CITY, <a href='#Page_212'>212</a>.</li> - <li class='c028'>SALT TRUST CASE, <a href='#Page_167'>167</a>.</li> - <li class='c028'>SANTA FE, - <ul> - <li>early management, <a href='#Page_54'>54</a>.</li> - <li>Colorado Fuel Co. case, <a href='#Page_124'>124</a>–141.</li> - <li>Hutchinson Salt case, <a href='#Page_167'>167</a>–169.</li> - <li>car-line, <a href='#Page_191'>191</a>–194.</li> - </ul> - </li> - <li class='c028'>SCALPING, <a href='#Page_19'>19</a>–20.</li> - <li class='c028'>SENATE COMMITTEE OF 1885, <a href='#Page_37'>37</a>–41.</li> - <li class='c028'><span class='pageno' id='Page_362'>362</span>SENATE COMMITTEE OF 1905, <a href='#Page_111'>111</a>–117.</li> - <li class='c028'>SIMMONS HARDWARE COMPANY, <a href='#Page_142'>142</a>.</li> - <li class='c028'>SOAP CLASSIFICATION, <a href='#Page_71'>71</a>, <a href='#Page_155'>155</a>.</li> - <li class='c028'>SOCIAL CIRCLE CASE, <a href='#Page_100'>100</a>.</li> - <li class='c028'>SOUTH AFRICA, <a href='#Page_329'>329</a>.</li> - <li class='c028'>SPECULATION IN LAND AND TOWN SITES, <a href='#Page_90'>90</a>.</li> - <li class='c028'>SPOKANE, WASHINGTON, <a href='#Page_91'>91</a>, <a href='#Page_213'>213</a>–215.</li> - <li class='c028'>SPRINGFIELD REPUBLICAN, - <ul> - <li>Pennsylvania passes, <a href='#Page_4'>4</a>.</li> - </ul> - </li> - <li class='c028'>STAMP MILL FROM CHICAGO TO SAN FRANCISCO VIA CHINA, <a href='#Page_223'>223</a>.</li> - <li class='c028'>STANDARD OIL COMPANY, - <ul> - <li>car-mileage, <a href='#Page_73'>73</a>.</li> - <li>barrel discrimination, <a href='#Page_73'>73</a>.</li> - <li>underbilling cars at East Boston, <a href='#Page_74'>74</a>.</li> - <li>paint out old car-numbers, <a href='#Page_75'>75</a>.</li> - <li>control of New England, <a href='#Page_75'>75</a>.</li> - <li>shuts out Western oil, <a href='#Page_75'>75</a>.</li> - <li>rebate of 1872, <a href='#Page_29'>29</a>.</li> - <li>ten advantages, <a href='#Page_30'>30</a>.</li> - <li>secures terminals, <a href='#Page_31'>31</a>.</li> - <li>private cars, <a href='#Page_176'>176</a>.</li> - <li>favored by rates, <a href='#Page_200'>200</a>–201.</li> - </ul> - </li> - <li class='c028'>STATE OWNED RAILROADS, - <ul> - <li>comparisons, <a href='#Page_308'>308</a>–311, <a href='#Page_313'>313</a>–315.</li> - </ul> - </li> - <li class='c028'>STATE RAILWAY COMMISSIONS, <a href='#Page_254'>254</a>–255.</li> - <li class='c028'>STATE TRAFFIC, <a href='#Page_142'>142</a>.</li> - <li class='c028'>ST. CLOUD, MINNESOTA, <a href='#Page_90'>90</a>.</li> - <li class='c028'>STEEL RAILS, - <ul> - <li>export rates on, <a href='#Page_222'>222</a>.</li> - </ul> - </li> - <li class='c028'>STEEL TRUST TERMINAL RAILROAD, <a href='#Page_171'>171</a>.</li> - <li class='c028'>STEWART, A. T., - <ul> - <li>rebates, <a href='#Page_28'>28</a>.</li> - </ul> - </li> - <li class='c028'>STICKNEY, A. B., - <ul> - <li>quoted, <a href='#Page_87'>87</a>.</li> - <li>story of passless sheriff, <a href='#Page_11'>11</a>.</li> - <li>on midnight tariffs, <a href='#Page_116'>116</a>.</li> - <li>on passes, <a href='#Page_13'>13</a>.</li> - <li>on rebating, <a href='#Page_187'>187</a>.</li> - </ul> - </li> - <li class='c028'>ST. LOUIS, - <ul> - <li>discriminated against, <a href='#Page_216'>216</a>.</li> - </ul> - </li> - <li class='c028'>STOCK YARD GRAFT, <a href='#Page_68'>68</a>.</li> - <li class='c028'><span class='pageno' id='Page_363'>363</span>STOPPAGE-IN-TRANSIT, <a href='#Page_60'>60</a>.</li> - <li class='c028'>STRAWBERRY CASE, <a href='#Page_174'>174</a>–175.</li> - <li class='c028'>“STRAW MAN” SYSTEM, <a href='#Page_142'>142</a>.</li> - <li class='c028'>STREYCHMANS, H. J., - <ul> - <li>testimony, <a href='#Page_195'>195</a>–198.</li> - </ul> - </li> - <li class='c028'>SUBSTITUTES FOR REBATES, <a href='#Page_57'>57</a>.</li> - <li class='c028'>SUMMARY OF METHODS AND RESULTS, <a href='#Page_228'>228</a>.</li> - <li class='c028'>SUMMERVILLE CASE, <a href='#Page_99'>99</a>.</li> - <li class='c028'>SUWANEE CASE, <a href='#Page_208'>208</a>.</li> - <li class='c028'>SWIFT AND COMPANY, - <ul> - <li>indicted, <a href='#Page_76'>76</a>.</li> - </ul> - </li> - <li class='c028'>SWITCH DENIED, <a href='#Page_163'>163</a>.</li> - <li class='c028'>SWITCHING CHARGES, <a href='#Page_140'>140</a>.</li> - <li class='c028'>SWITZERLAND, <a href='#Page_315'>315</a>.</li> - <li class='center'>T</li> - <li class='c028'>TARIFFS, - <ul> - <li>1000 changes daily, <a href='#Page_288'>288</a>.</li> - </ul> - </li> - <li class='c028'>TAX, - <ul> - <li>Wisconsin roads, <a href='#Page_120'>120</a>.</li> - </ul> - </li> - <li class='c028'>TERMINAL CHARGES, <a href='#Page_59'>59</a>.</li> - <li class='c028'>TERMINAL RAILWAYS, <a href='#Page_118'>118</a>, <a href='#Page_166'>166</a>. - <ul> - <li>logging allowances, <a href='#Page_146'>146</a>.</li> - <li>Hutchinson salt case, <a href='#Page_167'>167</a>.</li> - <li>International Harvester Company, <a href='#Page_170'>170</a>.</li> - <li>Steel Trust, <a href='#Page_171'>171</a>.</li> - <li>division of rates, <a href='#Page_171'>171</a>.</li> - <li>Illinois Glass Company, <a href='#Page_172'>172</a>.</li> - </ul> - </li> - <li class='c028'>TEXARKANA CASE, <a href='#Page_162'>162</a>.</li> - <li class='c028'>TEXAS AND PACIFIC CASE, <a href='#Page_84'>84</a>.</li> - <li class='c028'>TEXAS OIL DISCRIMINATION, <a href='#Page_201'>201</a>.</li> - <li class='c028'>TEXAS RAILWAY COMMISSION, <a href='#Page_105'>105</a>.</li> - <li class='c028'>TICKET SCALPING, <a href='#Page_19'>19</a>–22. - <ul> - <li>complaint of, by I. C. C., <a href='#Page_50'>50</a>–51.</li> - </ul> - </li> - <li class='c028'>TIES, - <ul> - <li>shipment prevented, <a href='#Page_150'>150</a>.</li> - <li>rebate on, <a href='#Page_151'>151</a>.</li> - </ul> - </li> - <li class='c028'>TRAIN LOADS, <a href='#Page_234'>234</a>.</li> - <li class='c028'>TUTTLE, PRESIDENT, - <ul> - <li>on division of rate, <a href='#Page_171'>171</a>.</li> - <li><span class='pageno' id='Page_364'>364</span>cargo-of-flour story, <a href='#Page_234'>234</a>.</li> - <li>on pooling, <a href='#Page_267'>267</a>.</li> - <li>on the I. C. C., <a href='#Page_276'>276</a>.</li> - <li>Worcester Wise case, <a href='#Page_292'>292</a>.</li> - <li>on getting rebates, <a href='#Page_303'>303</a>.</li> - </ul> - </li> - <li class='center'>U</li> - <li class='c028'>UNION PACIFIC, - <ul> - <li>steel rail rate, <a href='#Page_72'>72</a>.</li> - </ul> - </li> - <li class='c028'>UNION STOCK YARDS BEATS RIVALS, <a href='#Page_68'>68</a>.</li> - <li class='c028'>UNITED STATES SUPREME COURT, - <ul> - <li>Counselman case, <a href='#Page_52'>52</a>.</li> - <li>discriminations, <a href='#Page_59'>59</a>.</li> - <li>import rate decision, <a href='#Page_85'>85</a>.</li> - <li>ruled that I. C. C. cannot fix rates, <a href='#Page_92'>92</a>.</li> - <li>long-haul decisions, <a href='#Page_95'>95</a>.</li> - <li>Social Circle case, <a href='#Page_100'>100</a>.</li> - <li>maximum rates, <a href='#Page_218'>218</a>.</li> - <li>on pooling, <a href='#Page_270'>270</a>.</li> - <li>reversals of I. C. C., <a href='#Page_283'>283</a>, Appendix <a href='#AppendixA'>A</a>.</li> - <li>coal-carrying case, Appendix <a href='#AppendixA'>A</a>.</li> - <li>orange routing case, Appendix <a href='#AppendixA'>A</a>.</li> - </ul> - </li> - <li class='center'>V</li> - <li class='c028'>VANDERBILT, W. H., - <ul> - <li>before Hepburn Committee, <a href='#Page_28'>28</a>.</li> - <li>stockholder in Standard, <a href='#Page_31'>31</a>.</li> - </ul> - </li> - <li class='center'>W</li> - <li class='c028'>WATSON OF PORTER BROS., <a href='#Page_191'>191</a>.</li> - <li class='c028'>WILLCOX, DAVID, - <ul> - <li>criticism of I. C. C., <a href='#Page_279'>279</a>.</li> - </ul> - </li> - <li class='c028'>WISCONSIN, - <ul> - <li>railroads give passenger rebates, <a href='#Page_17'>17</a>.</li> - <li>revelations, <a href='#Page_120'>120</a>.</li> - </ul> - </li> - <li class='c028'>WORCESTER WIRE CASE, <a href='#Page_292'>292</a>.</li> -</ul> - -<hr class='c029' /> -<div class='footnote' id='f1'> -<p class='c007'><a href='#r1'>1</a>. See New England Exp. Co. <em>v.</em> Maine Central R. R., 57 Me. 188; Fitchburg -R. R. <em>v.</em> Gage, 12 Gray (Mass.), 393; Kenny <em>v.</em> Grand Trunk R. R., 47 N. Y. -525; Messenger <em>v.</em> Penn. R. R., 8 Vroom (N. J.), 531; Chicago, etc., R. R. <em>v.</em> -People, 67 Ill. 11; Wheeler <em>v.</em> San Francisco R. R., 31 Cal. 46.</p> -</div> -<div class='footnote' id='f2'> -<p class='c007'><a href='#r2'>2</a>. Pass discrimination alone, it is estimated, amounts to some 200,000 free -transits a day, or over 70 millions in a year. And as for freight discriminations, -the reader who follows this history through will see that like the leaves -of the forest they defy computation. Just a hint may be given here. Every -day that one of the 300,000 private cars is carried at the present mileage rates, -a discrimination is made in favor of the owner of the private car,—a hundred -millions of unjust discriminations, possibly, in this one item.</p> -</div> -<div class='footnote' id='f3'> -<p class='c007'><a href='#r3'>3</a>. The New York Central, Baltimore and Ohio, and some other lines announced -the same purpose as the Pennsylvania in respect to passes after -January 1, 1906, but with them as with the Pennsylvania it appears to be a -case of more careful discrimination in the use of discrimination, and an appreciation -of the fact that it is very important to make a good impression on -the public mind just now, in view of the widespread demand for drastic legislation -in the direction of railroad regulation.</p> -</div> -<div class='footnote' id='f4'> -<p class='c007'><a href='#r4'>4</a>. A number of the States have laws against passes. The Interstate -Commerce law forbids them. And they are always against the moral law -whether they run beyond the State line or not.</p> -</div> -<div class='footnote' id='f5'> -<p class='c007'><a href='#r5'>5</a>. In one case it appeared that a leading railroad attorney had been for -years in the habit of supplying jurors with passes. Opposing counsel -brought out the fact that all the jurors in the case on trial had accepted -passes from the railroad company which was the defendant in the case, -and that to have an equal chance for justice his client would have to give -each juror $50 to offset the railroad gifts. The judge discharged the whole -jury.</p> -</div> -<div class='footnote' id='f6'> -<p class='c007'><a href='#r6'>6</a>. Condensation of statement of Texas Railroad Commission’s Report for -1898, p. 17. See, further, “Bribery by Railway Passes,” <cite>North American -Review</cite>, 138, p. 89; and <cite>Public Opinion</cite>, 26, p. 167, Feb. 9, 1899: “The Pass -Evil in Three States” (Indiana, Minnesota, and Washington).</p> -</div> -<div class='footnote' id='f7'> -<p class='c007'><a href='#r7'>7</a>. “Railway Passes and the Public,” <cite>Forum</cite>, 3, p. 392.</p> -</div> -<div class='footnote' id='f8'> -<p class='c007'><a href='#r8'>8</a>. Vol. iv, pp. 456–457.</p> -</div> -<div class='footnote' id='f9'> -<p class='c007'><a href='#r9'>9</a>. American Railroads as Investments, p. 30.</p> -</div> -<div class='footnote' id='f10'> -<p class='c007'><a href='#r10'>10</a>. See C. Wood Davis’ article in <cite>The Arena</cite>, vi (1891), pp. 281–282.</p> -</div> -<div class='footnote' id='f11'> -<p class='c007'><a href='#r11'>11</a>. See the evidence cited below.</p> -</div> -<div class='footnote' id='f12'> -<p class='c007'><a href='#r12'>12</a>. Report of U. S. Industrial Commission (1900), iv, p. 135.</p> -</div> -<div class='footnote' id='f13'> -<p class='c007'><a href='#r13'>13</a>. Testimony before U. S. Industrial Commission (1900), iv, p. 490.</p> -</div> -<div class='footnote' id='f14'> -<p class='c007'><a href='#r14'>14</a>. <cite>Forum</cite>, 3, p. 392.</p> -</div> -<div class='footnote' id='f15'> -<p class='c007'><a href='#r15'>15</a>. Railroad Transportation, p. 109.</p> -</div> -<div class='footnote' id='f16'> -<p class='c007'><a href='#r16'>16</a>. In order to test the attitude of the government roads, I did my best to -get passes, trying first through the American ambassadors in Vienna, Berlin, -and Brussels, and afterward by direct appeal to the railway management. -But it was of no use, although I had a letter from the Chairman of the United -States Industrial Commission saying that I had rendered the government -valuable service in connection with the work of the Commission, and that any -courtesies shown me or assistance afforded me in my researches would be a -public service. I had other strong letters from men of high distinction in the -United States and England, and our ambassador at Berlin had been president -of my alma mater when I was in college, and was specially friendly and helpful; -but I was assured that no amount of influence or pull could secure a pass -or any other personal favor on the State railways.</p> -</div> -<div class='footnote' id='f17'> -<p class='c007'><a href='#r17'>17</a>. See <cite>McClure’s Magazine</cite>, December, 1905, where Ray Stannard Baker -has stated the leading facts.</p> -</div> -<div class='footnote' id='f18'> -<p class='c007'><a href='#r18'>18</a>. See, for example, the testimony of Stuyvesant Fish, President of the -Illinois Central, before the United States Industrial Commission, calling -attention to the fact that while railway officials could be prohibited by law -from selling tickets below published rates, individuals could not be so prohibited, -and that some railways sold their tickets to competitive points to -brokers, paying them a commission for making the sale, out of which the -brokers scalped the rate. (Industrial Commission, 1900, iv, p. 334.)</p> -</div> -<div class='footnote' id='f19'> -<p class='c007'><a href='#r19'>19</a>. Industrial Commission, iv, pp. 457–458.</p> -</div> -<div class='footnote' id='f20'> -<p class='c007'><a href='#r20'>20</a>. Hudson, “The Railways and the Republic,” p. 42.</p> -</div> -<div class='footnote' id='f21'> -<p class='c007'><a href='#r21'>21</a>. Hepburn Report, N. Y. Legislature Investigation, 1879, p. 120.</p> -</div> -<div class='footnote' id='f22'> -<p class='c007'><a href='#r22'>22</a>. The facts appear at full length in the reports of the Hepburn Committee, -the Select Committee of the United States on Interstate Commerce, -49th Congress, 1st Session, Lloyd’s “Wealth against Commonwealth,” and -Miss Tarbell’s “History of the Standard Oil Company.”</p> -</div> -<div class='footnote' id='f23'> -<p class='c007'><a href='#r23'>23</a>. Tarbell’s “History of the Standard Oil Co.,” pp. 185–190; Lloyd’s -“Wealth against the Commonwealth,” pp. 87–88.</p> -</div> -<div class='footnote' id='f24'> -<p class='c007'><a href='#r24'>24</a>. The Standard paid nominally 60 cents a barrel, but got a rebate of 49 -cents, so that their net rate was 11 cents per barrel against $1.90 for the independents. -See report of the Hepburn Committee (N. Y.), 1879, and George -Rice’s pamphlet on “The Standard Oil Trust.”</p> -</div> -<div class='footnote' id='f25'> -<p class='c007'><a href='#r25'>25</a>. Quoted from a synopsis of the Report.</p> -</div> -<div class='footnote' id='f26'> -<p class='c007'><a href='#r26'>26</a>. Railroad Freights, Ohio House of Representatives, 1879, pp. 159–163.</p> -</div> -<div class='footnote' id='f27'> -<p class='c007'><a href='#r27'>27</a>. Hardy <em>v.</em> Cleveland & Marietta R. R., Circuit Court, Ohio, E. D., 1887, -31 Fed. Rep. 689; Senate Select Committee on Interstate Commerce, 49th -Congress, 1st Session, p. 199.</p> -</div> -<div class='footnote' id='f28'> -<p class='c007'><a href='#r28'>28</a>. Besides the references already given on the Rice affair, see the Trust Investigation -of Congress, 1888; the testimony in the Rice case before the Interstate -Commerce Commission, Nos. 51–60, 1887; Decisions of the I. C. C., vol. 1, -pp. 503, 722; vol. 2, p. 389; vol. 3, p. 186; vol. 4, p. 228; vol. 5, pp. 193, 660; -State of Ohio <em>v.</em> Standard Oil Co., 49 Ohio St. Rep. 317; Lloyd, chapters -xv, xvi, xvii; and Tarbell’s History.</p> -</div> -<div class='footnote' id='f29'> -<p class='c007'><a href='#r29'>29</a>. I. C. C., First Report, 1887.</p> -</div> -<div class='footnote' id='f30'> -<p class='c007'><a href='#r30'>30</a>. Passes (annual in this case) to persons not in the regular service of the -carrier held unlawful. State <em>v.</em> Northern Pacific, p. 359, vol. 2, Decisions, -1888.</p> -</div> -<div class='footnote' id='f31'> -<p class='c007'><a href='#r31'>31</a>. Sale of 1000–mile tickets to commercial travellers at $20 while charging -others $25 illegal. Chicago & Grand Trunk, p. 147, vol. 1, Decisions, 1887.</p> -</div> -<div class='footnote' id='f32'> -<p class='c007'><a href='#r32'>32</a>. Paying commissions; selling tickets through brokers at reduced rates; -rate wars, etc. Pennsylvania, New York Central, Wabash, Chicago & Alton, -vol. 2, 1888, p. 513.</p> -</div> -<div class='footnote' id='f33'> -<p class='c007'><a href='#r33'>33</a>. Discounts to shippers receiving more than 30,000 tons a year illegal. -Providence and Worcester, vol. 1, 1887, p. 170.</p> -</div> -<div class='footnote' id='f34'> -<p class='c007'><a href='#r34'>34</a>. In many cases the direct rate between two points, X and Y, was found to -be greater than the combination of the rate from X past Y to a competitive -point Z and the local rate back from Z to Y. For example, goods could -be shipped from the Pacific coast to Kansas City and then back to points west -of Kansas City more cheaply than they could be sent direct from the coast to -these intermediate points. This enabled a shipper informed of the combination -rates to get an advantage over one with less information who relied on -the published tariffs stating the rates between his place of business and the -points to or from which his shipments were to be sent. The Commission took -up this matter in 1887 and the traffic managers of the roads agreed to revise -their tariffs so that the direct local rate should in no case exceed the through -rate plus the local rate back from the terminus or competitive point. This -rule resulted in many material reductions of the rates to intermediate points; -for example, the points between Denver and the Missouri River on the lines -controlled by the Southern Pacific. See Martin <em>v.</em> Southern Pacific R.R. -I. C. C. Decisions, vol. 2, 1888, pp. 1, 4.</p> -</div> -<div class='footnote' id='f35'> -<p class='c007'><a href='#r35'>35</a>. A higher rate on oil in barrels than in tanks held unjust, vol. 2, p. 365. -Report, 1888, p. 128.</p> -</div> -<div class='footnote' id='f36'> -<p class='c007'><a href='#r36'>36</a>. Report, 1888, p. 112.</p> -</div> -<div class='footnote' id='f37'> -<p class='c007'><a href='#r37'>37</a>. <em>Ibid.</em>, p. 114 <em>et seq.</em></p> -</div> -<div class='footnote' id='f38'> -<p class='c007'><a href='#r38'>38</a>. <em>Ibid.</em></p> -</div> -<div class='footnote' id='f39'> -<p class='c007'><a href='#r39'>39</a>. <em>Ibid.</em></p> -</div> -<div class='footnote' id='f40'> -<p class='c007'><a href='#r40'>40</a>. <em>Ibid.</em></p> -</div> -<div class='footnote' id='f41'> -<p class='c007'><a href='#r41'>41</a>. The Commission’s reports, 1889 to 1891, dealt with numerous discriminations -between localities and persons through free transportation, commissions -on the sale of tickets, combination rates, rebates, free cartage, payment -of yardage charges, excessive car mileage on private cars, discounts for -quantity, unfair classification, distribution of cars, special tariffs, advantage -or disadvantage to particular commodities or methods of shipment, low rates -on goods for export, etc., etc.