PASSENGER REBATES AND OTHER FORMS OF DISCRIMINATION IN PASSENGER
TRAFFIC.
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.[17] 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.
In the case of some favored shippers in Wisconsin it was found that the
railroads secretly refunded the entire 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.”
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 _laissez faire_
meant $30,000 a year to his company.
_The Deadhead Passenger Car._
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.
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.
_Ticket Scalping._
For many years the railroads aided and abetted the ticket scalpers,
paying commissions on the sale of tickets,[18] 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.
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.
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 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.
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.”
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.[19]
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.
“What will it cost me to go to Chicago?” I asked.
“I can give you a ticket for $12 if you are going within a few days.”
“Suppose I don’t go for a month or two?”
“Well, I can give you a $15 rate most any time.”
“First-class?”
“Yes.”
“Over what route?”
“The Boston & Maine and Grand Trunk.”
“What can you do over the Boston & Albany?”
“I’ll give you transportation on that route for $18.”
“Will that be first-class?”
“No.”
“Tourist?”
“Yes.”
“Do you have the $12 tickets often?”
“Sometimes; but I can give you a $15 rate any time.”
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.
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 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.
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.