FREE CARTAGE, STATE TRAFFIC, DEMURRAGE, THE EXPENSE BILL SYSTEM, GOODS
NOT BILLED, MILLING-IN-TRANSIT.
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.[201]
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 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.”[202] Some
shippers are allowed to let carloads lie 15 days without demurrage,
while others have to pay for the car service they get.[203] 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.
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.[204] This is, in fact, only another way of paying rebates. The
allowance of fictitious claims is still in vogue.[205]
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 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.[206]
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.
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 collusion with the shipper in some cases while at other
times the carrier is among the defrauded.
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.”
“SENATOR KEAN. How long ago was that?
“MR. DAVIES. A year or two ago. It is done to-day.
“SENATOR KEAN. Do you have knowledge of it?
“MR. DAVIES. Yes; and so can you, if you go around the freight yards.
“SENATOR KEAN. Is this knowledge of yours a guilty knowledge?
“MR. DAVIES. I just a moment ago told you not, and further, I will offer
to this committee the records of my business.
“SENATOR KEAN. But you say you know these things are being done and have
made no complaint.
“MR. DAVIES. Haven’t I? I would like to show you these papers that have
been nursed by the Interstate Commerce Commission for a year.”
Mr. Prouty of the Interstate Commerce Commission says:[207] “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.”
“SENATOR CULLOM. What object had they in doing that?
“MR. PROUTY. They wanted to prefer that man that had the wheat. Instead
of paying a rebate they carried the shipment for nothing.”
The power to give or withhold the milling-in-transit privilege is a
serious means of discrimination. The Pennsylvania Railroad, for example,
grants this privilege to mills west of Pittsburg, but denies it to
millers at Harrisburg.[208] 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.
By refusing to accord the milling-in-transit privilege[209] 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.[210]
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.[211]