</p> -</div> -<div class='footnote' id='f42'> -<p class='c007'><a href='#r42'>42</a>. Report, 1889, p. 10.</p> -</div> -<div class='footnote' id='f43'> -<p class='c007'><a href='#r43'>43</a>. 5 I. C. C. Decis. 69, 1891.</p> -</div> -<div class='footnote' id='f44'> -<p class='c007'><a href='#r44'>44</a>. <em>Ibid.</em>; see also 5 I. C. C. Decis. 153, 1892. Case against the Louisville -and Nashville for granting passes to members of the city council of New -Orleans.</p> -</div> -<div class='footnote' id='f45'> -<p class='c007'><a href='#r45'>45</a>. Investigation of the Commission, 1889.</p> -</div> -<div class='footnote' id='f46'> -<p class='c007'><a href='#r46'>46</a>. Report, Interstate Commerce Commission, 1889, p. 14.</p> -</div> -<div class='footnote' id='f47'> -<p class='c007'><a href='#r47'>47</a>. Pages 103–107, I. C. C. Rep. 1895.</p> -</div> -<div class='footnote' id='f48'> -<p class='c007'><a href='#r48'>48</a>. Report, 1897, p. 61.</p> -</div> -<div class='footnote' id='f49'> -<p class='c007'><a href='#r49'>49</a>. See p. 20 above.</p> -</div> -<div class='footnote' id='f50'> -<p class='c007'><a href='#r50'>50</a>. Heard <em>v.</em> Georgia R. R., 1 I. C. C. Decis. 428, and 3 I. C. C. Decis. 111. -But the United States Supreme Court decided against the Commission -on this point May 1, 1892 (145 U. S. 263), and the B. & O. tickets for parties -of 10 or more at ⅓ less than the regular rates were sustained.</p> -</div> -<div class='footnote' id='f51'> -<p class='c007'><a href='#r51'>51</a>. 2 I. C. C. Decis. 649, and 3 I. C. C. Decis. 465.</p> -</div> -<div class='footnote' id='f52'> -<p class='c007'><a href='#r52'>52</a>. This rule of exemption works great injustice under present conditions. -It was built into the common law when people were struggling against oppressors -in high places. But the conditions which made it useful have long -since passed away, and it is now simply a millstone about the neck of justice.</p> -</div> -<div class='footnote' id='f53'> -<p class='c007'><a href='#r53'>53</a>. Senate Committee, 1905, iv, pp. 2900–2901. Speaking of an investigation -of rebates on flour from Minneapolis and Duluth, the Commission -says (p. 8, Report for 1898): “All the railway witnesses denied knowledge of -any violation of the statute, and most of the accounting officers testified to the -effect that if rebates had been paid they would necessarily know about it and -that their accounts did not show any such payments. It was nevertheless -fully established by the investigation that secret rate concessions had been -generally granted on this traffic and that the carrier had allowed larger rebates -to some of the flour shippers than to others.”</p> -</div> -<div class='footnote' id='f54'> -<p class='c007'><a href='#r54'>54</a>. I. C. C. Rep. 1889, p. 75.</p> -</div> -<div class='footnote' id='f55'> -<p class='c007'><a href='#r55'>55</a>. See I. C. C. Rep. 1889, pp. 15, 16, 126, 130, 132, 237, 239, 240–242; -Decisions, vol. 3, 1889, p. 89, 25% rebates on coal to certain points; p. 137, -low rates on goods marked for export (10 cents on one hundred lbs. discount); -p. 652, unlawful discount of 50% on emigrants’ movables; Rep. 1890, -pp. 111, 190, 192, coal rates; 183, discount for quantity; 189, export; 101, 192, -hogs and hog rates; 184, stock yards; 99, 100, 185–187, oil; 112, 192, wheat -and flour; 187, 190, private cars; 188, special tariffs; and other unjust discriminations -relating to localities, privileges, etc., and not directly in point under -the head we are dealing with.</p> -</div> -<div class='footnote' id='f56'> -<p class='c007'><a href='#r56'>56</a>. Testimony, U. S. Ind. Com. iv, p. 353.</p> -</div> -<div class='footnote' id='f57'> -<p class='c007'><a href='#r57'>57</a>. I. C. C. Rep. 1890, p. 25.</p> -</div> -<div class='footnote' id='f58'> -<p class='c007'><a href='#r58'>58</a>. I. C. C. Rep. 1896, p. 78.</p> -</div> -<div class='footnote' id='f59'> -<p class='c007'><a href='#r59'>59</a>. <em>Ibid.</em>, p. 82.</p> -</div> -<div class='footnote' id='f60'> -<p class='c007'><a href='#r60'>60</a>. Industrial Commission, 1900, iv, p. 442.</p> -</div> -<div class='footnote' id='f61'> -<p class='c007'><a href='#r61'>61</a>. I. C. C. Dressed-meat Hearing, December, 1901, p. 94; Chicago and -Alton manager to same effect for his road, p. 136.</p> -</div> -<div class='footnote' id='f62'> -<p class='c007'><a href='#r62'>62</a>. I. C. C. Rep. 1898, p. 6.</p> -</div> -<div class='footnote' id='f63'> -<p class='c007'><a href='#r63'>63</a>. 4 I. C. C. Decis. 1891, p. 630. For example, on one line between Chicago -and New York, “200 stock cars more than paid for themselves and all repairs, -etc., in 2 years, and thereafter earned for the owners upwards of $100,000 a -year on no investment.” See Report Iowa Railroad Commission, 1891, p. 30.</p> -</div> -<div class='footnote' id='f64'> -<p class='c007'><a href='#r64'>64</a>. I. C. C. Rep. 1889, pp. 15–16.</p> -</div> -<div class='footnote' id='f65'> -<p class='c007'><a href='#r65'>65</a>. 9 I. C. C. Decis. 1, 1901 Rep., p. 36. As the circumstances were substantially -different in the two cases, the Commission said the local charge to the -drummer was “not necessarily unjust.”</p> -</div> -<div class='footnote' id='f66'> -<p class='c007'><a href='#r66'>66</a>. An additional charge by the Santa Fe of $2 a car on cattle consigned to -the Union Stock Yards at Chicago, where the Santa Fe had for years delivered -cattle, was held unlawful by the Commission, and its judgment was sustained -by the United States Circuit Court, but overruled by the Court of Appeals. -I. C. C. Rep. 1896, p. 45.</p> -</div> -<div class='footnote' id='f67'> -<p class='c007'><a href='#r67'>67</a>. Free cartage for a distant shipper and not for a nearer one is equivalent -to a rebate for the former. Hegel Milling Company v. St. Louis, etc., Railroad, -5 I. C. C. Decis. 1891, p. 57.</p> -</div> -<div class='footnote' id='f68'> -<p class='c007'><a href='#r68'>68</a>. The railway charged the same rates from the East to Grand Rapids as to -Ionia, although the former was 33 miles a longer distance point on the same -line of road, and in addition gave free cartage to Grand Rapids companies. -Complaint was made in September, 1888; April 26, 1890, the Commission held -the free cartage to be in effect a rebate, and ordered the railroad to desist from -giving free cartage in Grand Rapids. (3 I. C. C. Decis. 60; I. C. C. Rep. -1896, pp. 37–39; 1897, pp. 94–95.) The Circuit Court upheld the order October, -1893 (57 Fed. Rep. 1002), but the Circuit Court of Appeals overruled the decision -April, 1896 (74 Fed. Rep. 803), and the United States Supreme Court -sustained the Court of Appeals. (167 U. S. 633, May, 1897.) The Commission -made the mistake of resting the case on the 4th or long-haul section -instead of the 2d or 3d sections relating to undue preference, and the railway -should have been allowed the option of removing the discrimination by giving -free cartage in Ionia or making a lower rate there. The order to discontinue -free cartage in Grand Rapids was arbitrary and unnecessary.</p> -</div> -<div class='footnote' id='f69'> -<p class='c007'><a href='#r69'>69</a>. I. C. C. Rep. 1889, pp. 18–19.</p> -</div> -<div class='footnote' id='f70'> -<p class='c007'><a href='#r70'>70</a>. Commercial Club <em>v.</em> Rock Island, 6 I. C. C. Decis. 1896, p. 647.</p> -</div> -<div class='footnote' id='f71'> -<p class='c007'><a href='#r71'>71</a>. Pennsylvania Millers Association <em>v.</em> Reading R. R., 8 I. C. C. Decis. -1900, p. 531.</p> -</div> -<div class='footnote' id='f72'> -<p class='c007'><a href='#r72'>72</a>. I. C. C. Rep., 1898, pp. 46–47; 7 I. C. C. Decis. 1898, p. 556: Illinois Central, -charging some shippers for storage while others are not charged for it, -unlawful.</p> -</div> -<div class='footnote' id='f73'> -<p class='c007'><a href='#r73'>73</a>. Industrial Commission, iv, 541.</p> -</div> -<div class='footnote' id='f74'> -<p class='c007'><a href='#r74'>74</a>. <em>Ibid.</em>, 543.</p> -</div> -<div class='footnote' id='f75'> -<p class='c007'><a href='#r75'>75</a>. Investigation of expense bill frauds on grain shipments from Missouri -River points to Chicago and other destinations. I. C. C. Rep. 1896, p. 75, -on Santa Fe case. 7 I. C. C. Decis. 1897, p. 240, expense bill system held -illegal.</p> -</div> -<div class='footnote' id='f76'> -<p class='c007'><a href='#r76'>76</a>. I. C. C. Rep. 1896, p. 79.</p> -</div> -<div class='footnote' id='f77'> -<p class='c007'><a href='#r77'>77</a>. <em>Ibid.</em>, p. 77.</p> -</div> -<div class='footnote' id='f78'> -<p class='c007'><a href='#r78'>78</a>. <em>Ibid.</em>, p. 80. The Commission has not felt able to declare such an -allowance unlawful (10 I. C. C. Decis. 1904, p. 309), but it seems clear that -substantial preferences may be given in this way.</p> -</div> -<div class='footnote' id='f79'> -<p class='c007'><a href='#r79'>79</a>. Report, U. S. Industrial Commission, 1900, iv, p. 79.</p> -</div> -<div class='footnote' id='f80'> -<p class='c007'><a href='#r80'>80</a>. I. C. C. Rep. 1896, pp. 46–48.</p> -</div> -<div class='footnote' id='f81'> -<p class='c007'><a href='#r81'>81</a>. There is a statement concerning it in the I. C. C. Rep. 1896, p. 81, but -it does not bring out the facts at the core of the matter as stated to me by -the railway men.</p> -</div> -<div class='footnote' id='f82'> -<p class='c007'><a href='#r82'>82</a>. 8 I. C. C. Decis. 1898, p. 316.</p> -</div> -<div class='footnote' id='f83'> -<p class='c007'><a href='#r83'>83</a>. I. C. C. Rep. 1894, p. 9.</p> -</div> -<div class='footnote' id='f84'> -<p class='c007'><a href='#r84'>84</a>. It was held in the Nichols case (66 P. A. C. Rep. 768) that where a -shipper orders cars to be delivered at a certain date, the company’s action in -filling subsequent orders before complying with the first is unlawful. (Oregon -Short Line.)</p> -</div> -<div class='footnote' id='f85'> -<p class='c007'><a href='#r85'>85</a>. Report, Texas Railway Commission, 1896, p. 11.</p> -</div> -<div class='footnote' id='f86'> -<p class='c007'><a href='#r86'>86</a>. The Commission holds that the difference must not be so great as to be -destructive of competition between large and small dealers. (5 I. C. C. Decis. -638, following Thurber <em>v.</em> New York Central, Delaware & Lackawanna, B. -& O.; and 3 I. C. C. Decis. p. 473, March, 1890; Rep. 1890, p. 87.) Many articles -of groceries were so classified as to make the difference between carload -rates and less-than-carload rates unjustly great in violation of the principles -of the Interstate Act.</p> -</div> -<div class='footnote' id='f87'> -<p class='c007'><a href='#r87'>87</a>. Industrial Commission, iv, 207.</p> -</div> -<div class='footnote' id='f88'> -<p class='c007'><a href='#r88'>88</a>. Paine <em>v.</em> Lehigh Valley R. R., 7 I. C. C. Decis. 1897, p. 218.</p> -</div> -<div class='footnote' id='f89'> -<p class='c007'><a href='#r89'>89</a>. 9 I. C. C. Decis. 78; 1901 Rep. 38.</p> -</div> -<div class='footnote' id='f90'> -<p class='c007'><a href='#r90'>90</a>. 5 I. C. C. Decis. 663.</p> -</div> -<div class='footnote' id='f91'> -<p class='c007'><a href='#r91'>91</a>. 7 I. C. C. Decis. 43.</p> -</div> -<div class='footnote' id='f92'> -<p class='c007'><a href='#r92'>92</a>. 8 I. C. C. Decis. 214, 1898. See also 4 I. C. C. Decis. 417. and 7 I. C. C. -Decis. 481, Chicago, Milwaukee & St. Paul case, held that a higher rate on -wheat than on flour is unjust.</p> -</div> -<div class='footnote' id='f93'> -<p class='c007'><a href='#r93'>93</a>. 8 I. C. C. Decis. 304. See also 3 I. C. C. Decis. 400, and 4 I. C. C. 417.</p> -</div> -<div class='footnote' id='f94'> -<p class='c007'><a href='#r94'>94</a>. 4 I C. C. Decis. 1891, p. 733: N. Y. Central, Pa., B. & O., C. B. & Q., -Wabash, Santa Fe, etc.,—a whole page full of railroads.</p> -</div> -<div class='footnote' id='f95'> -<p class='c007'><a href='#r95'>95</a>. Rice cases, Nos. 51–60, I. C. C. Decis. 1887, 65, 131.</p> -</div> -<div class='footnote' id='f96'> -<p class='c007'><a href='#r96'>96</a>. Rice <em>v.</em> R. R., 4 I. C. C. Decis. 131; 5 <em>ibid.</em>, 193, 415. Railroads commenced -charging for barrel packages in 1888, and in a case tried in 1892 against the -Reading, Boston & Maine, and other roads the Commission ordered them to -cease, but they did not, and damages were awarded two years later from 1888 -to 1894. A similar order to desist from charging for the barrel was issued -against the Pennsylvania in September 1890 and it complied. I. C. C. Rep. -1895, pp. 33–35.</p> -</div> -<div class='footnote' id='f97'> -<p class='c007'><a href='#r97'>97</a>. Trust Investigation, Congress, 1888, pp. 531–533, 646–647.</p> -</div> -<div class='footnote' id='f98'> -<p class='c007'><a href='#r98'>98</a>. Testimony, Rice cases, 1 I. C. C. Decis. 28.</p> -</div> -<div class='footnote' id='f99'> -<p class='c007'><a href='#r99'>99</a>. See Trust Investigation, Congress, 1888, pp. 598–599.</p> -</div> -<div class='footnote' id='f100'> -<p class='c007'><a href='#r100'>100</a>. Lloyd’s “Wealth against the Commonwealth,” pp. 427, 480–481.</p> -</div> -<div class='footnote' id='f101'> -<p class='c007'><a href='#r101'>101</a>. U. S. Industrial Commission, iv, 53.</p> -</div> -<div class='footnote' id='f102'> -<p class='c007'><a href='#r102'>102</a>. 4 I. C. C. Decis. 158.</p> -</div> -<div class='footnote' id='f103'> -<p class='c007'><a href='#r103'>103</a>. Senate Committee, 1905, 3457.</p> -</div> -<div class='footnote' id='f104'> -<p class='c007'><a href='#r104'>104</a>. Testimony of McCabe, Pennsylvania traffic manager, I. C. C. Beef Hearing, -Dec. 1901, pp. 101, 102, 103.</p> -</div> -<div class='footnote' id='f105'> -<p class='c007'><a href='#r105'>105</a>. <em>Ibid.</em>, pp. 101, 102.</p> -</div> -<div class='footnote' id='f106'> -<p class='c007'><a href='#r106'>106</a>. Mr. Cost, traffic manager of the Big Four, I. C. C. Beef Hearing, Dec. -1901, p. 105.</p> -</div> -<div class='footnote' id='f107'> -<p class='c007'><a href='#r107'>107</a>. I. C. C. Beef Hearing, Dec. 1901, p. 114.</p> -</div> -<div class='footnote' id='f108'> -<p class='c007'><a href='#r108'>108</a>. <em>Ibid.</em>, pp. 113, 119.</p> -</div> -<div class='footnote' id='f109'> -<p class='c007'><a href='#r109'>109</a>. I. C. C. Beef Hearing, Dec. 1901, pp. 85, 86.</p> -</div> -<div class='footnote' id='f110'> -<p class='c007'><a href='#r110'>110</a>. I. C. C. Beef Hearing, Dec. 1901, p. 107.</p> -</div> -<div class='footnote' id='f111'> -<p class='c007'><a href='#r111'>111</a>. I. C. C. Hearing in the dressed-meat cases, Chicago, Jan. 7, 1902, -pp. 152–154.</p> -</div> -<div class='footnote' id='f112'> -<p class='c007'><a href='#r112'>112</a>. Evidence in the I. C. C. Hearing in the dressed-meat cases, Chicago, -Jan. 5, 1902, pp. 145, 148, 149.</p> -</div> -<div class='footnote' id='f113'> -<p class='c007'><a href='#r113'>113</a>. Report, Industrial Commission, vol. iv, pp. 69, 493.</p> -</div> -<div class='footnote' id='f114'> -<p class='c007'><a href='#r114'>114</a>. Import Rate Case. Texas and Pacific <em>v.</em> I. C. C., 162 U. S. 197, March, -1896. The complaint was brought in December, 1889, by the New York -Board of Trade against the Pennsylvania Railroad and others. The New -York Central, B. & O., B. & M., Ill. Central, Union Pacific, Southern -Pacific, Northern Pacific, Texas & Pacific, etc., 33 railroads in all, were joined -as defendants. The Commission held (Jan., 1891) that import traffic is entitled -to no preference. 3 I. C. C. Decis. 417. (See also 4 I. C. C. 447.) The -Circuit Court sustained the Commission in Oct., 1892 (52 Fed. Rep. 187), -and the Court of Appeals in Oct., 1893 (57 Fed. Rep. 948), but the Texas & -Pacific carried the case to the U. S. Supreme Court and the majority of the -Court, reversing the Commission and the Circuit Court, interpreted the Commerce -Act of Congress in such a way as to render substantially inoperative the -main clauses relating to discrimination and the long haul, and practically -nullify another Act of Congress so far as it imposes duties on imports for the -purpose of protecting home industries. The Court accomplished this by -focussing its attention on the phrase relating to dissimilar conditions, instead -of aiming to enforce the act according to its clear purpose and intent. Chief -Justice Fuller and Justices Harlan and Brown dissented, holding that the Interstate -Act requires railways to make the same charge for the same service, -whether the goods carried are domestic or foreign.</p> -</div> -<div class='footnote' id='f115'> -<p class='c007'><a href='#r115'>115</a>. For many other facts along the same lines, showing rates on flour from -the West to Baltimore, Philadelphia, New York, Boston, etc., 6 to 8 cents -higher than the rates on wheat, and much lower rates on the same products -for export than for domestic use, see Industrial Commission, 1900, iv, 70.</p> - -<p class='c007'>The Interstate Commerce Commission in 1899 found the export rates on -corn and wheat much lower than the domestic rates. I. C. C. Rep., 1899, -pp. 20–28, 31.</p> -</div> -<div class='footnote' id='f116'> -<p class='c007'><a href='#r116'>116</a>. 8 I. C. C. Decis. 214 n.</p> -</div> -<div class='footnote' id='f117'> -<p class='c007'><a href='#r117'>117</a>. Lewis, “National Consolidation of Railways,” p. 101.</p> -</div> -<div class='footnote' id='f118'> -<p class='c007'><a href='#r118'>118</a>. Industrial Commission, 1900, vol. iv, pp. 441–442. Shippers in Norfolk, -Nebr. for example, pay the local rate of 45 cents per cwt. (on first-class goods) -to Sioux City on the Missouri River, plus the rate from Sioux City to Chicago, -while Fremont, a rival town near Norfolk, has the same rates as Sioux City, -the local rate not being added in this case to the Missouri River rate. This -gives Fremont manufacturers and shippers a decided advantage over those of -Norfolk, and tends to build up Fremont and stunt the growth of Norfolk. -The witness suggested that “if the rates were established by the Government -instead of at the will and pleasure of the railway managers, it is a natural -conclusion that points having the same general conditions would receive -equal benefits.”</p> -</div> -<div class='footnote' id='f119'> -<p class='c007'><a href='#r119'>119</a>. Cator’s “Rescue the Republic,” p. 15.</p> -</div> -<div class='footnote' id='f120'> -<p class='c007'><a href='#r120'>120</a>. “National Consolidation of Railways,” Lewis, p. 102.</p> -</div> -<div class='footnote' id='f121'> -<p class='c007'><a href='#r121'>121</a>. “National Consolidation of Railways,” Lewis, p. 83.</p> -</div> -<div class='footnote' id='f122'> -<p class='c007'><a href='#r122'>122</a>. Martin <em>v.</em> Southern Pacific, Central Pacific, and Union Pacific Railroads. -1 I. C. C. Decis. 1.</p> -</div> -<div class='footnote' id='f123'> -<p class='c007'><a href='#r123'>123</a>. 8 I. C. C. Decis. 481. The Commission made an order that the Kearney -rate should not exceed the Omaha rate by more than 15 cents, but the -Southern Pacific refused to obey, and the Circuit Court declined to enforce -the order on the ground that the Commission had not found the rate to -Kearney unreasonable in itself, but only in comparison, citing 190 U. S. 273.</p> -</div> -<div class='footnote' id='f124'> -<p class='c007'><a href='#r124'>124</a>. 9 I. C. C. Decis. 17: Rep. 1901, 30.</p> -</div> -<div class='footnote' id='f125'> -<p class='c007'><a href='#r125'>125</a>. I. C. C. Rep. 1899, p. 31.