[9] The first part of this admirable essay appeared in July
ARENA.
First would be the stability and practical uniformity of rates now
impossible, as they are subject to change by hundreds of officials,
and are often made for the purpose of enriching such officials. State
and federal laws have had the effect of making discriminations less
public and less numerous, but it is doubtful if they are less
effective in enriching officials and their partners, although it may
be necessary to be more careful in covering tracks. That they are
continued is within the cognizance of every well-informed shipper, and
are made clear by such cases as that of Counselman and Peasley, now
before the United States Supreme Court. Counselman and Peasley--one a
large shipper and the other a prominent railway official--refused to
testify before a United States grand jury upon the plea that to do so
might criminate themselves; the federal law making it a criminal
offence to make or benefit by discriminating rates. Counselman had
been given rates on corn, some five cents less per hundred pounds than
others, from Kansas and Nebraska points to Chicago.
The outrageous character of this discrimination will appear when we
reflect that five cents per one hundred pounds is an enormous profit
on corn that the grower has sold at from eighteen to twenty-two cents
per one hundred pounds, and that such a margin would tend to drive
every one but the railway officials and their secret partners out of
the trade, as has practically been the case on many western roads.
Doubtless such rates are sometimes made in order to take the commodity
over a certain line, and there is no divide with the officials; but
the effect upon the competitors of the favored shipper and the public
is none the less injurious, and such practices would not obtain under
national ownership, when railway users would be treated with honesty
and impartiality, which the experience of half a century shows to be
impossible with corporate ownership.
Referring to the rate question in their last report, the Interstate
Commerce Commission says: "If we go no farther than the railroad
managers themselves for information, we shall not find that it is
claimed that railroad service, as a whole, is conducted without unjust
discriminations."
"If rates are secretly cut, or if rebates are given to large shippers,
the fact of itself shows the rates which are charged to the general
public are unreasonable, for they are necessarily made higher than
they ought to be in order to provide for the cut or to pay the
rebate."
"If the carrier habitually carries a great number of people free, its
regular rates are made the higher to cover the cost; if heavy
commissions are paid for obtaining business, the rates are made the
higher that the net revenues may not suffer in consequence; if
scalpers are directly or indirectly supported by the railroad
companies, the general public refunds to the companies what the
support costs."
The Commission quotes a Chicago railway manager as saying: "Rates are
absolutely demoralized and neither shippers, passengers, railways, or
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 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."
From years of ineffectual efforts on the part of State and national
legislatures and commissions to regulate the rate business, it would
appear that the only remedy is national ownership, which would place
the rate-making power in one body with no inducement to act otherwise
than fairly and impartially, and this would simplify the whole
business and relegate an army of traffic managers, general freight
agents, soliciting agents, brokers, scalpers, and hordes of traffic
association officials to more useful callings while relieving the
honest user of the railway of intolerable burthens.
Under corporate control, railways and their officials have taken
possession of the majority of the mines which furnish the fuel so
necessary to domestic and industrial life, and there are but few
coalfields where they do not fix the price at which so essential an
article shall be sold, and the whole nation is thus forced to pay
undue tribute.
Controlling rates and the distribution of cars, railway officials have
driven nearly all the mine owners who have not railways or railway
officials for partners, to the wall. For instance, in Eastern Kansas,
on the line of the St. Louis & San Francisco Railway Company, were two
coal companies, whose plants were of about equal capacity, and several
individual shippers. The railway company and its officials became
interested in one of the coal companies, and such company was, by the
rebate and other processes, given rates which averaged but forty per
cent. of the rates charged other shippers, the result being that all
the other shippers were driven out of the business, a part of them
being hopelessly ruined before giving up the struggle. In addition to
gross discriminations in rates this railway company practised worse
discriminations in the distribution of cars; for instance, during one
period of five hundred and sixty-four days, as was proven in court,
they 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 four hundred and fifty-six were delivered to
individual shippers. In other words, the coal company owned in large
part by the railway and its officials was given eighty-two per cent.
of all the facilities to get coal to market, although the other
shippers had much greater combined capacity than had the Rogers Coal
Company.
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 a 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.
On another railway, traversing the same coal-field, the railway or its
officials became interested in the Keith & Perry Coal Company--the
largest coal company doing business on the line--and here the plan
seems to have been, in addition to the manipulation of rates, to
starve other mine operators out, and force them to sell their coal to
the Keith & Perry Company, by failing to furnish the needed cars to
those who did not sell their coal to the Keith & Perry Company at a
very low price.
When the Keith & Perry Company had a great demand for coal, such
parties as sold the product of their mines to that company were
furnished with cars, but for the other operators cars were not to be
had, such cars as were brought to the field being assigned to such
parties as were loading to the Keith & Perry Company, because that
company furnished the coal consumed by the locomotives of the railway.
One operator, after being for years forced in this way to sell his
product to the Keith & Perry Company, or see his several plants stand
idle, has, in recent months, been obliged to build some seven miles of
railway in order to reach four different roads, and thus have a
fighting chance for cars, although all these railways are provided
with coal mines owned by the corporations or their officials.
In Arkansas, Jay Gould, or his railway company, own coal mines and the
coal is transported to the neighboring town at low rates, and there is
an ample supply of cars for such mines; but the owners of an adjoining
mine are forced to haul their coal some eighteen miles to the same
town in wagons, as the rates charged them over Mr. Gould's railway are
so high as to absorb the value of the coal at destination.
Not only are individuals thus oppressed, but for reasons which only
the initiated can fathom there are seemingly purposeless
discriminations against localities, as shown in the following extract
from the _Coal Trade Journal_ of March 25, 1891.
"Capt. Thomas H. Bates, before the railroad committee of the
Colorado Senate, said: The Grand River Coal & Coke Company
mine their coal in Garfield County, about fifty miles west
of Leadville, and all they sell in Denver, Colorado Springs,
and Pueblo, has to be hauled through Leadville. At Leadville
the individual consumer has to pay $7.00 per ton for this
coal, while in Denver, with an additional haul of 150 miles,
the coal from the same mines is delivered to the individual
consumer for $5.50 per ton. The Colorado Coal & Iron Company
produce all the anthracite coal sold in Colorado. It is
mined at Crested Butte, which is 150 miles nearer Leadville
than Denver, yet this coal is sold in Leadville for $9.00 to
the individual consumer, while the same coal is hauled 150
miles farther, and sold to the individual consumer for an
advance of twenty-five cents per ton over the Leadville
price, and is sold in Denver for $7.10 per ton in carload
lots."
With the government operating the railways, discriminations would
cease, as would individual and local oppression; and we may be sure
that an instant and absolute divorce would be decreed between railways
and their officials on one side, and commercial enterprises of every
name and kind on the other.
There are but three countries of any importance where the railways are
operated by corporations permitted to fix rates, as in all others the
government is the ultimate rate-making power: these are Great Britain,
Canada, and the United States; and while the British government
exercises a more effective control than we do, there are many and
oppressive discriminations, and complaints are loud and frequent, and
English farmers find it necessary to unite for the purpose of securing
protection from corporate oppression, as is shown by the following
from the Liverpool _Courier_ of January 29, 1891.