VARIOUS OTHER METHODS.
Railroads are in the habit of giving special rates on stuff sent over
their lines for other roads. “It is done,” says one of the leading
traffic managers of the country, “on everything that is
handled,—supplies, coal, and material.”[239] This enables any one who
stands in with the management of a railroad to have coal, etc., billed
at low rates to the railroad for him.
The routing of freight is the source of a double discrimination.
Connecting lines in some cases pay shippers to route the goods over
their roads, while in other cases the connecting lines pay the rebates
to the originating line, or make an agreement with it for reciprocal
favors in the routing of freight.[240] Shippers receiving rebates from a
connecting line can afford to pay the originating road or its clerks to
route the goods over the said connecting line. Mr. Morawetz says it is
customary for shippers to pay clerks in the routing department $5 or $10
to route the goods the way the shipper desires. Or it is done by giving
theatre parties or presents to wives and daughters.[241]
In the California Orange Routing Case (132 Fed. Rep. 829) the United
States Circuit Court decided that an agreement between railroads as to
routing, whereby the apportionment of freight to connecting roads is
affected, is in the nature of a traffic pool and comes within the
prohibition of pooling, Section 5, of the Interstate Act.
The Interstate Commission held that the regulations of the Southern
Pacific and Santa Fe, reserving to themselves the right of routing, were
unlawful under the discrimination clauses, but the court did not decide
this point. (I. C. C. Rep. 1904, p. 78.)
Mr. Ferguson says the private car-lines “sell the tonnage to the highest
bidding connecting line. It is purely a matter of bargain and
sale.”[242]
Unfair distribution of cars is an easy means of discrimination. Failure
to furnish cars to complainant for shipments of grain, while supplying
more than a fair proportion of cars to a competing shipper in the same
town, is as effective as any rebate could be.[243]
Railways have refused cars to persons desiring to ship railroad ties
which the railways did not wish to have go out of their own field.[244]
A Michigan railroad neglected to furnish the Richmond Elevator Company
with cars in which to ship the hay the company had contracted to
deliver, although the railroad was all the while supplying other
shippers with cars for hay and straw, etc.[245]
The Pennsylvania Railroad has been recently sued by independent coal
companies along its line for $2,000,000 damages for refusal to furnish
cars in fair proportion. It is charged that the mines in which the
railroad company is interested have had all the cars they needed, while
the independents have not received cars enough to fill their orders; in
consequence of which great loss has been inflicted upon them and their
business diverted to the railway mines.
The B. & O. was also sued for refusing to furnish cars to the Glade Coal
Company, while supplying cars to competing mines.[246]
In the case of the West Virginia Northern Railroad[247] the Circuit
Court issued a mandamus ordering the road to cease from discrimination
against the Kingwood Coal Company in the supply of cars and to furnish
said company with a specified percentage of cars. In affirming this
decision the Circuit Court of Appeals said:
“It is insisted that the court had no power in a proceeding of this
character to fix the percentage of cars the relator should have, and to
command that such percentage of cars should be furnished to the relator.
The acts of Congress forbade discrimination and made it unlawful to give
any undue or unreasonable preference or advantage to particular persons,
companies, corporations, or localities, or any particular description of
traffic, or to subject them to any undue or unreasonable prejudice or
disadvantage in any respect whatsoever, and vested jurisdiction in the
circuit and district courts to proceed by mandamus as a cumulative
remedy for violations of the statutory provisions. We are unable to
accept the view that Congress intended to confine the scope of the writ
to admonition merely, or to a general command to desist from
discrimination, rather than from the particular action in which the
discrimination consisted. By the findings, the delivery to the relator
of any less than 31 percent of the supply amounted to unlawful
discrimination, and the judgment of the court did no more than to
correct it.”
Sometimes it is the denial of a switch, that blocks the independent; for
example, the railroads controlled by the coal pool refused to put in a
switch for the Johnson coal mine or to permit the company to put one in
until suit to forfeit its charter for refusing equal opportunities to
shippers was begun in the Ohio Supreme Court. Then the switch was put
in.
The Coal Combine and its railroads have persistently pursued the policy
of crushing smaller rivals by denying them transportation facilities.