</p> -</div> -<div class='footnote' id='f126'> -<p class='c007'><a href='#r126'>126</a>. The Commission ordered the roads to discontinue this practice. They -refused. And the United States Supreme Court sustained them in their refusal. -(4 I. C. C. Decis., July, 1890, p. 104; Rep. 1901, p. 25.)</p> -</div> -<div class='footnote' id='f127'> -<p class='c007'><a href='#r127'>127</a>. Nov. 1895, the Commission ordered that the rates from Pueblo to California -should not exceed 75 percent of the rates from Chicago to California. -The railroads refused to obey. Proceedings in court were begun by the Commission -to enforce their order. Then the railroads yielded. They kept the -rates down about 2 years, till Oct. 17, 1898. Then the Southern Pacific increased -the rates. The Colorado Fuel & Iron Company on whose complaint -the investigation and order were made, sued for damages and an injunction, -Oct. 1898. The Circuit Court enjoined the railroads from charging more than -the rates fixed by the Commission. But April 16, 1900, the Circuit Court of -Appeals reversed the decision on the ground that the United States Supreme -Court had ruled that the Commission cannot fix rates. (I. C. C. Rep. 1895, -pp. 41–43; and Rep. 1900, pp. 55–61); also (101 Fed. Rep. 779) an appeal to -the Supreme Court was dismissed per stipulation, Nov. 1901 (46 L. Ed. 1264).</p> -</div> -<div class='footnote' id='f128'> -<p class='c007'><a href='#r128'>128</a>. Ind. Com. iv, 257.</p> -</div> -<div class='footnote' id='f129'> -<p class='c007'><a href='#r129'>129</a>. Ind. Com., iv, 257.</p> -</div> -<div class='footnote' id='f130'> -<p class='c007'><a href='#r130'>130</a>. <em>Ibid.</em>, 67.</p> -</div> -<div class='footnote' id='f131'> -<p class='c007'><a href='#r131'>131</a>. <em>Ibid.</em></p> -</div> -<div class='footnote' id='f132'> -<p class='c007'><a href='#r132'>132</a>. Ind. Com. iv, 252.</p> -</div> -<div class='footnote' id='f133'> -<p class='c007'><a href='#r133'>133</a>. <em>Ibid.</em>, 257.</p> -</div> -<div class='footnote' id='f134'> -<p class='c007'><a href='#r134'>134</a>. Alabama Midland Case. Decis. of U. S. Supreme Court, Nov. 8, 1897, -168 U. S. 144; Behlmer Case, 175 U. S. 648, 676; 181 U. S. 1, 29; Dallas -Case, I. C. C. Rep. 1901, p. 27. Actual and controlling competition of any -sort is now held to justify a less charge for the longer than for the shorter -haul. 10 I. C. C. Decis. 289, June, 1904. See also Senate Committee, 1905, -3339, where Chairman Knapp of the Interstate Commission declares that the -courts have interpreted the law so that if the circumstances substantially differ, -no matter what the reason, the prohibition does not apply. Brooks Adams says, -“The Supreme Court is antagonistic to that clause,” (the long and short haul -clause) and does not intend to enforce it. “They have simply thrown out -every suitor but one who came in under that clause.” (Sen. Com., 1905, -p. 2922.)</p> -</div> -<div class='footnote' id='f135'> -<p class='c007'><a href='#r135'>135</a>. I. C. C. Rep. 1887. Nearly a hundred pages are filled with both the -statements and petitions of railroads relating to the long-haul clause. See also -Rep. for 1895, pp. 24–28. Exemption from the long-haul clause was allowed -in the case of passenger fares to the World’s Fair at Chicago.</p> -</div> -<div class='footnote' id='f136'> -<p class='c007'><a href='#r136'>136</a>. <em>In re</em> Louisville and Nashville, 1 I. C. C. Decis., 1887, p. 31. See also Ga. -Rd. Commission <em>v.</em> Clyde Steamship Co., 5 I. C. C. Decis. 326.</p> -</div> -<div class='footnote' id='f137'> -<p class='c007'><a href='#r137'>137</a>. Alabama Midland or Troy Case, 168 U. S. 144, 164, 166. Reference was -made to 31 Fed. Rep. 315, 862; 50 Fed. Rep. 295; 56 Fed. Rep. 925, 943; -71 Fed. Rep. 835, Behlmer Case; 73 Fed. Rep. 409, I. C. C. <em>v.</em> Louisville and -Nashville.</p> -</div> -<div class='footnote' id='f138'> -<p class='c007'><a href='#r138'>138</a>. I. C. C. Rep. 1899, pp. 66–68; 85 Fed. Rep. 1898, p. 107; 99 Fed. Rep. -1899, p. 52.</p> -</div> -<div class='footnote' id='f139'> -<p class='c007'><a href='#r139'>139</a>. 181 U. S. 1, April, 1901.</p> -</div> -<div class='footnote' id='f140'> -<p class='c007'><a href='#r140'>140</a>. <em>Ibid.</em>, 29, 1901.</p> -</div> -<div class='footnote' id='f141'> -<p class='c007'><a href='#r141'>141</a>. Rep. 1895, p. 29. See Louisville & Nashville Case, 1 I. C. C. Decis. 31; -C. B. & Q. Case, 2 I. C. C. Decis. 46; Krewer Case, 4 I. C. C. Decis. 686; -Nashville, Chattanooga and St. Louis R. R. Co., 6 I. C. C. Decis. 343. See -also 8 I. C. C. Decis. 503.</p> -</div> -<div class='footnote' id='f142'> -<p class='c007'><a href='#r142'>142</a>. H. P. Newcomb, <cite>Popular Science Monthly</cite>, p. 815, Oct. 1897.</p> -</div> -<div class='footnote' id='f143'> -<p class='c007'><a href='#r143'>143</a>. I. C. C. Rep. 1894, p. 19; 1900, p. 52. The Railways declined to obey; -the Circuit Court ruled against the Commission (71 Fed. Rep. Jan. 1896, -p. 835); the Circuit Court of Appeals reversed the Circuit Court decision (83 -Fed. Rep. Nov. 1897, p. 898); and finally, in Jan. 1900, the U. S. Supreme -Court reversed the Court of Appeals and sustained the railroads. (Behlmer -Case, 175 U. S. 648.)</p> -</div> -<div class='footnote' id='f144'> -<p class='c007'><a href='#r144'>144</a>. I. C. C. Rep. 1895, p. 29; 1896, pp. 16–23. In March, 1896, the U. S. Supreme -Court considered the case on appeal, and apparently accepted the decision -of the Commission on the question of similar conditions, but overruled -another part of its order, requiring the railroad not to charge more than $1 -per hundred on first-class goods from Cincinnati to Atlanta. The Court placed -its decision on the ground that the Commission has no authority to fix rates, -maximum, minimum, or absolute. It may determine that a past rate is unreasonable, -but cannot fix a rate for the future. Interstate Commission <em>v.</em> -Cincinnati, New Orleans, and Texas Pacific, 162 U. S. 184; and 167 U. S. -479. I. C. C. <em>v.</em> Texas and Pacific, 162 U. S. 197.</p> -</div> -<div class='footnote' id='f145'> -<p class='c007'><a href='#r145'>145</a>. 6 I. C. C. Decis. 343; and Rep. 1895, pp. 29–31.</p> -</div> -<div class='footnote' id='f146'> -<p class='c007'><a href='#r146'>146</a>. Rep. 1895, p. 31.</p> -</div> -<div class='footnote' id='f147'> -<p class='c007'><a href='#r147'>147</a>. I. C. C. Rep. 1899, p. 68; 7 I. C. C. Decis. Dec. 1897, p. 431. The Commission -ordered that the charge to La Grange should not exceed the rate for -the longer haul to Atlanta, and two years later the Circuit Court sustained -the order (102 Fed. Rep. 709), but the Circuit Court of Appeals reversed the -decision in May, 1901 (108 Fed. Rep. 988), and in May, 1903, the Supreme -Court affirmed the ruling of the Court of Appeals against the Commission -(190 U. S. 273).</p> -</div> -<div class='footnote' id='f148'> -<p class='c007'><a href='#r148'>148</a>. I. C. C. Rep. 1902, p. 48; 7 I. C. C. Decis. 431; 8 I. C. C. Decis. 377; -118 Fed. Rep. 613; Sen. Com. 1905, pp. 2316, 2317, 2926. No appeal appears -to have been taken from the Circuit Court.</p> -</div> -<div class='footnote' id='f149'> -<p class='c007'><a href='#r149'>149</a>. 8 I. C. C. Decis. Feb. 1900, p. 409; Rep. 1900, p. 34.</p> -</div> -<div class='footnote' id='f150'> -<p class='c007'><a href='#r150'>150</a>. 8 I. C. C. Decis. 93, reversed by the Circuit Court, August, 1902 (117 -Fed. Rep. 741), and by the Court of Appeals, May, 1903 (122 Fed. Rep. 800); -now on appeal to U. S. Supreme Court.</p> -</div> -<div class='footnote' id='f151'> -<p class='c007'><a href='#r151'>151</a>. 8 I. C. C. Decis. 142.</p> -</div> -<div class='footnote' id='f152'> -<p class='c007'><a href='#r152'>152</a>. I. C. C. Rep. 1895, p. 39.</p> -</div> -<div class='footnote' id='f153'> -<p class='c007'><a href='#r153'>153</a>. See 6 I. C. C. Decis. 257, 361, 458, 488, 568, 601; 7 I. C. C. 61, 224, -286; 8 I. C. C. 93, 214, 277, 290, 304, 316, 346. See also vol. 9 of the -Decisions, and Rep., 1898, pp. 33, 246; 1899, p. 28; 1900, p. 40; 1901, pp. 57, -65; etc. Wherein conditions substantially differ the exemption is applied. -For example, the Santa Fe is justified in charging lower rates from the -Pacific to the Missouri River than to Denver on rice, hemp, blankets, books, -boots, etc. (9 I. C. C. Decis. 606); and a higher rate on lumber to Wichita from -Western points than to Kansas City is approved (9 I. C. C. Decis. 569).</p> - -<p class='c007'>Rates of an individual road cannot be compared with joint rates made by -that road with others. Osborne Case, 52 Fed. Rep. 912; Tozer Case, 52 Fed. -Rep. 917; Union Pacific Case, 117 U. S. 355.</p> -</div> -<div class='footnote' id='f154'> -<p class='c007'><a href='#r154'>154</a>. <cite>Popular Science Monthly</cite>, Oct. 1897, p. 816.</p> -</div> -<div class='footnote' id='f155'> -<p class='c007'><a href='#r155'>155</a>. M. E. Ingalls, before National Convention of Railway Commissioners, -1898, p. 14.</p> -</div> -<div class='footnote' id='f156'> -<p class='c007'><a href='#r156'>156</a>. Rep. 1897, p. 6; and 1898, p. 15.</p> -</div> -<div class='footnote' id='f157'> -<p class='c007'><a href='#r157'>157</a>. “The exaction of the published rate is the exception.... Men who in -every other respect are reputable citizens are guilty of acts which, if the -statute law of the land were enforced, would subject them to fine or imprisonment.” -See Rep. 1898, pp. 5, 6, 18, 19; Rep. 1899, p. 8.</p> -</div> -<div class='footnote' id='f158'> -<p class='c007'><a href='#r158'>158</a>. Report, vol. iv, 1900, p. 625.</p> -</div> -<div class='footnote' id='f159'> -<p class='c007'><a href='#r159'>159</a>. Ind. Com. iv, pp. 6, 349, 359.</p> -</div> -<div class='footnote' id='f160'> -<p class='c007'><a href='#r160'>160</a>. Testimony, p. 25.</p> -</div> -<div class='footnote' id='f161'> -<p class='c007'><a href='#r161'>161</a>. Sen. Com. 1905, p. 2912.</p> -</div> -<div class='footnote' id='f162'> -<p class='c007'><a href='#r162'>162</a>. Judge Clements of the Interstate Commission, Senate Committee, 1905, -p. 3238. When the reader examines the facts that follow in this book he -may wonder what the railroads will do when they are not under a good -resolution, in view of the record they have made while under a good -resolution.</p> -</div> -<div class='footnote' id='f163'> -<p class='c007'><a href='#r163'>163</a>. See “Rebates” and “Discriminations” in index to Hearings of the -Elkins Committee, 1905.</p> - -<p class='c007'>Some of these witnesses who do not know of any discriminations or unreasonable -rates declare in other parts of their testimony that if the proposed -legislation were enacted the Interstate Commission would be deluged with -complaints. And this is probably true, since complaints of excessive rates -and discriminations have been more numerous in the last two or three years -than in any other equal period before. (Testimony of Judge Clements of the -I. C. C., Senate Committee, 1905, p. 3242.)</p> -</div> -<div class='footnote' id='f164'> -<p class='c007'><a href='#r164'>164</a>. Sen. Com. 1905, p. 1331.</p> -</div> -<div class='footnote' id='f165'> -<p class='c007'><a href='#r165'>165</a>. <em>Ibid.</em>, pp. 2253, 2284.</p> -</div> -<div class='footnote' id='f166'> -<p class='c007'><a href='#r166'>166</a>. <em>Ibid.</em>, p. 3140.</p> -</div> -<div class='footnote' id='f167'> -<p class='c007'><a href='#r167'>167</a>. <em>Ibid.</em>, p. 1652.</p> -</div> -<div class='footnote' id='f168'> -<p class='c007'><a href='#r168'>168</a>. On the question whether or no rebates and discriminations exist, the -testimony of credible witnesses who say they know of these secret favors far -outweighs the proving power of the negative statements of witnesses who -say they do not know of the said phenomena. Lots of people did not know -till recently that the Equitable paid a famous railroad senator $20,000 a -year for “advice.” And the statements of a multitude that they did not -know of it would weigh nothing against the testimony of 2 or 3 well informed -men who positively stated the facts. Discriminations may go on without the -railroad directors or principal officers knowing about them. They may not -know about them on purpose. Where ignorance is protection ’tis folly to be -wise.</p> - -<p class='c007'>Railway men have told me that in many cases leading officers of a railroad -are purposely kept, or keep themselves, in perfect ignorance of all discriminations -and other wrongdoing in order that such officers may appear in -legislative and interstate commerce hearings without knowledge of any facts -that would be prejudicial to the railroad.</p> -</div> -<div class='footnote' id='f169'> -<p class='c007'><a href='#r169'>169</a>. Sen. Com. 1905, p. 1474.</p> -</div> -<div class='footnote' id='f170'> -<p class='c007'><a href='#r170'>170</a>. Sen. Com. 1905, pp. 819, 820, 842.</p> -</div> -<div class='footnote' id='f171'> -<p class='c007'><a href='#r171'>171</a>. <em>Ibid.</em>, pp. 2122, 2123.</p> -</div> -<div class='footnote' id='f172'> -<p class='c007'><a href='#r172'>172</a>. <em>Ibid.</em>, p. 951.</p> -</div> -<div class='footnote' id='f173'> -<p class='c007'><a href='#r173'>173</a>. <em>Ibid.</em>, p. 2329.</p> -</div> -<div class='footnote' id='f174'> -<p class='c007'><a href='#r174'>174</a>. Sen. Com. 1905, p. 2083.</p> -</div> -<div class='footnote' id='f175'> -<p class='c007'><a href='#r175'>175</a>. In illustration of his statement the witness referred to the prevalence -of abuses in respect to terminal railroads, private cars, purchasing agents, -switching charges, special tariffs, milling in transit, etc., describing a number -of cases that have come under his personal observation in the year 1905. Sen. -Com. 1905, pp. 2432, 2434.</p> -</div> -<div class='footnote' id='f176'> -<p class='c007'><a href='#r176'>176</a>. More complaints per annum have been filed with the Commission since -the Elkins Act took effect than were filed before the act was passed. The -reports of the I. C. C. show 145 formal complaints filed in 1903 and 1904, -carrying the total to 789, and 888 informal complaints, carrying the total to -3223, making the whole number 1033 in the two years, and 4012 since 1887—more -than 25 percent of the complaints having been filed in the last two -years which constitute only 11 percent of the time covered by the reports of -the Commission. Out of the 62 suits entered in 1904, 50 charge unjust discrimination -of serious character, and nearly all the rest involve discrimination -in some form. The complaints entered for amicable adjustment also relate -in large part to cases of discrimination between persons and places, refusal to -furnish cars, unreasonable delay, unfair classification, discrimination in track -facilities, unfair estimate of weights, allowing competitors to underbill, refusal -of the Transcontinental Passenger Association to grant the American Federation -of Labor the usual special convention rate for their meeting at San -Francisco, refusal to route shipments as ordered by shippers, relatively excessive -rates on vegetables, lumber, lead, drugs, corn products, coal, iron, shoes, -leather, etc., violations of the long and short haul clause, and outright refusal -to accept shipments, besides a number of complaints of overcharges, and -rates alleged to be unreasonable per se.</p> - -<p class='c007'>Adding the figures for 1905, which have come to hand since the above was -written, we find that more than double the number of complaints of discrimination -have been made to the Interstate Commerce Commission in the last -three years, since the Elkins Law was passed, than in any equal period before. -The complaints filed in 1903, 1904, and 1905 constitute more than a third of -the whole number of complaints from the beginning of the Commission in -1887. The average number of complaints per year from 1887 to 1902 inclusive -was 186, while the yearly average for 1903–1905 is 534—more than double, -nearly threefold—and five-sixths of the suits entered charge facts that constitute -discrimination of serious character, and nearly all the rest involve -discrimination in some form.</p> -</div> -<div class='footnote' id='f177'> -<p class='c007'><a href='#r177'>177</a>. In the report for 1905, p. 13, the Commission refers to the fact that in -the reports for 1903 and 1904 some favorable comments were made on the -effect of the Elkins Law upon the practice of paying rebates, and says: “Further -experience, however, compels us to modify in some degree the hopeful -expectations then entertained. Not only have various devices for evading the -law been brought into use, but the actual payment of rebates as such has been -here and there resumed. [It never stopped in a good many places, judging by -the La Follette facts and other evidence, including the statements of many -leading railroad men.] Instances of this kind have been established by convincing -proof. More frequently the unjust preference is brought about by -methods which may escape the penalties of the law, but which plainly operate -to defeat its purpose.”</p> -</div> -<div class='footnote' id='f178'> -<p class='c007'><a href='#r178'>178</a>. Judge Clements of the Commission, Sen. Com. 1905, p. 3238.</p> -</div> -<div class='footnote' id='f179'> -<p class='c007'><a href='#r179'>179</a>. See the admirable summary of the investigation by Ray Stannard Baker -in <cite>McClure’s Magazine</cite> for December, 1905.</p> -</div> -<div class='footnote' id='f180'> -<p class='c007'><a href='#r180'>180</a>. The Interstate Commission says: “While giving rebates to the fuel and -iron company from tariff rates, it (the Santa Fe Railroad) charged the full -tariff rates on interstate shipments of coal by other shippers in not only the -general coal region involved, but in the same coal field. This practice of the -railway company resulted in closing markets for coal to shippers competing -with the Colorado Fuel and Iron Company.” 10 I. C. C. Decis. 473, February, -1905.</p> -</div> -<div class='footnote' id='f181'> -<p class='c007'><a href='#r181'>181</a>. 10 I. C. C. Decis. 475.</p> -</div> -<div class='footnote' id='f182'> -<p class='c007'><a href='#r182'>182</a>. 10 I. C. C. Decis. 476–480. While the Caledonian Company was trying -to get to market on equal terms with the Colorado Fuel and Iron Company, -they got a letter from the Santa Fe traffic office, Nov. 15, 1900, saying that -they could sell their coal to the Colorado Fuel and Iron Company, or keep it. -Mr. Biddle, however, when shown the letter and questioned about it, admitted -the authorship, but said he did not construe the letter as saying anything of -the kind. (I. C. C. Santa Fe Hearing, Dec. 1904, p. 154. The text of the -letter is not given.)</p> -</div> -<div class='footnote' id='f183'> -<p class='c007'><a href='#r183'>183</a>. There was a dispute about the relative steam power of the coals from the -different localities, but the point doesn’t seem to be material.</p> -</div> -<div class='footnote' id='f184'> -<p class='c007'><a href='#r184'>184</a>. Sen. Com. 1905, pp. 3072, 3073. The Caledonian had a good market -before the agreements between the Santa Fe and the Colorado Coal Company -were made, and it had many orders afterwards, but could not fill them except -at a loss because of favoritism in freight rates.</p> -</div> -<div class='footnote' id='f185'> -<p class='c007'><a href='#r185'>185</a>. I. C. C. Hearing, Dec. 1904, pp. 135, 148, Biddle.