THE ELKINS ACT AND ITS EFFECTS.
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imprisonment clause of the Interstate Act being repealed.
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.
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 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 _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_.”
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.
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.[160]
“SENATOR ELKINS. 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?
“MR. BACON. It has benefited the railroads, by millions of dollars.
“SENATOR ELKINS. I mean the good railroads.
“MR. BACON. It will undoubtedly effect a saving of upwards of a hundred
million dollars a year.”
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.”
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 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.”[161]
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.”[162]
Some of the sweeping declarations of railway men and others about
discriminations, and especially about rebates, are as follows:[163]
“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.”
“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.”
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.”[164]
Mr. Bird, Vice-President of the Gould lines, says: “I believe there are
no rebates paid.”
“CHAIRMAN. And discriminations?
“MR. BIRD. 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.”[165]
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.”[166]
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.”[167]
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 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.
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.[168]
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.”[169]
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 by them,
but it is understood that concessions are given and must be given.[170]
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.”[171]
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.”
Senator Dolliver said:[172] “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.”
Professor Ripley says[173] that discriminations between localities and
between commodities through classification, etc., are still serious
evils.
Governor Cummins of Iowa said:[174] “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.”
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.”[175]
The complaints made to the Interstate Commission in the last few
years[176] and the facts brought out in the 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.
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.”[177]
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.”[178] 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 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.