THE HEART
OF THE
RAILROAD PROBLEM
THE HISTORY OF RAILWAY DISCRIMINATION IN THE UNITED STATES, THE CHIEF
EFFORTS AT CONTROL AND THE REMEDIES PROPOSED, WITH HINTS FROM OTHER
COUNTRIES
BY
PROF. FRANK PARSONS, PH.D.
AUTHOR OF “THE STORY OF NEW ZEALAND,” “THE WORLD’S BEST BOOKS,” “THE
CITY FOR THE PEOPLE,” “THE RAILWAYS, THE TRUSTS, AND THE PEOPLE”
BOSTON
LITTLE, BROWN, AND COMPANY
1906
_Copyright, 1906_,
BY FRANK PARSONS.
_All rights reserved_
Published April, 1906
THE UNIVERSITY PRESS, CAMBRIDGE, U. S. A.
PREFACE
This work is one of the consequences of a conversation years ago with
Dr. C. F. Taylor, of Philadelphia, editor and publisher of _The Medical
World_ 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.
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 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.
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.
FRANK PARSONS.
BOSTON, March, 1906.
CONTENTS
CHAPTER PAGE
I. THE LAW AND THE FACT 1
II. PASSES AND POLITICS 3
III. PASSENGER REBATES AND OTHER FORMS OF DISCRIMINATION IN
PASSENGER TRAFFIC 17
The Deadhead Passenger Car 18
Ticket Scalping 19
IV. FREIGHT DISCRIMINATION 23
V. THE EARLY YEARS, HEPBURN REPORT, ETC. 25
The Granger Laws 26
The Hepburn Investigation 27
VI. THE SENATE INVESTIGATION OF 1885 AND THE INTERSTATE
COMMERCE ACT 37
VII. THE INTERSTATE COMMISSION 43
VIII. EFFECTS OF THE INTERSTATE ACT 49
Direct Rebates 53
IX. SUBSTITUTES FOR REBATES 57
X. DENIAL OF FAIR FACILITIES 66
XI. CLASSIFICATION AND COMMODITY RATES 70
XII. OIL AND BEEF 73
XIII. IMPORTS AND EXPORTS 84
XIV. LOCALITY DISCRIMINATIONS 87
XV. LONG-HAUL DECISIONS OF THE SUPREME COURT 95
XVI. TEN YEARS OF FEDERAL REGULATION 104
XVII. THE ELKINS ACT AND ITS EFFECTS 110
XVIII. THE WISCONSIN REVELATIONS 120
XIX. THE COLORADO FUEL REBATES AND OTHER CASES 124
XX. FREE CARTAGE, STATE TRAFFIC, DEMURRAGE, THE EXPENSE BILL
SYSTEM, GOODS NOT BILLED, MILLING-IN-TRANSIT 142
XXI. MIDNIGHT TARIFFS AND ELEVATOR FEES 147
XXII. COMMODITY DISCRIMINATIONS 150
XXIII. DISCRIMINATION BY CLASSIFICATION 155
XXIV. VARIOUS OTHER METHODS 159
XXV. TERMINAL RAILROADS 166
XXVI. PRIVATE-CAR ABUSES 174
XXVII. THE LONG-HAUL ANOMALY 208
XXVIII. OTHER PLACE DISCRIMINATIONS 216
XXIX. NULLIFYING THE PROTECTIVE TARIFF 221
XXX. SUMMARY OF METHODS AND RESULTS 228
XXXI. DIFFICULTIES OF ABOLISHING DISCRIMINATION 241
XXXII. REMEDIES 252
Pooling 265
Wrestling with the Long-Haul Abuse 270
A Drastic Cure for Rebating 271
XXXIII. FIXING RATES BY PUBLIC AUTHORITY 274
Alleged Errors of the Commission 279
XXXIV. CAN REGULATION SECURE THE NEEDFUL DOMINANCE OF PUBLIC
INTEREST? 306
XXXV. HINTS FROM OTHER COUNTRIES 313
APPENDIX
A. LATEST DECISIONS OF U. S. SUPREME COURT 335
B. PRESIDENT HADLEY AND THE HEPBURN BILL. ENGLISH EXPERIENCE
IN THE REGULATION OF RATES 337
INDEX 345
THE HEART OF
THE RAILROAD PROBLEM
CHAPTER I.
THE LAW AND THE FACT.
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.”[1] 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 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.
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,[2] 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.
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.