</p> -</div> -<div class='footnote' id='f186'> -<p class='c007'><a href='#r186'>186</a>. Mr. Biddle says the coal rate circular was issued by his authority and -continued a practice that was in effect when the Santa Fe operated the mines, -but he could not say whether it was “simply continued at the time the Colorado -Company acquired the mines or whether there were negotiations under -which it was done” (I. C. C. Hearing, Dec. 1904, pp. 135, 136, 147, 148).</p> -</div> -<div class='footnote' id='f187'> -<p class='c007'><a href='#r187'>187</a>. A copy of this circular bearing the name of the traffic manager of the -Santa Fe was taken without permission by a dealer at El Paso from the -Santa Fe office there.</p> -</div> -<div class='footnote' id='f188'> -<p class='c007'><a href='#r188'>188</a>. I. C. C. Santa Fe Hearing, Dec. 1904, p. 8.</p> -</div> -<div class='footnote' id='f189'> -<p class='c007'><a href='#r189'>189</a>. I. C. C. Santa Fe Hearing, Dec. 1904, pp. 146–148.</p> -</div> -<div class='footnote' id='f190'> -<p class='c007'><a href='#r190'>190</a>. Sen. Com., 1905, p. 848.</p> -</div> -<div class='footnote' id='f191'> -<p class='c007'><a href='#r191'>191</a>. Mr. Morton’s letter to President Roosevelt, June 5, 1905. Secretary Morton -continues: “The tariff covering this arrangement was published so as to -show the freight rate to be $4.05 per ton instead of the delivered price at El -Paso and Deming, and did not separate the freight rate from the cost of the -coal at the mines, as it should have done. Until the investigation of the case -by the Interstate Commerce Commission I did not know personally how the -matter was being handled, so far as the publication of the tariff was concerned. -My own connection with the case was to see that the traffic was secured to -the Atchison rails, and after that details were left to subordinates.”</p> -</div> -<div class='footnote' id='f192'> -<p class='c007'><a href='#r192'>192</a>. Mr. Biddle testified that the same thing had been done for other coal -companies, and in one instance at least it was shown that it had been done for -the Victor Fuel Company, but in this case “the price of the coal and the rate -of freight were kept entirely separate, the price of coal being treated in the -nature of an advance charge.” The Commission says further “If the Colorado -Fuel and Iron Company had in all cases paid the published tariff rate -which was exacted from other shippers, the fact that the price of the coal and the -freight were included in a single item would have worked no practical advantage -to that company so far as we can see. Neither, apparently, would there -have been any reason for this arrangement if the purpose of the parties had been -honest. If, however, there existed upon the part of the Santa Fe Company -an intent to charge the Colorado Fuel and Iron Company less for the transportation -of its coal than the published rate, it is evident that this method of -billing would afford a ready means for concealing the transaction. In point -of fact, during the entire period covered by this investigation (July 1899 to -Nov. 27, 1904) the Santa Fe Company did transport coal for the Colorado -Fuel and Iron Company for less than its open tariff rates, and these concessions -amounted in many cases to the price of the coal itself.” (10 I. C. C. -Decis. 482, Feb. 1905.)</p> -</div> -<div class='footnote' id='f193'> -<p class='c007'><a href='#r193'>193</a>. See 10 I. C. C. Decis. 473, 487, 488, Feb. 1, 1905.</p> -</div> -<div class='footnote' id='f194'> -<p class='c007'><a href='#r194'>194</a>. “Strategy of Great Railroads,” 1904, p. 167.</p> -</div> -<div class='footnote' id='f195'> -<p class='c007'><a href='#r195'>195</a>. I confess, however, that I do not see how, in the light of the records in -the Colorado Case, the Santa Fe counsel could tell the Senate Committee -this year that his road had made no discriminating rates (see above, p. 114). -Neither is it easy to see how Mr. Biddle could testify that he had not known -of the payment of any rebates for 12 years. The Commission says the Santa -Fe paid rebates to the Fuel Company till November, 1904, and other preferences have been unearthed, as we shall see hereafter. Some shippers and some -consignees have had better terms than others. Mr. Biddle does not call these -preferences rebates. The Commission sees that when the Santa Fe collected -the published freight rate, $4.05, from the El Paso people and paid for the -coal out of that, instead of collecting the $4.05 as freight and leaving the El -Paso folks to pay for the coal in addition, the effect was the same to the El -Paso people as the payment of a rebate equal to the value of the coal, and -the same to the Fuel Company in respect to securing a monopoly of the market, -and so the Commission, looking at the substance of the matter and the -form too so far as could be judged from the published tariff, called the payments -rebates, or payments out of, or deductions from, the regular tariff -rates.</p> -</div> -<div class='footnote' id='f196'> -<p class='c007'><a href='#r196'>196</a>. Commissioner Prouty to the Boston Economic Club, March 9, 1905.</p> -</div> -<div class='footnote' id='f197'> -<p class='c007'><a href='#r197'>197</a>. Sen. Com. 1905, p. 3607.</p> -</div> -<div class='footnote' id='f198'> -<p class='c007'><a href='#r198'>198</a>. 10 I. C. C. Decis. 226, and Rep. 1904, pp. 58–59.</p> -</div> -<div class='footnote' id='f199'> -<p class='c007'><a href='#r199'>199</a>. Sen. Com. 1905, p. 367. Testimony of E. M. Ferguson, representing 12 -organizations of shippers, State and national.</p> -</div> -<div class='footnote' id='f200'> -<p class='c007'><a href='#r200'>200</a>. Sen. Com. 1905, p. 2432.</p> -</div> -<div class='footnote' id='f201'> -<p class='c007'><a href='#r201'>201</a>. I. C. C. Decis. 735, March 25, 1905.</p> -</div> -<div class='footnote' id='f202'> -<p class='c007'><a href='#r202'>202</a>. Ind. Com. iv, 54.</p> -</div> -<div class='footnote' id='f203'> -<p class='c007'><a href='#r203'>203</a>. Sen. Com. 1905, pp. 2284, 2429.</p> -</div> -<div class='footnote' id='f204'> -<p class='c007'><a href='#r204'>204</a>. <em>Ibid.</em>, p. 2432.</p> -</div> -<div class='footnote' id='f205'> -<p class='c007'><a href='#r205'>205</a>. <em>Ibid.</em>, p. 18.</p> -</div> -<div class='footnote' id='f206'> -<p class='c007'><a href='#r206'>206</a>. Sen. Com. 1905, pp. 2484, 2490.</p> -</div> -<div class='footnote' id='f207'> -<p class='c007'><a href='#r207'>207</a>. Sen. Com. 1905, p. 2912.</p> -</div> -<div class='footnote' id='f208'> -<p class='c007'><a href='#r208'>208</a>. 10 I. C. C. Decis. 675, April 11, 1905; Rep. Dec. 1905, p. 39.</p> -</div> -<div class='footnote' id='f209'> -<p class='c007'><a href='#r209'>209</a>. Under the milling-in-transit privilege grain may be shipped into the mill -from the West, ground, and shipped out from the mill to New York or other -destination at a total cost but little greater than the straight through rate -from the West to New York. But a mill without this privilege must pay the -rate from the West to Philadelphia, and then the local rate from Philadelphia -to New York, making the total cost very much greater.</p> -</div> -<div class='footnote' id='f210'> -<p class='c007'><a href='#r210'>210</a>. Some strong statements about this case may be found in the Philadelphia -<cite>North American</cite> August 12, August 20, and other dates during -August, 1903.</p> -</div> -<div class='footnote' id='f211'> -<p class='c007'><a href='#r211'>211</a>. Sen. Com. 1905, p. 2434. See 10 I. C. C. 1905, p. 505.</p> -</div> -<div class='footnote' id='f212'> -<p class='c007'><a href='#r212'>212</a>. This trick was resorted to by the oily people many years ago, but the -railroads, realizing its potency in eluding the rebate prohibitions, have lately -extended its sphere of usefulness and it is becoming quite frequent. See -Sen. Com. 1905, p. 2123.</p> -</div> -<div class='footnote' id='f213'> -<p class='c007'><a href='#r213'>213</a>. Ind. Com. iv, 544. The name “midnight tariff” by which this scheme -is known probably fits the case, but “flying tariff” is perhaps still more -appropriate.</p> -</div> -<div class='footnote' id='f214'> -<p class='c007'><a href='#r214'>214</a>. <cite>Outlook</cite>, July 1, 1905, p. 579.</p> -</div> -<div class='footnote' id='f215'> -<p class='c007'><a href='#r215'>215</a>. Sen. Com. 1905, pp. 2911, 2912, Commissioner Prouty; 2123, President -Stickney. See also p. 3231, and 10 I. C. C. Decis. 317.</p> -</div> -<div class='footnote' id='f216'> -<p class='c007'><a href='#r216'>216</a>. Mr. Moffat was asked if he thought the allowances ought to be made. -He said: “I think that it ought to be made to the big shippers. I think the -man who ships 100,000 bushels a month ought to get a little better deal than -the man who ships only 1,000 bushels a year.”</p> - -<p class='c007'>Commissioner Cockrell replied: “There is where I think you are entirely -wrong. No government could live under such a condition. The rich would -soon absorb everything and the small man would be wiped out of existence. -The whole business we are on now started from a railroad giving a man a -rebate. The minute the railroad does a thing like that it opens the way to a -swindling petty graft and bigger grafting and crooked work. It is wrong, -all wrong. It is so wrong that nobody knows what to call it. Down in Louisville -they call it a ‘swag.’ Here you call it an ‘allowance.’ It is all wrong.”</p> -</div> -<div class='footnote' id='f217'> -<p class='c007'><a href='#r217'>217</a>. 10 I. C. C. Decis. 274, June 4, 1904.</p> -</div> -<div class='footnote' id='f218'> -<p class='c007'><a href='#r218'>218</a>. <em>Ibid.</em>, 255, June 4, 1904. The practice was held unjust.</p> -</div> -<div class='footnote' id='f219'> -<p class='c007'><a href='#r219'>219</a>. <em>Ibid.</em>, 489, Feb. 2, 1895. Duluth Shingle Co. <em>v.</em> Northern Pacific, -Great Northern, Chicago, Milwaukee and St. Paul, and other railroads.</p> -</div> -<div class='footnote' id='f220'> -<p class='c007'><a href='#r220'>220</a>. 10 I. C. C. Decis. 452, Jan. 7, 1905.</p> -</div> -<div class='footnote' id='f221'> -<p class='c007'><a href='#r221'>221</a>. Sen. Com. 1905, pp. 2432, 2433.</p> -</div> -<div class='footnote' id='f222'> -<p class='c007'><a href='#r222'>222</a>. 11 I. C. C. Decis. 104.</p> -</div> -<div class='footnote' id='f223'> -<p class='c007'><a href='#r223'>223</a>. 10 <em>ibid.</em>, 428, Jan. 1905.</p> -</div> -<div class='footnote' id='f224'> -<p class='c007'><a href='#r224'>224</a>. Sen. Com. 1905, pp. 3426, 3427. S. H. Cowan, attorney of Cattle -Growers’ Interstate Committee; Chicago Board of Trade <em>v.</em> C. & A. R. R., -4 I. C. C. Decis. 158.</p> -</div> -<div class='footnote' id='f225'> -<p class='c007'><a href='#r225'>225</a>. 10 I. C. C. Decis. 428. Chicago Live-Stock Exchange <em>v.</em> Chicago and -Great Western. See also I. C. C. Rep. 1905, pp. 42, 63.</p> -</div> -<div class='footnote' id='f226'> -<p class='c007'><a href='#r226'>226</a>. The United States Circuit Court has refused to enforce the order of the -Commission on the ground that the Chicago Great Western reduced the rate -for competitive reasons to get its share of the tariff. The Commission justly -says: “If the decision of the Circuit Court in this case is sound any carrier -is justified in making the widest discriminations in rates as between competing -commodities, regardless of the effect upon non-favored industries, by simply -asserting the existence of general competition and the desire to increase the -traffic in particular commodities over its line.”</p> - -<p class='c007'>I. C. C. Rep. December, 1905, p. 64. It is to be hoped that the case will -go up on appeal and a reversal of the Circuit decision be obtained.</p> -</div> -<div class='footnote' id='f227'> -<p class='c007'><a href='#r227'>227</a>. 10 I. C. C. Decis. 590, Feb. 11, 1905; Rep. 1905, p. 31.</p> -</div> -<div class='footnote' id='f228'> -<p class='c007'><a href='#r228'>228</a>. Cannon Falls to St. Louis, 10 I. C. C. 650, March, 1905.</p> -</div> -<div class='footnote' id='f229'> -<p class='c007'><a href='#r229'>229</a>. Sen. Com. 1905, p. 1775. Mr. Bacon of Milwaukee, speaking for a -convention of shippers.</p> - -<p class='c007'>Rates to Texas also from Kansas and Missouri points are 5 cents per -hundred higher on flour than on wheat, and this differential is not applied -on shipments in any other direction from those points. (10 I. C. C. Decis. -1904, 55.)</p> -</div> -<div class='footnote' id='f230'> -<p class='c007'><a href='#r230'>230</a>. I. C. C. Cases, 707, 1905.</p> -</div> -<div class='footnote' id='f231'> -<p class='c007'><a href='#r231'>231</a>. Proctor and Gamble Case, I. C. C. Rep., 1903, pp. 57–61; 1905. Rep. -p. 63.</p> -</div> -<div class='footnote' id='f232'> -<p class='c007'><a href='#r232'>232</a>. Sen. Com. 1905, p. 346.</p> -</div> -<div class='footnote' id='f233'> -<p class='c007'><a href='#r233'>233</a>. <em>Ibid.</em>, p. 2742.</p> -</div> -<div class='footnote' id='f234'> -<p class='c007'><a href='#r234'>234</a>. <em>Ibid.</em>, p. 18.</p> -</div> -<div class='footnote' id='f235'> -<p class='c007'><a href='#r235'>235</a>. Business Men’s League of St. Louis <em>v.</em> many railroads, 9 I. C. C. Decis. -319, Nov. 17, 1902.</p> -</div> -<div class='footnote' id='f236'> -<p class='c007'><a href='#r236'>236</a>. 10 I. C. C. Decis. 333, June 25, 1904.</p> -</div> -<div class='footnote' id='f237'> -<p class='c007'><a href='#r237'>237</a>. <em>Ibid.</em>, 327, June 25, 1904.</p> -</div> -<div class='footnote' id='f238'> -<p class='c007'><a href='#r238'>238</a>. Sen. Com. 1905, p. 1925.</p> -</div> -<div class='footnote' id='f239'> -<p class='c007'><a href='#r239'>239</a>. I. C. C. Dressed-meat Hearings, Dec. 1904, Biddle.</p> -</div> -<div class='footnote' id='f240'> -<p class='c007'><a href='#r240'>240</a>. Sen. Com. 1905, pp. 351, 354, 364, 818, 2496. The routing instructions -to agents of the St. Louis and San Francisco Railroad Company were introduced. -The circular contained a list of the roads over which shipments were -to be routed unless shippers insisted on a different routing. Agents were -cautioned that “these instructions are confidential and must not be made -public. Under no circumstances must representatives of foreign roads or -fast lines be allowed to examine the instructions contained in the circular.” -(p. 351.)</p> -</div> -<div class='footnote' id='f241'> -<p class='c007'><a href='#r241'>241</a>. Sen. Com. 1905, p. 818.</p> -</div> -<div class='footnote' id='f242'> -<p class='c007'><a href='#r242'>242</a>. Sen. Com. 1905, p. 354. The witness derived his information as to the -sale of tonnage and reciprocal routing agreements from high officials of the -railroads, pp. 354, 364.</p> -</div> -<div class='footnote' id='f243'> -<p class='c007'><a href='#r243'>243</a>. 10 I. C. C. Decis., 1904, p. 47.</p> -</div> -<div class='footnote' id='f244'> -<p class='c007'><a href='#r244'>244</a>. <em>Ibid.</em>, 422, Jan. 7, 1905.</p> -</div> -<div class='footnote' id='f245'> -<p class='c007'><a href='#r245'>245</a>. <em>Ibid.</em>, 630.</p> -</div> -<div class='footnote' id='f246'> -<p class='c007'><a href='#r246'>246</a>. 10 I. C. C. Decis. 226, April 28, 1904; Rep. 1904, p. 58,—held unlawful -discrimination. See also p. 78, complaint against W. Va. Northern for refusing -due proportions of coal cars.</p> -</div> -<div class='footnote' id='f247'> -<p class='c007'><a href='#r247'>247</a>. 134 Fed. Rep. 196; I. C. C. Rep., Dec. 1905, p. 65.</p> -</div> -<div class='footnote' id='f248'> -<p class='c007'><a href='#r248'>248</a>. 10 I. C. C. Decis. 699.</p> -</div> -<div class='footnote' id='f249'> -<p class='c007'><a href='#r249'>249</a>. <em>Ibid.</em>, 47, 663. The favored party in this case was an agent for the -railroad. No relief could be given.</p> -</div> -<div class='footnote' id='f250'> -<p class='c007'><a href='#r250'>250</a>. 11 I. C. C. Decis. 104. Rep. 1905, p. 45. Citing Wight <em>v.</em> United -States, 167 U. S. 512, and the Midland Case, 168 U. S. 144.</p> -</div> -<div class='footnote' id='f251'> -<p class='c007'><a href='#r251'>251</a>. The Commission holds that the division agreed on must not be excessive -(10 I. C. C. Decis. 1905, p. 385. Harvester Trust and Steel Trust Cases). -But there is nothing in such granting or refusing of rate concessions that -necessarily violates the interstate law, provided the little roads are common -carriers for the public subject to the Act to regulate commerce. If not, the -division is held unlawful (10 I. C. C. Decis., March 19, 1904, pp. 193, 505, 545, -546. Lumber).</p> - -<p class='c007'>The plea that the division is accorded to the little road because it controls -the business of its routing does not explain cases of division between a private -railroad that brings logs, etc., to the mill, and the railroad that takes the -lumber, etc., from the mill. But through the milling-in-transit principle a -division may be arranged between the common carrier by rail that brings the -logs to the mill and the carrier that takes the lumber away (10 I. C. C. Decis. -194).</p> -</div> -<div class='footnote' id='f252'> -<p class='c007'><a href='#r252'>252</a>. I. C. C. Rep. 1903, pp. 18–22.</p> -</div> -<div class='footnote' id='f253'> -<p class='c007'><a href='#r253'>253</a>. Testimony of Mr. Biddle, General Traffic Manager of the Santa Fe, -Hutchinson Salt Case. I. C. C. Hearing, Dec. 5, 1903, p. 35.</p> -</div> -<div class='footnote' id='f254'> -<p class='c007'><a href='#r254'>254</a>. 10 I. C. C. Decis. 385, 392, Nov. 3, 1904. The Commission held that -$3.50 a car to the Illinois Northern, and $3 a car to the West Pullman, would -be reasonable for switching charges, and that switching charges in excess of -these sums amount to unlawful preferences in favor of the International -Harvester Company.</p> -</div> -<div class='footnote' id='f255'> -<p class='c007'><a href='#r255'>255</a>. I. C. C. Rep. 1904, p. 21.</p> -</div> -<div class='footnote' id='f256'> -<p class='c007'><a href='#r256'>256</a>. I. C. C. Rep. 1904, p. 21; 10 I. C. C. Decis. 385, Nov. 1904. The Commission -held that “the divisions are grossly excessive for the services rendered -and afford unlawful preference for the U. S. Steel Corporation, which owns -the Ill. Steel Co.”</p> -</div> -<div class='footnote' id='f257'> -<p class='c007'><a href='#r257'>257</a>. 10 I. C. C. Decis., March 25, 1905, pp. 661, 667–669 <em>et seq.</em></p> -</div> -<div class='footnote' id='f258'> -<p class='c007'><a href='#r258'>258</a>. <em>Ibid.</em>, p. 661.</p> -</div> -<div class='footnote' id='f259'> -<p class='c007'><a href='#r259'>259</a>. I. C. C. Decis., 664, March 12, 1904.</p> -</div> -<div class='footnote' id='f260'> -<p class='c007'><a href='#r260'>260</a>. <em>Ibid.</em>, 707, Feb. 7, 1905; also p. 681, March 19, 1904.</p> -</div> -<div class='footnote' id='f261'> -<p class='c007'><a href='#r261'>261</a>. The oil cars, dressed-meat cars, etc., of course are in use the year round, -and even fruit and vegetables need refrigerator cars in the winter to keep -them from freezing as well as in summer to keep them from spoiling. (Sen. -Com., 1905, p. 370.)</p> -</div> -<div class='footnote' id='f262'> -<p class='c007'><a href='#r262'>262</a>. The present system, however, does not always give good service. In -April and May, 1905, for instance, hundreds and hundreds of cars of strawberries rotted at the stations in North Carolina for want of cars. The Armour -Car-Line could not, or at least did not supply the needed cars, and as they have -an exclusive contract with the Atlantic Coast Line no other cars are in the -field. At one station only 4 cars were furnished in two days and 125 carloads -of berries were left on the platform and the ground to spoil. The loss this -season to the truck growers of this one section from insufficient car service is -estimated at $600,000. (Sen. Com., 1905, pp. 2596, 2619.)</p> -</div> -<div class='footnote' id='f263'> -<p class='c007'><a href='#r263'>263</a>. Some railroads have refrigerator lines of their own; the Pennsylvania, -for example, and the Vanderbilts, the Goulds, the Santa Fe, the Northern -Pacific, the Great Northern, etc., but they carry the private refrigerators also. -Packers and other shippers owning cars insist on sending their goods in their -own cars, and making the roads pay mileage. If the road refuses, the freight -goes by some other line. “They compel us to take it in their cars and pay -them for the use of them while our own cars stand on the side track, or else -some other road gets the business.” (Testimony of James J. Hill, Sen. -Com., 1905, pp. 1504–1505.)</p> -</div> -<div class='footnote' id='f264'> -<p class='c007'><a href='#r264'>264</a>. See above, pp. 57, 58.</p> -</div> -<div class='footnote' id='f265'> -<p class='c007'><a href='#r265'>265</a>. This mileage rebate system began long ago. Way back in the seventies -the Erie and other roads allowed the Standard Oil Company to put tank cars -on their tracks and paid it a mileage sufficient to pay back the values of the -cars in less than 3 years.</p> -</div> -<div class='footnote' id='f266'> -<p class='c007'><a href='#r266'>266</a>. The 1 cent rate applies to 15 to 25 percent of the total mileage of the -cars and the ¾ cent rate to the remaining mileage. (Bureau of Commerce Rep. -on Beef Industry, March, 1905, p. 273.)</p> -</div> -<div class='footnote' id='f267'> -<p class='c007'><a href='#r267'>267</a>. Evidence in I. C. C. Hearings on private car-lines, April 28, 1904, p. 8. -The Beef Trust report of the Bureau of Commerce, 1905, presents some conflicting -evidence and sums up the case with a conservative estimate which -places the average daily run of <em>all</em> the cars owned by Armour and his associates -and used in the beef business at 90 to 100 miles. In the same report, -however, the refrigerator cars of the National Car-Line Company, and of the -Provision Dealers’ Dispatch are reported as running 300 miles a day, and the -cars of Swift and Company are estimated to make 373 miles a day in Iowa. -(“Report of Commissioner of Corporations on the Beef Industry.” March 3, -1905, pp. 274–281.)</p> -</div> -<div class='footnote' id='f268'> -<p class='c007'><a href='#r268'>268</a>. I. C. C. Rep. 1903, p. 23.</p> -</div> -<div class='footnote' id='f269'> -<p class='c007'><a href='#r269'>269</a>. National Congress of Railway Commissioners, 1892, statement of the -Committee on Private Cars, p. 52 <em>et seq.</em> The Lackawanna Line Stock -Express Co., for example, netted 50 percent a year, or $343 per car. See also -4 I. C. C. Decis. 630.</p> -</div> -<div class='footnote' id='f270'> -<p class='c007'><a href='#r270'>270</a>. I. C. C. Rep. 1903, p. 24. Sometimes the payment for a refrigerator -car is much more than $1 a day. James J. Hill says: “If we take another -railway company’s car, we pay 20 cents a day for it for the time we have had -it, and we are in a hurry to get it back; and we load the other man’s car back -if we have anything to put in it. That is always understood. But they do not -want anything put in their cars. They say: ‘Hurry it back; get it around -quickly, and pay us, in place of 20 cents a day, three-fourths of a cent a mile.’ -They used to ask a cent a mile, but I think that has been abandoned.”</p> - -<p class='c007'>“<span class='sc'>Senator Newlands.</span> How much does that amount to a day, say at the -rate of a cent a mile?</p> - -<p class='c007'>“<span class='sc'>Mr. Hill.</span> If they got a cent a mile and we hurried that car through to -the coast, we would take it about 300 miles a day, so that they would get -about $3 a day for the car.</p> - -<p class='c007'>“<span class='sc'>Senator Newlands.</span> So that in the one case you pay 20 cents?</p> - -<p class='c007'>“<span class='sc'>Mr. Hill.</span> And in the other we pay $3.</p> - -<p class='c007'>“<span class='sc'>Senator Newlands.</span> And the private car-lines you pay $3.</p> - -<p class='c007'>“<span class='sc'>Mr. Hill.</span> Yes—well, $3 would be the extreme figure. We will say -$2.50.” (Sen. Com. 1905, p. 1505.)</p> -</div> -<div class='footnote' id='f271'> -<p class='c007'><a href='#r271'>271</a>. A refrigerator car costs $900 to $1000, as a rule. A first-class steel-framed -freight car costs about the same. Private stock cars of good build -cost about $800 each. (See evidence in Hearings on Private Cars, I. C. C. -April, 1904, pp. 19, 100; I. C. C. Rep. 1904, p. 14.) The contracts provide that -the railroads are to carry no perishable goods except in Trust cars if the Trust -cares to furnish the cars. If by chance the railroads use their own or any -other refrigerator cars than those of the Trust they are to charge the full -Trust rates and turn over the said charges to the car-line just as if its cars -had been used.</p> -</div> -<div class='footnote' id='f272'> -<p class='c007'><a href='#r272'>272</a>. Sen. Com. 1905, p. 776: 49,807 total, 15,269 railroad and 34,538 private -refrigerators; 14,792 tank cars; 11,357 stock cars; 325 poultry cars; vehicle -cars and furniture cars, 1,621. These with coal and coke cars and other private -cars make a total of 127,331 private cars. The entire freight car equipment -belonging to the railroads is about 1,700,000 cars.</p> -</div> -<div class='footnote' id='f273'> -<p class='c007'><a href='#r273'>273</a>. The Beef Trust is one of the largest shippers in the world. Its packing-house -shipments from Chicago are said to amount to some three thousand -million pounds (3,000,000,000 lbs.) a year. Its shipments from Kansas City, -Omaha, St. Joe, St. Louis, etc., are also enormous. There is also a vast -traffic in poultry, eggs, dairy products, fruit, and vegetables, that is controlled -by the Trust. Is it any wonder that a railroad president or manager should -refrain from action that might lose him his share of this huge business? It -would make a sad hole in his receipts. Dividends would be emaciated and -might vanish or appear with a minus sign. His stock would sink in Wall -Street. Angry directors, bankers, investors, and stockholders would assail -him and attack his management. And as a result of defying the Trust he -would put himself out of office and his road perhaps in the hands of a -receiver.</p> -</div> -<div class='footnote' id='f274'> -<p class='c007'><a href='#r274'>274</a>. C. B. Hutchins was the inventor of an improved refrigerator car. He -built five cars in 1886, and in 1890 he had the California Fruit Transportation -Company operating $200,000 worth of cars. In two years, 1890 and -1891, the profits amounted to $250,000 or more than the total investment, -and the company thought they had something better than a gold mine. But -the Beef Trust undermined them by railroad favoritism and compelled them -to sell out to the Swifts.</p> - -<p class='c007'>While the California Fruit Transportation Company was fighting for its -life with the Armour lines, it presented the Southern Pacific Railway Company -with $100,000 of its stock on condition of receiving an exclusive contract. -The contract was made, but the Armour cars continued to go. An -influence was at work stronger than the exclusive contract and the power of -the California Fruit Transportation Company.</p> -</div> -<div class='footnote' id='f275'> -<p class='c007'><a href='#r275'>275</a>. Evidence, pp. 101, 133, 134, 146, etc. For example the manager of the -“Missouri River Despatch” operating 250 refrigerator cars testified that -the Erie paid 12½ percent commissions on the freight rates in addition to the -mileage. And the manager of the Santa Fe car-line said the B. & O. paid -them 12½ percent commissions on dairy products in addition to the ¾ cent -mileage, etc. etc.</p> -</div> -<div class='footnote' id='f276'> -<p class='c007'><a href='#r276'>276</a>. Evidence, pp. 54–55, Armour Cars.</p> -</div> -<div class='footnote' id='f277'> -<p class='c007'><a href='#r277'>277</a>. National Congress Railway Commissioners, above cited.</p> -</div> -<div class='footnote' id='f278'> -<p class='c007'><a href='#r278'>278</a>. <em>Ibid.</em></p> -</div> -<div class='footnote' id='f279'> -<p class='c007'><a href='#r279'>279</a>. I. C. C. Rep. 1904, p. 14. Aug. 1, 1904 the Armour lines made an exclusive -contract with the Pere Marquette Railroad, the fruit carrier of Michigan. Before that the railroad iced carloads of fruit free of charge. On the -date named icing charges went into effect as follows:</p> - -<p class='c007'>$25 to Chicago, Detroit, Grand Rapids, and other Michigan points.</p> - -<p class='c007'>$30 to Cleveland, Columbus, Cincinnati, Indianapolis, and other points in -Ohio and Indiana.</p> - -<p class='c007'>$35 to Buffalo, Bloomington, and various other points in New York, Illinois, -and Wisconsin.</p> - -<p class='c007'>$40 to Des Moines, Minneapolis, Nashville, and other points in Iowa, -Minnesota, Tennessee, etc.</p> - -<p class='c007'>$45 to Duluth, Lincoln, Wichita, etc.</p> - -<p class='c007'>$50 to New York City, Baltimore, Washington, Denver, etc.</p> - -<p class='c007'>$55 to Boston, Hartford, Mobile, New Orleans, etc.</p> - -<p class='c007'>$60 to Spokane, etc.</p> - -<p class='c007'>From $25 to $60 for what a year ago the railroad gave free of charge.</p> -</div> -<div class='footnote' id='f280'> -<p class='c007'><a href='#r280'>280</a>. Rep. 1904, p. 15, 10 I. C. C. Decis. 1904, p. 360. Dealers have protested -against paying 4 or 5 or 6 times the fair charge for ice, and have now and then -refused to pay, telling the companies they could sue for the charges. But the -car companies knew a better way. They ordered the cars of the disobedient -dealers delayed and notified them that in future icing charges must be prepaid -on all shipments to them or from them. These orders were enforced by the -railroads and the kicking dealers were helpless. (Evidence, etc., 201–203.)</p> - -<p class='c007'>With a commission business such as that involved in the case referred to, -an order for prepayment of icing charges or freight rates or both means ruin. -For farmers and other producers will not prepay charges on perishables, and -will not therefore ship to commission merchants to whom the railroads do not -give credit that permits the payment of charges at their end of the line, <em>i. e.</em>, -on delivery.</p> -</div> -<div class='footnote' id='f281'> -<p class='c007'><a href='#r281'>281</a>. Evidence, etc., 206, 207.</p> -</div> -<div class='footnote' id='f282'> -<p class='c007'><a href='#r282'>282</a>. <em>Ibid.</em>, 207.</p> -</div> -<div class='footnote' id='f283'> -<p class='c007'><a href='#r283'>283</a>. Sen. Com. 1905, p. 2596; and the next item in the text.</p> -</div> -<div class='footnote' id='f284'> -<p class='c007'><a href='#r284'>284</a>. 11 I. C. C. Decis, 129, and Rep. 1905, p. 30, holding the Pere Marquette -Armour charges excessive and approving the Michigan Central charge of -$2.50 per ton on interstate shipments by the car.</p> -</div> -<div class='footnote' id='f285'> -<p class='c007'><a href='#r285'>285</a>. Sen. Com. 1905, p. 369.</p> -</div> -<div class='footnote' id='f286'> -<p class='c007'><a href='#r286'>286</a>. I. C. C. Beef Hearing, 1904, p. 165 <em>et seq.</em> It is a physical impossibility -for a man to inspect the loading of 75 or 100 cars a day, and if an inspector -is overzealous and conscientious in watching the cars he can attend to, the -Trust has the railroad dismiss him.</p> -</div> -<div class='footnote' id='f287'> -<p class='c007'><a href='#r287'>287</a>. <cite>McClure’s</cite> for January, 1906, p. 323.</p> -</div> -<div class='footnote' id='f288'> -<p class='c007'><a href='#r288'>288</a>. See testimony before the I. C. C. April, 1904, p. 27. Mr. Watson’s -memory was very hazy. He could not remember what he had formerly testified -on this subject before the referee. Neither could he tell what “U. P.” meant -nor recognize the clear meaning of “C. & A.” in the car-line account books, -though every one familiar with railway matters knows that “U. P.” stands -for Union Pacific and “C. & A.” for Chicago and Alton. Mr. Marchand, -counsel for the Commission, drew some curious non-information and mal-information from Mr. Watson, the former head of Porter Brothers, who -were large shippers of fruit in Chicago.</p> - -<p class='c007'>“<span class='sc'>Mr. Marchand.</span> What commission did you receive from the railroads -on account of Porter Brothers up to that time?</p> - -<p class='c007'>“<span class='sc'>Mr. Watson.</span> I told you that was all stopped about four years ago, to -the best of my recollection.”</p> - -<p class='c007'>“<span class='sc'>Mr. Marchand.</span> Do you remember receiving from the Union Pacific -Railroad Company $1,400 in 1898—January 25, 1898?</p> - -<p class='c007'>“<span class='sc'>Mr. Watson.</span> I do not.</p> - -<p class='c007'>“<span class='sc'>Mr. Marchand.</span> You have no recollection of that?</p> - -<p class='c007'>“<span class='sc'>Mr. Watson.</span> No, sir.</p> - -<p class='c007'>“<span class='sc'>Mr. Marchand.</span> In 1899 there appears upon the ledger of Armour -& Co., or rather the Fruit Growers’ Express, an item of $47,000, a credit. -Do you know where that came from?</p> - -<p class='c007'>“<span class='sc'>Mr. Watson.</span> I do not know anything about the books of Armour & Co.</p> - -<p class='c007'>“<span class='sc'>Mr. Marchand.</span> Do you remember having received from C. & A. -as on the books of Armour & Co., on the 10th of October, 1899, the sum of -$45,219?</p> - -<p class='c007'>“<span class='sc'>Mr. Watson.</span> I do not. I guess if you look it up you will find it is -‘credits and allowances.’</p> - -<p class='c007'>“<span class='sc'>Mr. Marchand.</span> ‘C. & A.’ stands for ‘credits and allowances’? What -does ‘U. P.’ stand for?</p> - -<p class='c007'>“<span class='sc'>Mr. Watson.</span> I do not know.</p> - -<p class='c007'>“<span class='sc'>Mr. Marchand.</span> Does that stand for ‘Union Pacific’?</p> - -<p class='c007'>“<span class='sc'>Mr. Watson.</span> I do not know whether it does or not.”</p> - -<p class='c007'>Mr. Robbins, vice-president and manager of the Armour Car-Lines, was -also afflicted with loss of memory, which was specially unfortunate in view of -the fact that the Trust had destroyed the accounts some time before the -Hearing.</p> - -<p class='c007'>“<span class='sc'>Mr. Marchand.</span> Can you explain the item of $14,000 paid to the Union -Pacific?</p> - -<p class='c007'>“<span class='sc'>Mr. Robbins.</span> No, sir; I can not.</p> - -<p class='c007'>“<span class='sc'>Mr. Marchand.</span> Is there anybody in your employ that can?</p> - -<p class='c007'>“<span class='sc'>Mr. Robbins.</span> I do not think so.</p> - -<p class='c007'>“<span class='sc'>Mr. Marchand.</span> You say you have destroyed your records.</p> - -<p class='c007'>“<span class='sc'>Mr. Robbins.</span> Yes, sir.”</p> -</div> -<div class='footnote' id='f289'> -<p class='c007'><a href='#r289'>289</a>. I. C. C. Hearing on Private Cars, 1904, pp. 147–149. Mr. Brown, counsel -for the Santa Fe, said to the Senate Committee, 1905, that he wished to put on -record a sweeping denial that the A. T. & S. F. Co. has made any discriminatory -rates or paid any rebates. The next moment, in answer to a question -about the reduction of $25 a car below the published tariff, to which Mr. Leeds -testified as given by the Santa Fe car-line, Mr. Brown said: “It was a rebate -given to every one.” (Rep. Sen. Com. on Interstate Commerce, May, 1905, -p. 3140.) He first said the road did not give any rebates, and then admitted it -did give rebates, but said it gave the same rebate to every one that shipped. -The coal mines that paid the Santa Fe $4 against $2.90 paid by the Colorado -Fuel Co. would hardly agree to that statement. But Mr. Brown had in mind -the car-line case in which they said the same rebate was given to every shipper. -Mr. Leeds said it was a secret rate, and that he went to California and -solicited business from various shippers. Under such circumstances, the fact -that every one who shipped got the rebate does not eliminate discrimination -but accentuates it. The discrimination is against the man who does not ship, -the man who is not informed of the secret rebate. The Santa Fe car-line informed -such dealers as it chose. No others could afford to ship on the Santa Fe. -The instructed dealers could easily hold the market at prices that would prevent -the uninstructed from thinking about shipping such goods.</p> -</div> -<div class='footnote' id='f290'> -<p class='c007'><a href='#r290'>290</a>. Rep. 1904, p. 13.</p> -</div> -<div class='footnote' id='f291'> -<p class='c007'><a href='#r291'>291</a>. Mr. Streychmans has been accused of stealing this code book and also -certain letters and papers, but in fact he took no original papers, but only carbon -copies of letters and statements he wrote for the company, and the code book -was put into his possession for use in his work by the secretary of Armour’s -general manager. If any charge of stealing or any other criminal charge -could be made, Streychmans would long ago have been prosecuted by the -Beef Trust people. When he began giving publicity to the facts in his possession -the general manager tried to buy him off. He was shamefully -treated by some of the Armour officers, and partly in revenge, probably, and -partly in gratitude to the editor of the San Francisco <cite>Examiner</cite> for helping -him out of California and the Armour grip, he gave the editor copies of letters, -etc., the publication of which led to his examination by the Commission.</p> -</div> -<div class='footnote' id='f292'> -<p class='c007'><a href='#r292'>292</a>. Testimony of J. W. Midgley, for over 20 years commissioner, chairman -and arbitrator for various Western railroads. I. C. C. Hearing, April, 1904, -p. 8. The reader who is specially interested in the Beef Trust and its doings -should send for a copy of this Hearing, and those of 1901–1902. The report -of the Bureau of Commerce Mar. 3, 1905, and Mr. Baker’s articles in <cite>McClure’s</cite> -for Jan. 1906 and following months, are also of the deepest interest.</p> -</div> -<div class='footnote' id='f293'> -<p class='c007'><a href='#r293'>293</a>. Sen. Com. 1905, p. 311. The organizations represented by Mr. Ferguson -are the Western Fruit Jobbers’ Association; the National Retail Grocers’ -Association; the Minnesota Jobbers’ Association; Wisconsin Retail and -General Merchandise Association; Wisconsin Master Butchers’ Association; -Minnesota State Retail Grocers’ Association, Superior, Wis.; Lake Superior -Butchers’ Association, Duluth, Minn.; Duluth Commercial Club; Duluth -Produce and Fruit Exchange, and the Iowa Fruit Jobbers’ Association.</p> -</div> -<div class='footnote' id='f294'> -<p class='c007'><a href='#r294'>294</a>. Rep. U. S. Industrial Commission, iv, p. 53.</p> -</div> -<div class='footnote' id='f295'> -<p class='c007'><a href='#r295'>295</a>. The Standard has the tanks and private sidings all over the New Haven’s -territory while few are owned by the independents. Persons without these -facilities must pay 2d-class rates, while the Standard Oil pays 5th class. -The 5th class rate between Boston and New Haven is 10 cents per hundred, -while the 2d class is 20 cents, the difference probably representing several -times the profit in handling one hundred lbs. of kerosene. (Commissioner -Prouty, in Annals of American Academy of Political and Social Science, -January, 1900.)</p> -</div> -<div class='footnote' id='f296'> -<p class='c007'><a href='#r296'>296</a>. Ind. Com. iv, p. 53.</p> -</div> -<div class='footnote' id='f297'> -<p class='c007'><a href='#r297'>297</a>. Sen. Com., 1905, pp. 2740, 2742.</p> -</div> -<div class='footnote' id='f298'> -<p class='c007'><a href='#r298'>298</a>. See <cite>The Outlook</cite>, July 1, 1905, p. 578.</p> -</div> -<div class='footnote' id='f299'> -<p class='c007'><a href='#r299'>299</a>. See Miss Tarbell’s vigorous description of what the Standard did to -Kansas in <cite>McClure’s</cite> for September, 1905.</p> -</div> -<div class='footnote' id='f300'> -<p class='c007'><a href='#r300'>300</a>. Ind. Com. vi, pp. 663–665. The seaboard pipe line was completed -in 1884.</p> -</div> -<div class='footnote' id='f301'> -<p class='c007'><a href='#r301'>301</a>. Sen. Com. 1905, p. 2322, Professor Ripley.</p> -</div> -<div class='footnote' id='f302'> -<p class='c007'><a href='#r302'>302</a>. <em>Ibid.</em>, p. 48. A member of the Florida State Commission says the roads -also show favoritism in the supply of cars and by giving rebates to large -shippers. (<em>Ibid.</em>, p. 47, R. H. Burr.)</p> -</div> -<div class='footnote' id='f303'> -<p class='c007'><a href='#r303'>303</a>. Sen. Com. 1905, pp. 3339, 3340, Commissioner Fifer.</p> -</div> -<div class='footnote' id='f304'> -<p class='c007'><a href='#r304'>304</a>. <em>Ibid.</em>, pp. 1816–1820, 3439, 3440.</p> -</div> -<div class='footnote' id='f305'> -<p class='c007'><a href='#r305'>305</a>. 10 I. C. C. Decis. 342, June 25, 1904.</p> -</div> -<div class='footnote' id='f306'> -<p class='c007'><a href='#r306'>306</a>. Sen. Com. 1905, p. 3441. Other witnesses agreed as to the oppressive -freight rates, and said the town had subsidized two roads, both of which -are now controlled by the Southern Railway, but they did not think town -values had decreased or that population had diminished (pp. 2006, 2018).</p> -</div> -<div class='footnote' id='f307'> -<p class='c007'><a href='#r307'>307</a>. <em>Ibid.</em>, pp. 1761, 1762.</p> -</div> -<div class='footnote' id='f308'> -<p class='c007'><a href='#r308'>308</a>. <em>Ibid.</em>, p. 3294.</p> -</div> -<div class='footnote' id='f309'> -<p class='c007'><a href='#r309'>309</a>. <em>Ibid.</em>, p. 1878.</p> -</div> -<div class='footnote' id='f310'> -<p class='c007'><a href='#r310'>310</a>. Sen. Com. 1905, p. 2040.</p> -</div> -<div class='footnote' id='f311'> -<p class='c007'><a href='#r311'>311</a>. Sen. Com. 1905, p. 34.</p> -</div> -<div class='footnote' id='f312'> -<p class='c007'><a href='#r312'>312</a>. <em>Ibid.</em> See 10 I. C. C. Decis. 650, and Rep. 1905, p. 36.</p> -</div> -<div class='footnote' id='f313'> -<p class='c007'><a href='#r313'>313</a>. Complaint of Denver Chamber of Commerce, Sen. Com. 1905, p. 3257.</p> -</div> -<div class='footnote' id='f314'> -<p class='c007'><a href='#r314'>314</a>. Sen. Com. 1905, p. 3336.</p> -</div> -<div class='footnote' id='f315'> -<p class='c007'><a href='#r315'>315</a>. Question of Mr. Fifer of Interstate Commission to Sen. Com. 1905, -p. 3337.</p> -</div> -<div class='footnote' id='f316'> -<p class='c007'><a href='#r316'>316</a>. Sen. Com. 1905, pp. 2930, 2940.</p> -</div> -<div class='footnote' id='f317'> -<p class='c007'><a href='#r317'>317</a>. <em>Ibid.</em>, p. 2914.</p> -</div> -<div class='footnote' id='f318'> -<p class='c007'><a href='#r318'>318</a>. See statements of Chamber of Commerce of Spokane and testimony of -its representative, Brooks Adams, Sen. Com. 1905, pp. 2917, 2928.</p> -</div> -<div class='footnote' id='f319'> -<p class='c007'><a href='#r319'>319</a>. Sen. Com. 1905, pp. 2527–2529.</p> -</div> -<div class='footnote' id='f320'> -<p class='c007'><a href='#r320'>320</a>. Senator Dolliver, Sen. Com. 1905, p. 2094.</p> -</div> -<div class='footnote' id='f321'> -<p class='c007'><a href='#r321'>321</a>. Sen. Com. 1905, p. 1870.</p> -</div> -<div class='footnote' id='f322'> -<p class='c007'><a href='#r322'>322</a>. 10 I. C. C. Decis. 456, Jan. 13, 1905.</p> -</div> -<div class='footnote' id='f323'> -<p class='c007'><a href='#r323'>323</a>. See the series of broadsides on these subjects in the Philadelphia <cite>North -American</cite> during August, 1903, and the early part of 1904. An excursion -ticket from Washington to New York and return allowed 10 days in New York. -Formerly a southern buyer going north on such a ticket could stop over in -Philadelphia. But in 1903 this stop-over privilege was revoked, and if the -buyer stopped in Philadelphia and then bought an excursion to New York he -could only stay five days in New York. The result was that southern buyers -began to leave Philadelphia out in the cold and merchants found that “the -present tariff arrangements are working incalculable injury to wholesale -houses in Philadelphia,” and some of them had to open houses in New York.</p> -</div> -<div class='footnote' id='f324'> -<p class='c007'><a href='#r324'>324</a>. Ind. Com. ix, p. 133.</p> -</div> -<div class='footnote' id='f325'> -<p class='c007'><a href='#r325'>325</a>. 4 I. C. C. Decis. 593. The order was made May 29, 1894, on petition of -the Freight Bureau of the Cincinnati Chamber of Commerce <em>v.</em> 23 railway -companies, and the Chicago Freight Bureau <em>v.</em> 31 railways and 5 steamship -companies. The companies refused to comply and the Circuit Court dismissed -the bill for an enforcement, October, 1896, 62 Fed. Rep. 690; 76 Fed. Rep. 183.</p> -</div> -<div class='footnote' id='f326'> -<p class='c007'><a href='#r326'>326</a>. I. C. C. <em>v.</em> Railway, 167 U. S. 479, May, 1897, reaffirming 162 U. S. 184 and -citing 145 U. S. 263, 267. Justice Harlan dissented.</p> -</div> -<div class='footnote' id='f327'> -<p class='c007'><a href='#r327'>327</a>. “Railroad Transportation,” p. 114.</p> -</div> -<div class='footnote' id='f328'> -<p class='c007'><a href='#r328'>328</a>. Sen. Com. 1905, p. 844.</p> -</div> -<div class='footnote' id='f329'> -<p class='c007'><a href='#r329'>329</a>. <cite>Atlantic Monthly</cite>, vol. 73, p. 803, June, 1894.</p> -</div> -<div class='footnote' id='f330'> -<p class='c007'><a href='#r330'>330</a>. E. P. Alexander in “Railway Practice,” p. 8.</p> -</div> -<div class='footnote' id='f331'> -<p class='c007'><a href='#r331'>331</a>. Ind. Com. iv, p. 194.</p> -</div> -<div class='footnote' id='f332'> -<p class='c007'><a href='#r332'>332</a>. 10 I. C. C. Decis. 1904, p. 58.</p> -</div> -<div class='footnote' id='f333'> -<p class='c007'><a href='#r333'>333</a>. Sen. Com., 1905, p. 19, Bacon.</p> -</div> -<div class='footnote' id='f334'> -<p class='c007'><a href='#r334'>334</a>. <em>Ibid.</em>, p. 19.</p> -</div> -<div class='footnote' id='f335'> -<p class='c007'><a href='#r335'>335</a>. J. C. Wallace of the American Shipbuilding Co., June 28, 1904, to the -Congressional Merchant Marine.</p> -</div> -<div class='footnote' id='f336'> -<p class='c007'><a href='#r336'>336</a>. See Wright’s letter printed in the speech of Senator Bacon of Georgia, -<cite>Congressional Record</cite>, April 25, 1904.</p> -</div> -<div class='footnote' id='f337'> -<p class='c007'><a href='#r337'>337</a>. Testimony of James J. Hill before the Marine Commission.</p> -</div> -<div class='footnote' id='f338'> -<p class='c007'><a href='#r338'>338</a>. 10 I. C. C. Decis. 1904, p. 81.</p> -</div> -<div class='footnote' id='f339'> -<p class='c007'><a href='#r339'>339</a>. Sen. Com. 1905, p. 919.</p> -</div> -<div class='footnote' id='f340'> -<p class='c007'><a href='#r340'>340</a>. <em>Ibid.</em>, p. 20. Glass, for example, costs 53 cents a hundred from Boston -to Chicago, while it will go all the way from Antwerp to Chicago for 40 cents, -and the railroads get only a fraction of the through charge.</p> -</div> -<div class='footnote' id='f341'> -<p class='c007'><a href='#r341'>341</a>. Ind. Com. iv, p. 194.</p> -</div> -<div class='footnote' id='f342'> -<p class='c007'><a href='#r342'>342</a>. I. C. C. Beef Hearing, Dec. 1901, pp. 106–107; see also pp. 87, 88.</p> -</div> -<div class='footnote' id='f343'> -<p class='c007'><a href='#r343'>343</a>. Sen. Com. 1905, p. 1462.</p> -</div> -<div class='footnote' id='f344'> -<p class='c007'><a href='#r344'>344</a>. See evidence adduced in Chapter II. The words of the Industrial Commission -are still true: “There seems to be a general agreement that the issue -of free passes is carried to a degree which makes it a serious evil.... Passes -are still frequently granted to the members of State and national legislatures -and to public officers of many classes.... And stress is often laid on the -opinion that the issue of passes to public officers and legislators involves an -element of bribery.” (Vol. iv, p. 18.)</p> -</div> -<div class='footnote' id='f345'> -<p class='c007'><a href='#r345'>345</a>. Salaries are paid to favored persons; stock is given to influential people; -and tips on the market are given to congressmen and others whose favor may -be of advantage. And the railroads act against those they dislike as vigorously -as they act in favor of their friends. A curious illustration of the -extent to which railways will sometimes go in their breaches of neutrality -occurred in connection with the recent trip of Thomas W. Lawson in the -West. During the Chatauqua exercises at Ottawa, Kansas, the Santa Fe -advertised specials to run every day. The day that Lawson was to speak, -however, no specials ran, and thousands of people were unable to go, as they -had expected, to hear the man who was attacking Standard Oil and its allies. -The specials ran as advertised every day up to “Lawson Day,” and began -running again the day after. The Santa Fe may not approve of Mr. Lawson’s -statements and in common with all other citizens it has the right to oppose -him with disproof, but isn’t it a little strange in this land of liberty, free -speech, and equal rights, for one of the best railroads in the country to -boycott a Chatauqua day because a man it does not approve of is to speak?</p> - -<p class='c007'>Similar experiences with the railroad service are reported from the Chatauqua -at Fairbury, Neb., when Lawson spoke there.</p> -</div> -<div class='footnote' id='f346'> -<p class='c007'><a href='#r346'>346</a>. Mr. Appleton Morgan, writing in the <cite>Popular Science Monthly</cite> for -March, 1887, said (p. 588): “Rebates and discriminations are neither peculiar -to railways nor dangerous to the ‘republic.’ They are as necessary and as -harmless to the former as is the chromo which the seamstress or the shopgirl -gets with her quarter-pound of tea from the small tea-merchant, and no -more dangerous to the latter than are the aforesaid chromos to the small -recipients.”</p> - -<p class='c007'>General Manager Van Etten of the B. & A. says discrimination is the -American principle. You find it everywhere. You buy goods at wholesale -much cheaper than you can get them at retail. It is the same with gas and -water and electric light.</p> - -<p class='c007'>A number of railroad men take the view that “railroad service” is a commodity -to be sold like any other sort of private property at whatever price -the owner can get or chooses to take.</p> - -<p class='c007'>The trouble with these statements (aside from the quantity plea which -may be allowed within reasonable limits) is that the differences between railway -service and ordinary mercantile service are not taken into account.</p> - -<p class='c007'>If people found they were unfairly treated by the bakeries or groceries -or shoe stores of a town, it would be easy to establish a new store co-operatively -or otherwise, that would be fair and reasonable, and that possibility -keeps the store fair as a rule even where there is no direct competition. But -when the railways do not deal justly with the people of a town they cannot -build a new road to Chicago or San Francisco. It is the monopoly element, -together with the vital and all-pervading influence of transportation, that -differentiates the railroad service from any ordinary sort of commerce. If -bread stores or shoe stores combined, and, by means of control of raw material -or transportation facilities, erected a practical monopoly or group of -monopolies, and favoritism were shown in the sale of goods by means of -which those who were favored by the monopolists got all the chromos and -low rates, and grew prosperous and fat, while those who were not favored -went chromoless and grew thin in body and emaciated in purse, it is not -improbable that the President would write a message on the bread question -and the leather question, and a Senate committee would be considering legislation -to alleviate the worst evils of the bread and shoe monopolies without -stopping the game entirely.</p> -</div> -<div class='footnote' id='f347'> -<p class='c007'><a href='#r347'>347</a>. In their established tariffs our railroads do apply the same rates per -hundred whether the goods moved in carloads or train loads. The Commission -has held that the law requires this, and Commissioner Prouty says that -the open adoption of any different rule would create an insurrection that -Congress would hear from from all parts of the country; but he thinks -that in certain cases, live-stock and perishable fruit for example, the railroads -should have a right to make lower rates by the train-load than by the carload. -In reference to cost of service there is ground for such a difference, but on -grounds of public policy is it not a mistake to favor the giant shipper in this -way and so help the building of trusts and monopolies?</p> -</div> -<div class='footnote' id='f348'> -<p class='c007'><a href='#r348'>348</a>. Sixth Annual Report, Interstate Commerce Commission, p. 7.</p> -</div> -<div class='footnote' id='f349'> -<p class='c007'><a href='#r349'>349</a>. <cite>Outlook</cite>, July 1, 1905, p. 577.</p> -</div> -<div class='footnote' id='f350'> -<p class='c007'><a href='#r350'>350</a>. We have seen earlier in this chapter that a number of railroad men and -others told the Senate Committee that they believed rebates and discriminations -to have ceased. In his excellent book, “The Strategy of Great Railroads,” -Mr. Spearman says: “Alexander J. Cassatt has made unjust discrimination in -railroad traffic a thing of the past.” Sometimes we are assured: “There can -be no doubt but that, on the whole, the freight rates of the country have been -adjusted in very nearly the best way possible for the upbuilding of the country’s -commerce.” (See “Freight Rates that were made by the Railroads,” -W. D. Taylor, <cite>Review of Reviews</cite>, July, 1905, p. 73.) For one who has in -mind the facts brought out in this book, comment on these statements is hardly -necessary. There is no doubt that President Cassatt is a railroad commander -of exceptional power, but he has not vanquished the smokeless rebate, nor -driven the hosts of unjust discrimination from the railroads of the United -States.</p> -</div> -<div class='footnote' id='f351'> -<p class='c007'><a href='#r351'>351</a>. Ind. Com. Q. & Ans. iv, p. 596.</p> -</div> -<div class='footnote' id='f352'> -<p class='c007'><a href='#r352'>352</a>. Sen. Com. 1905, p. 1474.</p> -</div> -<div class='footnote' id='f353'> -<p class='c007'><a href='#r353'>353</a>. Sen. Com. 1905, p. 1521. The Texas Railway Commission says: “It -is plain that, if a railway company is permitted to become interested in any -kind of business competitive with business in the carrying on of which for -others it is engaged, the business in which it is interested can be made to -prosper at the expense of the business in which it has no interest. The -temptation to unfair discrimination in such a case is so powerful that it -ought to be removed.” (Report, 1896, p. 29.)</p> -</div> -<div class='footnote' id='f354'> -<p class='c007'><a href='#r354'>354</a>. Sen. Com. 1905, p. 17.</p> -</div> -<div class='footnote' id='f355'> -<p class='c007'><a href='#r355'>355</a>. I. C. C. Rep. 1898, p. 6.</p> -</div> -<div class='footnote' id='f356'> -<p class='c007'><a href='#r356'>356</a>. I. C. C. Rep. 1898, p. 8.</p> -</div> -<div class='footnote' id='f357'> -<p class='c007'><a href='#r357'>357</a>. On pages 65 and 66 of the last Report, Dec. 1905, the Commission discusses -a decision of the Circuit Court for the Southern District of New York, -in June last, to the effect that a <i><span lang="la" xml:lang="la">subpœna duces tecum</span></i>, commanding the secretary -and treasurer of a corporation supposed to have violated the law to testify -before the grand jury, and bring numerous agreements, letters, telegrams, -etc.,—practically all the correspondence and documents of the company originating -since the date of its origin,—to enable the district attorney to ascertain -whether evidence of the alleged breach of law exists, constitutes an unreasonable -search and seizure of papers prohibited by the Fourth Amendment to the -Constitution.</p> -</div> -<div class='footnote' id='f358'> -<p class='c007'><a href='#r358'>358</a>. Sen. Com. 1905, pp. 2899–2901, 2911.</p> -</div> -<div class='footnote' id='f359'> -<p class='c007'><a href='#r359'>359</a>. Sen. Com. 1905, p. 829.</p> -</div> -<div class='footnote' id='f360'> -<p class='c007'><a href='#r360'>360</a>. I. C. C. Beef Hearing, Dec. 1901, pp. 100, 101.</p> -</div> -<div class='footnote' id='f361'> -<p class='c007'><a href='#r361'>361</a>. I. C. C. Beef Hearing, Dec. 1901, pp. 114–115.</p> -</div> -<div class='footnote' id='f362'> -<p class='c007'><a href='#r362'>362</a>. <em>Ibid.</em>, p. 126.</p> -</div> -<div class='footnote' id='f363'> -<p class='c007'><a href='#r363'>363</a>. Report of Oregon Railway Commission, 1889, p. 32.</p> -</div> -<div class='footnote' id='f364'> -<p class='c007'><a href='#r364'>364</a>. See above, p. 237.</p> -</div> -<div class='footnote' id='f365'> -<p class='c007'><a href='#r365'>365</a>. See above, p. 113.</p> -</div> -<div class='footnote' id='f366'> -<p class='c007'><a href='#r366'>366</a>. “There is ample law to-day” to stop rebates and unjust discriminations, -says President Tuttle of the Boston and Maine (Sen. Com. 1905, p. 951), and -he backs up his statement with vigorous reasons for believing that the Government -has never earnestly enforced existing laws. President Ramsey of the -Wabash also says that the present law is ample to cover every unjust charge, -and no further legislation is needed to stop discrimination (Same, p. 1959).</p> - -<p class='c007'>George R. Peck, general counsel for the Chicago, Milwaukee & St. Paul, -testified that “existing law is entirely adequate” (Same, p. 1301).</p> - -<p class='c007'>Mr. Robbins, manager of the Armour Car-Lines and director in Armour -& Co., declares that the “Elkins Law is ample” (Same, p. 2387). See also -p. 2117, James J. Hill; pp. 2179, 2181, Carle; p. 2228, Grinnell; p. 3068, -Faxon; pp. 3274, 3276, 3285, 3290, Elliott; p. 2360, Woodworth; p. 2829, -Smith.</p> -</div> -<div class='footnote' id='f367'> -<p class='c007'><a href='#r367'>367</a>. A number of witnesses declare that the delays and uncertainties and -inadequacies of redress under existing laws discourage shippers from efforts -to obtain relief. Mr. C. W. Robinson, representing the New Orleans Board -of Trade and the Central Yellow Pine Association, says they had such bad -luck with their lumber cases before the United States courts that they are -discouraged.</p> - -<p class='c007'>“‘Don’t you think that the question of rebates and discriminations is already -covered by law and can be stopped by summary proceedings?’</p> - -<p class='c007'>“<span class='sc'>Mr. Robinson.</span> That they are not stopped is patent to every one who -uses a railway company as a shipper and who keeps his eyes open.</p> - -<p class='c007'>“‘Has there been any suit brought within the last two or three years for -rebates and discriminations in this section of the country?’</p> - -<p class='c007'>“<span class='sc'>Mr. Robinson.</span> No; generally speaking, we have decided down there that -life is too short to litigate with the railroad companies” (Sen. Com. 1905, -p. 2492).</p> - -<p class='c007'>Governor Cummins of Iowa says that no suits have been brought in Iowa -for discrimination under the Elkins Law because the remedy under that law -is regarded as inadequate (Sen. Com. p. 2081). It appears that only one case, -the Wichita sugar differential, is before the I. C. C. under the Elkins Law -(Sen. Com. p. 2874).</p> -</div> -<div class='footnote' id='f368'> -<p class='c007'><a href='#r368'>368</a>. Fifer, Adams, etc., Sen. Com. pp. 2923, 3338.</p> -</div> -<div class='footnote' id='f369'> -<p class='c007'><a href='#r369'>369</a>. Vining, Sen. Com. p. 1691, Knapp, p. 3294, etc. Robbins, however, manager -of the Armour Car-Lines, says they are opposed to being made common -carriers (pp. 2384, 2397, 2400). He says they do not indulge in rebates, generally -speaking (pp. 2382, 2387, 2403), and thinks they would be worse off if -put under the Interstate Law (pp. 2390, 2397, 2401).</p> -</div> -<div class='footnote' id='f370'> -<p class='c007'><a href='#r370'>370</a>. President Roosevelt, Governor La Follette, Governor Cummins, Sen. -Com. p. 2046; Professor Ripley, pp. 2330, 2338: Commissioner Knapp, p. 3305, -Commissioner Prouty, pp. 2794, 2873, 2881, and 2886, where he says: “I do -not think the Commission has to-day in its docket a case that can be satisfactorily -disposed of without determining the rate for the future.” Commissioner -Clements, p. 3243, Commissioner Fifer, pp. 3344, 3350, and many other witnesses; -also writers and speakers throughout the country.</p> - -<p class='c007'>On the other hand, James J. Hill, President of the Great Northern, says he -cannot imagine a greater misfortune than to attempt to fix rates by law, p. 1486; -it would hamper transportation and hinder development. President Tuttle -says that rate-making is practically the only property right the railways have, -p. 913. Railway men generally are strongly opposed to fixing rates by commissions.</p> -</div> -<div class='footnote' id='f371'> -<p class='c007'><a href='#r371'>371</a>. Sen. Com. p. 3482, N. Y. Chamber of Commerce.</p> -</div> -<div class='footnote' id='f372'> -<p class='c007'><a href='#r372'>372</a>. Several witnesses suggest this. See, for example, Sen. Com. p. 3280. -But James J. Hill says that if present laws were enforced not one of the car-lines -could exist a moment, p. 1486.</p> -</div> -<div class='footnote' id='f373'> -<p class='c007'><a href='#r373'>373</a>. Professor Ripley, p. 2345, Fordyce, p. 2202, and many railroad men; see -below, p. 265. But see p. 61, Cowan; p. 822, Victor Morawetz; pp. 973 and -1003, President Tuttle.</p> -</div> -<div class='footnote' id='f374'> -<p class='c007'><a href='#r374'>374</a>. James J. Hill, p. 1521.</p> -</div> -<div class='footnote' id='f375'> -<p class='c007'><a href='#r375'>375</a>. Knapp, p. 3299; without such a provision the old roads can cripple a new -road unless it goes clear across the continent.</p> -</div> -<div class='footnote' id='f376'> -<p class='c007'><a href='#r376'>376</a>. Morawetz, pp. 818, 824; Bacon, pp. 16, 23; Davies, p. 3470; and Report of -Industrial Commission. Publicity is an excellent aid, but is insufficient alone. -It must keep steady company with adequate legislation and efficient enforcement -of it. What has been the effect of publicity on the Standard Oil Trust -up to date?</p> -</div> -<div class='footnote' id='f377'> -<p class='c007'><a href='#r377'>377</a>. Commissioner Prouty, p. 2912. “That would stop discriminations,” said -the Commissioner. “Unless they got possession of the man,” said Senator -Dolliver.</p> -</div> -<div class='footnote' id='f378'> -<p class='c007'><a href='#r378'>378</a>. Judge Gaynor proposes that the traffic managers shall be appointed by -the Government. The present writer has suggested that the public might be -represented on the board of direction in consideration of the franchises, etc.</p> -</div> -<div class='footnote' id='f379'> -<p class='c007'><a href='#r379'>379</a>. <cite>Arena</cite>, vol. 24, p. 569, Parsons.</p> -</div> -<div class='footnote' id='f380'> -<p class='c007'><a href='#r380'>380</a>. Many of the States have strong laws, but the inharmonious, uncoordinated -efforts of individual States have proved of little avail against the -giant railway systems. Of the 31 States which have established railway -commissions, 22 have given the commissions more or less of the rate-making -power. For example, the Alabama Code, 1886, gives the Commission authority -“to revise the tariffs and increase or reduce any of the rates.” The California -Constitution, 1880, confers power “to establish rates;” Florida Laws, -1887, “to make and fix reasonable and just rates;” Georgia Code, 1882, “to -make reasonable and just rates;” Illinois Laws, 1878, “to make for each -railway a schedule of reasonable maximum rates;” Iowa, 1888, and South -Carolina, 1888, the same as Illinois; Minnesota, 1887, power “to compel -railways to adopt such rates and classification as the Commission declares to -he equal and reasonable;” South Dakota, 1890, the same; Mississippi, 1884, -“to revise tariffs;” New Hampshire, 1883, “to fix tables of maximum charges.” -(See 63 N. H. 259.) Kansas: on complaint and proof of unreasonable charge -Commission may fix reasonable rates, and if companies don’t comply they may -be sued for damages. The Massachusetts Commission has “authority to revise -the tariffs and fix the rates for the transportation of milk” (158 Mass. 1). -In New York the board may notify the railways of changes in the rates, etc., -it deems requisite, and the Supreme Court may in its discretion issue mandamus, -etc., subject to appeal. In Nebraska the State Supreme Court has held -that general language prohibiting unreasonable rates, and giving the Commission -power to enforce the law, is sufficient to confer authority to fix -reasonable rates in place of those found unreasonable, such authority being -essential to the efficient execution of the law against excessive rates (22 Neb. -313).</p> - -<p class='c007'>In none of the States does the power to regulate rates appear to have produced -results of much value. In some States, Georgia, Texas, Nebraska, Iowa, -etc., the power has been at times vigorously used, but the effect has been to -antagonize the railroads, which have so much power that is beyond the reach -of any State Commission that they can arrange their tariffs and service so as -to work against the aggressive States and disgust the people with the consequences -of trying to control the rates. Senator Newlands, who is sincerely on -the people’s side in the struggle for justice in transportation, voiced the common -opinion when he said in the United States Senate, January 11, 1905, -“As to the rate-regulating power, my judgment is, and it is the belief of -almost all experienced men in this country, that the rate-regulating power -exercised by the States has not, as a rule, been beneficially exercised.”</p> -</div> -<div class='footnote' id='f381'> -<p class='c007'><a href='#r381'>381</a>. The Bill provides that “Whenever ... the Interstate Commerce Commission -shall ... make any finding or ruling declaring any rate, regulation -or practice whatsoever affecting the transportation of persons or property to be -unreasonable or unjustly discriminatory the Commission shall have power and -it shall be its duty to declare and order what shall be a just and reasonable rate, -practice or regulation to be ... imposed or followed in the future in place of -that found to be unreasonable” etc. It also provides that the order of the Commission -shall take effect 30 days after notice, but may on appeal within 60 days -be reviewed by a special transportation court having exclusive jurisdiction of -all such cases. By Section 12, the case is to be reviewed on the original record, -except when there is newly discovered evidence which was not known at the -hearing before the Commission, or could not have been known with due diligence, and the findings of fact by the Commission are <i><span lang="la" xml:lang="la">prima facie</span></i> evidence of -each and every fact found. The only appeal from the court of transportation -is to the United States Supreme Court.</p> -</div> -<div class='footnote' id='f382'> -<p class='c007'><a href='#r382'>382</a>. I. C. C. Rep. 1905, p. 9.</p> -</div> -<div class='footnote' id='f383'> -<p class='c007'><a href='#r383'>383</a>. The granting of such power of inspection and publicity has been urged -by the Commission upon Congress in previous reports. On page 11 of the -Report for December, 1905, the Commission says: “We have also called -attention to the fact that certain carriers now refuse to make the statistical -returns required by the Commission. For example, railways are required, -among other things, to indicate what permanent improvements have been -charged to operating expenses. Without an answer to this question it is -impossible to determine to what extent gross earnings have been used in -improving the property and the actual cost of operation proper.... Certain -important railways decline to furnish this information at all, and others furnish -it in a very imperfect and unsatisfactory manner.”</p> -</div> -<div class='footnote' id='f384'> -<p class='c007'><a href='#r384'>384</a>. I. C. C. Rep. 1905, pp. 9, 10.</p> -</div> -<div class='footnote' id='f385'> -<p class='c007'><a href='#r385'>385</a>. This clause together with the words italicized in the next paragraph -make the ruling of the Commission final so far as the merits of the case -are concerned. (See Appendix <a href='#AppendixB'>B</a>.)</p> -</div> -<div class='footnote' id='f386'> -<p class='c007'><a href='#r386'>386</a>. As the galley proofs of this book go back to the printer, the Hepburn -Bill has passed the House by a big majority. If passed by the Senate and -put in force, it promises to operate as a serious check upon the abuses connected -with private cars, terminal railroads and midnight tariffs, but it does -not touch at all nine-tenths of the methods of discrimination. We have seen -that between 60 and 70 different methods of unjust discrimination between -persons and places are in use in our railway business to-day. The fixing of -a maximum rate cannot prevent either secret rate cutting or favoritism in -facilities and services, or even open discrimination in the arrangement of -classifications and adjustment of rates between different localities.</p> - -<p class='c007'>No doubt this law in the hands of an able and honest commission would -do much good, but it cannot reach the heart of the railroad problem, which is -the unjust discrimination between persons and places. No amount of maximum -rate-fixing or prescribing of regulations can destroy discrimination so -long as we have the pressure of great private interests driving the railroads -into the practice of favoritism.</p> - -<p class='c007'>The history of railroad legislation in this country shows that the railways -do not respect or obey the law when it conflicts with the fundamental financial -interests and orders of the railway owners and trust magnates, whose gigantic -power represents the real sovereignty and control in America to-day.</p> - -<p class='c007'>On page 3 of the House Report, 59th Congress, 1st Session, No. 591, -January 27, 1906, accompanying the Hepburn Bill the Committee on Interstate -and Foreign Commerce says: “It is proper to say to those who complain -of this legislation that the necessity for it is the result of the misconduct of -carriers.... If the carriers had in good faith accepted existing statutes and -obeyed them there would have been no necessity for increasing the powers -of the Commission or the enactment of new coercive measures.”</p> - -<p class='c007'>What reason is there to believe that the railroads will accept a new -statute in good faith and obey it any more than any former law? On the -contrary, the probability is that if the Hepburn Bill becomes a law the main -effect will be to compel railway managers and counsel to sit up nights for a -time planning methods to evade and overcome the new provisions. Even if -Congress gave the full power at first demanded by the President, to fix the -precise rate to be charged, the general effect would probably be that railways -would exert themselves to control the Commission. They have always at -hand the weapon of practically interminable litigation, and it is very doubtful -whether the railroad representatives in the United States Senate will permit -any law to pass until it is amended so that the review in the courts shall go -to the merits of the Commission’s order in each case. Powerful interests are -opposed to any provision that will permit the fixing of a rate, even a maximum, -to go into effect before it is connected already with the Federal courts.</p> -</div> -<div class='footnote' id='f387'> -<p class='c007'><a href='#r387'>387</a>. See statement earlier in this discussion.</p> -</div> -<div class='footnote' id='f388'> -<p class='c007'><a href='#r388'>388</a>. Sen. Com. 1905, p. 3485.</p> -</div> -<div class='footnote' id='f389'> -<p class='c007'><a href='#r389'>389</a>. Dept. of Commerce, Monthly Summary, April, 1900, p. 3991.</p> -</div> -<div class='footnote' id='f390'> -<p class='c007'><a href='#r390'>390</a>. See Ind. Com. vols. iv and ix, and Hudson, Hadley, etc.</p> -</div> -<div class='footnote' id='f391'> -<p class='c007'><a href='#r391'>391</a>. They tend to stability, economy, and efficiency, diminishing the fluctuation -of rates, railroad wars, and the wastes of competition, and improving the -service by better co-ordination, distribution of traffic, etc.</p> -</div> -<div class='footnote' id='f392'> -<p class='c007'><a href='#r392'>392</a>. See the powerful statements of President Ingalls, President Fish, Paul -Morton, Professor Seligman, Commissioner Prouty, etc., Ind. Com. vol. iv; -and statements of Professor Ripley, Morawetz, Fordyce, etc., Sen. Com. 1905. -It is absurd to forbid co-operation for the maintenance of reasonable rates -and prevention of superfluous transportation, or any other honest purpose. -Traffic agreements may secure a co-ordination of service approaching that -which would be attained by unity of management. The fetish-worship of -competition is one of the prime curses of our economic ignorance. We might -as well worship destruction, injustice, and inefficiency. Moreover, competition -of the kind that protects the public from oppressive rates cannot be maintained -in the railway world. Let the railways unite, and then control them, -insisting on the dominance of the public interest so far as necessary to accomplish -justice.</p> -</div> -<div class='footnote' id='f393'> -<p class='c007'><a href='#r393'>393</a>. The United States Supreme Court held in the Trans-Missouri Case, -March 22, 1897, and the Joint Traffic Association Case, Oct. 24, 1898, that -railroads cannot lawfully agree on rates to competitive points. But no law -or decision can well prevent railroad managers from meeting and coming to -an understanding that they will adopt the same rates to such points. No -contract in restraint of trade or to limit competition is necessary,—if each -railroad publishes the same rates between “competitive” points and maintains -them, competition as to rates is killed as effectually as if there were a pool -or a traffic association with a written agreement.</p> -</div> -<div class='footnote' id='f394'> -<p class='c007'><a href='#r394'>394</a>. Sen. Com. 1905, pp. 2923, 3338.</p> -</div> -<div class='footnote' id='f395'> -<p class='c007'><a href='#r395'>395</a>. Sen. Com. 1905, p. 3482.</p> -</div> -<div class='footnote' id='f396'> -<p class='c007'><a href='#r396'>396</a>. <em>Ibid.</em>, pp. 3485, 3486. The railroad managers decided to notify offending -railroads that unless rates were restored, the lowest cut rates that had -been made by any line would be adopted by all, to punish the rebaters and -stop them from getting business thereby. At a meeting July 26, 1882, 30 -railroads being represented, a resolution was unanimously adopted, directing -agents at connecting points to examine waybills, and when rates were found -to have been cut, to hold the freight at the expense of the initial line until -the waybills had been corrected.</p> -</div> -<div class='footnote' id='f397'> -<p class='c007'><a href='#r397'>397</a>. Sen. Com. 1905, p. 1908, and index, “Rate-Making.”</p> -</div> -<div class='footnote' id='f398'> -<p class='c007'><a href='#r398'>398</a>. The Senate is too full of men interested in railroads in one way or -another to make it easy to pass any measure that might seriously affect -either the power or the profits of the roads.</p> -</div> -<div class='footnote' id='f399'> -<p class='c007'><a href='#r399'>399</a>. President Tuttle agrees with the Commission on this point. In his testimony -to the Senate Committee, 1905, he said that the company’s books -would not show rebates, etc., “unless they wanted them to. I will say to you -frankly that if a company intended to evade the law by giving rebates and -commissions they would find some way of so covering them up that all the -experts on the face of the earth could not find them. If you assume at the -beginning that the railroad management is deliberately going into violations -of the law it is not going to make records of those things which can ever be -found out.” (Sen. Com. 1905, p. 952.) But President Tuttle said: “There is -ample opportunity to ascertain if rebates exist. There are always opportunities. -The competitive shipper knows about it. There is always enough of -the loose end hanging out somewhere so that if the Interstate Commerce -Commission or whoever is authorized to move in those matters will take the -time to proceed upon the lines of information that they can always get they -will be easily ferreted out and punished. I do not think there is any evidence -that the Interstate Commerce Commission has tried to enforce the Elkins Law.” (Same, p. 951.) Shippers have, however, often stated that they -felt sure some concession was being made to their rivals, but they could not -tell what, and in many cases there is simply a vague suspicion; no one knows -whether others are paying the tariff rates or not. And railroad men have -admitted, as in the B. & A. case, that no shipper knew what rates others were -getting.</p> -</div> -<div class='footnote' id='f400'> -<p class='c007'><a href='#r400'>400</a>. Sen. Com. 1905, p. 3644.</p> -</div> -<div class='footnote' id='f401'> -<p class='c007'><a href='#r401'>401</a>. Out of 37 passenger cases (20 rate cases and 17 miscellaneous) the decision -was favorable to the complainant in 9; and in 316 freight cases the -decision was for the complainant in 185 cases. In 70 of the freight cases the -complaint was of excessive charges (half of them charging discrimination -also, or relative excess as well as absolute excess); 119 related to charges -relatively unreasonable; 52 concerned long and short haul abuses; 20 unreasonable -classification, 8 unfair distribution of cars, 41 miscellaneous. Ninety-six -of the 316 freight cases were dismissed, 13 settled while pending, 4 left -without a general statement and no order, and 17 held for further action. -Nearly 90 percent of all the cases, passenger and freight, related directly to -some form of discrimination, and indirectly discrimination of some sort was -an element in practically every case.</p> -</div> -<div class='footnote' id='f402'> -<p class='c007'><a href='#r402'>402</a>. The 8 cases are the New York and Northern Case (3 I. C. C. 542) the -Social Circle Case (4 I. C. C. 744) the Minneapolis Case (5 I. C. C. 571) the -Colorado Fuel and Iron Case (6 I. C. C. 488) the St. Cloud Case (89 I. C. C. -346) the Savannah Case (8 I. C. C. 377) the Tifton Case (9 I. C. C. 160) and -the California Orange Routing Case (9 I. C. C. 182). Mr. Willcox thinks -the Minneapolis Case and the Colorado Case should be crossed off because the -carriers complied with the orders while suit was pending, so that there was -no decision on the merits. He says the decision was not on the merits in the -New York Case, the St. Cloud Case, or the Tifton Case. In the Social Circle -Case the Supreme Court sustained the order in respect to discrimination, but -reversed it so far as it attempted to fix a maximum rate. In the Orange -Case the Circuit Court sustained the Commission, but an appeal was taken at -once to the Supreme Court. In the Savannah Naval Stores Case the Circuit -Court sustained the Commission and no appeal was taken. Two cases in -favor of the Commission in the Court of Appeals and one-half a case in the -Supreme Court, and one of the circuit decisions is on appeal—one and one-half -final affirmatives on the merits out of 34. One would think that Mr. -Willcox might allow the Commission the three cases that were decided in their -favor although the court did not find it necessary to go into the merits of the -matter, and he seems to be less generous about the Colorado Case than Mr. -Newcomb, who says the Commission was sustained by the court.</p> -</div> -<div class='footnote' id='f403'> -<p class='c007'><a href='#r403'>403</a>. Work of the Interstate Commission, p. 14, 1905. (See Appendix <a href='#AppendixA'>A</a>.)</p> -</div> -<div class='footnote' id='f404'> -<p class='c007'><a href='#r404'>404</a>. As the average time required to reach a final decision in a case that goes -from the Commission through the Federal courts up to the United States Supreme -Court is 7½ years, it is clear that there is plenty of time for the accumulation -of a congregation of cases, birds of a feather, waiting for judgment, -on the same point.</p> -</div> -<div class='footnote' id='f405'> -<p class='c007'><a href='#r405'>405</a>. Sen. Com. 1905, p. 2888.</p> -</div> -<div class='footnote' id='f406'> -<p class='c007'><a href='#r406'>406</a>. The railroads would prefer a court to a Commission if any public body -is to have power over rates. They know that proceedings in court are likely -to be troubled with long delays, and great expense, and that courts are very -delicate about determining what is a reasonable rate. In the Reagan case -(154 U. S. 362) the Supreme Court says: “It has always been recognized -that if the carrier attempted to charge a shipper an unreasonable sum the -courts had jurisdiction to inquire into that matter and award to the shipper -any amount exacted from him in excess of a reasonable rate; and, also, in a -reverse case, to render judgment in favor of the carrier for the amount found -to be a reasonable rate.”</p> - -<p class='c007'>In any case of suit by a shipper to recover damages for unreasonable -charges the court would have to determine what was a reasonable rate in -order to fix the measure of damages, but Chairman Knapp of the I. C. C. -says he does not know of a case in which suit was ever brought (Sen. Com. -1905, p. 3301). The fact that very many complaints have been made of -unreasonable rates and no suits brought in the courts indicates that court -procedure is regarded as inadequate. Courts are by nature judicial, not legislative -or executive. And the remedy which can be administered by them -in these railroad cases is uncertain, limited, and indirect. (Sen. Com. -p. 3362.)</p> -</div> -<div class='footnote' id='f407'> -<p class='c007'><a href='#r407'>407</a>. Sen. Com. 1905, pp. 3297, 3298.</p> -</div> -<div class='footnote' id='f408'> -<p class='c007'><a href='#r408'>408</a>. Sen. Com. 1905, p. 975.</p> -</div> -<div class='footnote' id='f409'> -<p class='c007'><a href='#r409'>409</a>. 9 I. C. C. Decis. 318, Nov. 17, 1902.</p> -</div> -<div class='footnote' id='f410'> -<p class='c007'><a href='#r410'>410</a>. 10 I. C. C. Decis. 590; Rep. 1905, p. 31.</p> -</div> -<div class='footnote' id='f411'> -<p class='c007'><a href='#r411'>411</a>. Essex Milk Producers’ Association <em>v.</em> Railroads, 7 I. C. C. Decis. 92, -March 13, 1897. See also Howell <em>v.</em> New York, Lake Erie, and Western, -2 I. C. C. Decis. 272, equal milk rates from all distances unlawful.</p> -</div> -<div class='footnote' id='f412'> -<p class='c007'><a href='#r412'>412</a>. 11 I. C. C. Decis. 31.</p> -</div> -<div class='footnote' id='f413'> -<p class='c007'><a href='#r413'>413</a>. Sen. Com. 1905, p. 1339.</p> -</div> -<div class='footnote' id='f414'> -<p class='c007'><a href='#r414'>414</a>. Sen. Com. 1905, p. 1165. The fact is that neither the Elkins Bill nor -the Esch-Townsend Bill reaches the private car abuses or terminal railroads, -or flying tariffs, or other evasive forms of discrimination, and neither adds -much to the power of the Commission to deal with the subject. (See Sen. -Com. pp. 2889, 2905, 2911).</p> -</div> -<div class='footnote' id='f415'> -<p class='c007'><a href='#r415'>415</a>. Sen. Com. 1905, pp. 1675, 1676.</p> -</div> -<div class='footnote' id='f416'> -<p class='c007'><a href='#r416'>416</a>. See Chamber of Commerce <em>v.</em> C. M. & St. P. Rd., 7 I. C. C. Decis. 1898, -p. 510 and I. C. C. Rep. 1898, p. 24.</p> -</div> -<div class='footnote' id='f417'> -<p class='c007'><a href='#r417'>417</a>. The reasons for and against public ownership of railroads are dealt with -in the testimony of the writer before the Industrial Commission, vol. ix., -pp. 123–193, 883–890. President Roosevelt had the possibility of public ownership -in mind when he said in his message that we must choose between an -increase of existing evils, or increased Government supervision, or a “still -more radical policy.”</p> -</div> -<div class='footnote' id='f418'> -<p class='c007'><a href='#r418'>418</a>. The railways of Italy were operated by private companies when I was -there; since then, in 1905, the Government has undertaken the operation of -them.</p> -</div> -<div class='footnote' id='f419'> -<p class='c007'><a href='#r419'>419</a>. A few illustrations of the vigorous manner in which this law works out -in practice may be of advantage here:</p> - -<p class='c007'>The Hungarian Government at a single stroke, in 1889, reduced State railway -fares 40 to 80 percent. Austria and Prussia have also made great reductions -in railway charges. Belgium started in the thirties with the very low -rate of ⅘ of a cent on her public railways. In New Zealand and Australia -also the Government managements have adopted the settled policy of reducing -railroad rates as fast as possible.</p> - -<p class='c007'>When England made the telegraph public in 1870, rates were lowered 30 -to 50 percent at once, and still further reductions were afterwards made.</p> - -<p class='c007'>When France took over the telephone in 1889, rates were reduced from $116 -to $78 per year in Paris, and from $78 to $39 elsewhere, except in Lyons, -where the charge was made $58.50.</p> - -<p class='c007'>Private turnpikes, bridges and canals levy sufficient tolls to get what profit -may be possible; but when the same highways, bridges and canals become -public the tolls are often abolished entirely, rendering such facilities of transportation -free, and when charges are made they are lower than the rates of -private monopolies under similar conditions, and generally reach the vanishing -point as soon as the capital is paid off or before.</p> - -<p class='c007'>When Glasgow took the management of her street railways in 1894, fares -were reduced at once about 33 percent, the average fare dropped to about 2 -cents, and 35 percent of the fares were 1 cent each. Since then further reductions -have been made, and the average fare now is little more than a cent -and a half; over 50 percent reduction in 6 years, while we pay the 5 cent fare -to the private companies in Boston and other cities of the United States the -same as we did 6 years ago, instead of the 2½ cent fare we would pay if the -same percentage of reduction had occurred here as in Glasgow.</p> - -<p class='c007'>According to Baker’s Manual of American Waterworks, the charges of -private water companies in the United States average 43 percent excess above -the charges of public waterworks for similar service. In some states investigation -shows that private water rates are double the public rates.</p> - -<p class='c007'>For commercial electric lighting Prof. John R. Commons says that private -companies charge 50 to 100 percent more than public plants.</p> - -<p class='c007'>We could offer many other illustrations of the law that public ownership -tends to lower rates than private monopoly, but this discussion may be sufficient -to indicate the complexion of the facts.</p> -</div> -<div class='footnote' id='f420'> -<p class='c007'><a href='#r420'>420</a>. The sixteenth annual report of the Commission, dated 1905, and covering -the year 1904, has come just in time for a note before the galleys are -made up into pages. Of the 103 suits entered before the Commission in 1904, -about a quarter (25) relate to undue preference, rebates, refusal or neglect to -afford such reasonable facilities as were accorded to others under similar -circumstances; and most of the other cases, charging unreasonable rates, etc., -were really based on some element of unjust discrimination in one form or -another. (See Appendix <a href='#AppendixB'>B</a>.)</p> -</div> -<div class='footnote' id='f421'> -<p class='c007'><a href='#r421'>421</a>. While this book is on the press, the eighth report, covering 1902 and -1903, has come to hand. More than half the 180 new complaints filed in the -2 years directly relate to questions of discrimination—undue preference, -rebates, denial of facilities accorded to others, excessive charges as compared -with other rates, etc., and nearly all the 180 cases involve discrimination -directly or indirectly. (See Appendix <a href='#AppendixB'>B</a>.)</p> -</div> -<div class='footnote' id='f422'> -<p class='c007'><a href='#r422'>422</a>. From the <cite>Progressive Review</cite>, vol. II, no. 11, pp. 441, 442, where a number -of facts relating to import rates are condensed from the testimony before -Parliamentary committees.</p> -</div> -<div class='footnote' id='f423'> -<p class='c007'><a href='#r423'>423</a>. See “The Railway Act” 1903.</p> -</div> -<div class='footnote' id='f424'> -<p class='c007'><a href='#r424'>424</a>. This and other phases of the problem relating to the comparison of private -management, government control, and government ownership, are more -fully dealt with in “The Railways, the Trusts and the People” by the same -author. Oct. 1905, Equity Series, 1520 Chestnut St., Philadelphia.</p> -</div> - -<div class='figcenter id002'> -<img src='images/i_365.jpg' alt='' class='ig001' /> -</div> -<div class='pbb'> - <hr class='pb c003' /> -</div> - -<div class='chapter ph2'> - -<div class='nf-center-c0'> -<div class='nf-center c004'> - <div>THE RAILWAYS, THE TRUSTS AND THE PEOPLE.</div> - </div> -</div> - -</div> - -<div class='nf-center-c0'> -<div class='nf-center c002'> - <div><span class='sc'>By Prof. FRANK PARSONS, Ph.D.</span></div> - <div class='c003'><em>Edited and Published by C. F. TAYLOR, M.D., Editor and Publisher of Equity Series, 1520 Chestnut Street, Philadelphia.</em></div> - <div class='c003'>THE CONTENTS ARE AS FOLLOWS:</div> - </div> -</div> - -<table class='table1'> - <tr><th class='c011' colspan='3'>PART I.</th></tr> - <tr> - <td class='c009'> </td> - <td class='c009'> </td> - <td class='c030'> </td> - </tr> - <tr> - <th class='c031' colspan='3'><span class='sc'>The Relations of the Railroads to the Public, or Vital Facts from the Railway History of the United States.</span></th> - </tr> - <tr> - <td class='c009'> </td> - <td class='c009'> </td> - <td class='c030'> </td> - </tr> - <tr> - <th class='c009'></th> - <th class='c009'> </th> - <th class='c030'><span class='sc'>Chapter</span></th> - </tr> - <tr> - <td class='c009' colspan='2'>The Railway Empire</td> - <td class='c030'>I.</td> - </tr> - <tr> - <td class='c009' colspan='2'>The Allied Interests</td> - <td class='c030'>II.</td> - </tr> - <tr> - <td class='c009' colspan='2'>Railway Favoritism</td> - <td class='c030'>III.</td> - </tr> - <tr> - <td class='c009' colspan='2'>Railways in Politics</td> - <td class='c030'>IV.</td> - </tr> - <tr> - <td class='c009' colspan='2'>Fostering Monopoly</td> - <td class='c030'>V.</td> - </tr> - <tr> - <td class='c009' colspan='2'>Watered Stock and Capital Frauds</td> - <td class='c030'>VI.</td> - </tr> - <tr> - <td class='c009' colspan='2'>Gambling and Manipulation of Stock</td> - <td class='c030'>VII.</td> - </tr> - <tr> - <td class='c009' colspan='2'>Railroad Graft and Official Abuse</td> - <td class='c030'>VIII.</td> - </tr> - <tr> - <td class='c009' colspan='2'>Railways and the Postal Service</td> - <td class='c030'>IX.</td> - </tr> - <tr> - <td class='c009' colspan='2'>The Express</td> - <td class='c030'>X.</td> - </tr> - <tr> - <td class='c009' colspan='2'>The Chaos of Rates</td> - <td class='c030'>XI.</td> - </tr> - <tr> - <td class='c009' colspan='2'>Taxation without Representation</td> - <td class='c030'>XII.</td> - </tr> - <tr> - <td class='c009' colspan='2'>Railways and Panics</td> - <td class='c030'>XIII.</td> - </tr> - <tr> - <td class='c009' colspan='2'>Railway Strikes</td> - <td class='c030'>XIV.</td> - </tr> - <tr> - <td class='c009' colspan='2'>Railway Wars</td> - <td class='c030'>XV.</td> - </tr> - <tr> - <td class='c009' colspan='2'>Defiance of Law</td> - <td class='c030'>XVI.</td> - </tr> - <tr> - <td class='c009' colspan='2'>Nullification of the Protective Tariff</td> - <td class='c030'>XVII.</td> - </tr> - <tr> - <td class='c009' colspan='2'>Railway Potentates</td> - <td class='c030'>XVIII.</td> - </tr> - <tr> - <td class='c009' colspan='2'>The Failure of Control, How Far and Why</td> - <td class='c030'>XIX.</td> - </tr> - <tr> - <td class='c009' colspan='2'>The Irrepressible Conflict</td> - <td class='c030'>XX.</td> - </tr> - <tr> - <td class='c009'> </td> - <td class='c009'> </td> - <td class='c030'> </td> - </tr> - <tr> - <td class='c009'> </td> - <td class='c009'> </td> - <td class='c030'> </td> - </tr> - <tr><th class='c011' colspan='3'>PART II.</th></tr> - <tr> - <td class='c009'> </td> - <td class='c009'> </td> - <td class='c030'> </td> - </tr> - <tr> - <td class='c031' colspan='3'><span class='sc'>The Railroad Problem in the light of Comparative Railroad History covering the Leading Systems of Three Continents.</span></td> - </tr> - <tr> - <td class='c009'> </td> - <td class='c009'> </td> - <td class='c030'> </td> - </tr> - <tr> - <th class='c009' colspan='2'> </th> - <th class='c030'><span class='sc'>Chapter</span></th> - </tr> - <tr> - <td class='c009' colspan='2'>The Problem</td> - <td class='c030'>XXI.</td> - </tr> - <tr> - <td class='c009' colspan='2'>The Supreme Test</td> - <td class='c030'>XXII.</td> - </tr> - <tr> - <td class='c009' colspan='2'>Lessons from Other Lands</td> - <td class='c030'>XXIII.</td> - </tr> - <tr> - <td class='c009' colspan='2'>The Aim</td> - <td class='c030'>XXIV.</td> - </tr> - <tr> - <td class='c009' colspan='2'>Contrasts in General Policy</td> - <td class='c030'>XXV.</td> - </tr> - <tr> - <td class='c009'> </td> - <td class='c009'>Location.—Construction.—Capitalization, etc.</td> - <td class='c030'> </td> - </tr> - <tr> - <td class='c009' colspan='2'>Management</td> - <td class='c030'>XXVI.</td> - </tr> - <tr> - <td class='c009'> </td> - <td class='c009'>Safety.—Service.—Economy.—Progress.</td> - <td class='c030'> </td> - </tr> - <tr> - <td class='c009' colspan='2'>The Rate Question</td> - <td class='c030'>XXVII.</td> - </tr> - <tr> - <td class='c009'> </td> - <td class='c009'>General Policy.—Rate Level under Public and Private Management.—Zone System.</td> - <td class='c030'> </td> - </tr> - <tr> - <td class='c009' colspan='2'>Employees</td> - <td class='c030'>XXVIII.</td> - </tr> - <tr> - <td class='c009' colspan='2'>Political, Industrial, and Social Effects</td> - <td class='c030'>XIX.</td> - </tr> - <tr> - <td class='c009' colspan='2'>Remedies Proposed</td> - <td class='c030'>XXX.</td> - </tr> - <tr> - <td class='c009'> </td> - <td class='c009'>Pooling.—Consolidation.—Regulation.—Public Ownership.</td> - <td class='c030'> </td> - </tr> -</table> - -<div class='chapter ph2'> - -<div class='nf-center-c0'> -<div class='nf-center c004'> - <div>AMERICAN RAILROAD RATES</div> - </div> -</div> - -</div> - -<div class='nf-center-c0'> -<div class='nf-center c002'> - <div><span class='sc'>By</span> JUDGE WALTER C. NOYES</div> - <div class='c003'><em>Author of “The Law of Intercorporate Relations,” etc.</em></div> - </div> -</div> - -<hr class='c015' /> - -<p class='c007'>A masterly work, reviewing the most highly controversial economic -issue of the day in this country.—<cite>New York Commercial.</cite></p> - -<p class='c007'>Judge Noyes is the possessor of a thorough knowledge of the complicated -subject of rate-making.—<cite>Chicago Record-Herald.</cite></p> - -<p class='c007'><strong>The most intelligent discussion of the subject which has yet -appeared.</strong>—<cite>New York Law Journal.</cite></p> - -<p class='c007'>Judge Noyes’ handling of the question is clear, impressive, and indicative -of a mastery of the legal or constitutional side of the subject.—<cite>Springfield -Republican.</cite></p> - -<p class='c007'>A careful reading will help toward a solution of the problem of federal -regulation of railway rates.—<cite>Railway Age.</cite></p> - -<p class='c007'><strong>We know of no book which will give the lay reader so clear -and so authoritative a statement of the fundamental legal principles -which must govern in the determination of the pending -question concerning government regulation of railway rates.</strong>—<cite>Outlook</cite>, -New York.</p> - -<p class='c007'>It is truly refreshing to turn to the book. Every aspect, historical or -actual, of the question is dealt with, including discrimination, pooling, -competition.—<cite>Chicago Evening Post.</cite></p> - -<p class='c007'>A book covering completely a field heretofore only touched in spots.—<cite>Indianapolis -News.</cite></p> - -<p class='c007'><strong>A remarkable book, considered from every point of view—economic, -practical, legal.</strong>—<span class='sc'>Edgar J. Rich</span>, <cite>General Solicitor of the -Boston & Maine R. R.</cite></p> - -<p class='c007'>For readers desirous of reaching a clear understanding both of the legal -and economic questions involved in the fixing of railroad rates there is -probably no better handbook. His whole attitude is eminently judicial, -open-minded, and impartial.—<cite>St. Paul Pioneer Press.</cite></p> - -<p class='c007'>The author is an expert in railroad management and his opinions are -judicial and wholly unbiased.—<cite>American Law Review.</cite></p> - -<hr class='c015' /> - -<div class='nf-center-c0'> - <div class='nf-center'> - <div>PRICE, $1.50 net. 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