An exasperating form of discrimination near of kin to this refusal of
cars is the refusal directly or indirectly to take shipments for certain
persons or to certain points. The Hope Cotton Oil Company operates a
mill at Hope, Ark., for the manufacture of cotton-seed oil. It desired
to buy seed at various points on the Texas and Pacific Railroad. This
seed could only reach the mill by passing over the Texas and Pacific to
Texarkana and from there to Hope by the St. Louis, Iron Mountain and
Southern Railroad. The published rate from the points in question to
Texarkana was 12½ cents per hundred, and 5 cents from Texarkana to Hope.
After receiving this information the agent of the Hope Company bought 49
carloads of seed on the line of the Texas and Pacific, intending to send
them to Texarkana on the 12½ cent rate and from there to Hope on the 5
cent rate. Seventeen cars were sent in this way. But when the General
Freight Agent of the Texas and Pacific ascertained what was being done,
he refused to allow the shipments to continue, insisting that the seed
must take the broad joint rate of 67 cents applicable to class A in
which cotton seed belonged. Under his orders the station agents on the
Texas and Pacific refused to bill the cars in any way to Texarkana on
the published local rate of 12½ cents. The 67 cent rate amounted to
$13.40 a ton on seed which only cost $14 a ton, and to insist on such a
rate the Commission says “was for all practical purposes to decline to
receive the cotton seed for shipment on any terms.”[248] The secret of
the situation was that the Texas and Pacific did not want the cotton
seed to go off of its line. If shipped to Texarkana mills or other mills
on its line the products would find their way to market over that road,
while if manufactured at Hope this would not probably be the case.
Denying a private switch to one party while providing such facility for
a competing dealer[249] may amount to a preference similar to that
resulting from free cartage.
A discrimination in the place of delivery of freight may work serious
injury to a shipper. For example, D. W. Miner, a dealer in beef and pork
products at Providence, complains to the Interstate Commerce Commission,
July, 1905, that the New Haven road refuses to deliver his merchandise
at the Canal Street yard where his place of business is located,
carrying his freight half a mile beyond, while delivery is made to his
competitors at the Canal Street yard.
Sometimes railroads discriminate even on long hauls in interstate
traffic by taking advantage of the fact that the Interstate Commerce Act
does not apply to State traffic. They take the car across the State line
on a “mem.-bill,” then draw a new bill of lading marked “State
Business,” and then pay the rebate without fear of disagreeable
consequences.
In other cases the full freight is charged on the way-bill, but a
fictitious entry is made in the prepaid column which is to be subtracted
from the total amount of charges when the bill is collected. If the
freight on a car amounted to $90, and $15 were entered in the prepaid
column, $75 would be collected and the consignee would be in the same
position as if he had received a rebate of $15 on the car.
Another method, akin to this, is to give the local agent at the station
of delivery power to correct the way-bill, or deduct a certain
percentage from every bill presented to the favored shipper. The agent
forwards the amount collected as full payment, correcting his accounts
so as to give himself the necessary credit, which is O. K.’d by the
auditor of the road on his next visit to the station.
Large payments are made by some railroads “to encourage new industries.”
They have the example of cities and States and of the nation to justify
appropriations for the establishment of infant industries and
development of the country, but they abuse the principle by making it a
cover for payments which are really rebates to favored shippers. Some of
the “new industries,” or infant undertakings, which the Wisconsin
investigators found were being “encouraged” by cash contributions from
the railroads, have been established and prosperous for 25 or 30 years,
one of them being founded away back in 1873 and others in the eighties.
Sometimes the railroads make a low rate, joint or single, on certain
goods when intended for a specific purpose, thereby limiting the low
rate to certain favored shippers. For example, in a recent case decided
on complaint of the Capital City Gas Company the railroads had made a
joint rate of 90 cents per ton on bituminous coal from Norwood, N. Y.,
to Montpelier, Vt., when intended for railroad supply, while the
ordinary combination rate of $1.85 per ton applied to such coal carried
between the same points and used for manufacturing or any other
industrial or domestic purpose. This was held by the Commission to be an
unlawful discrimination, on the ground that it is not permissible under
the Interstate Commerce Act for two or more carriers to establish a
joint through rate less than the sum of their locals, which shall be
applicable only to a particular shipper, or class of shippers, while
denying such low rate to other shippers of like traffic between the same
points.[250]
A method of discrimination that has spread enormously in the last year
is to pay large salaries or commissions to traffic agents located at
important points, on the understanding that these traffic agents shall
divide their salaries or commissions with favored shippers. This is much
safer than paying rebates or commissions direct to the shipper, and is
one of the most difficult forms of discrimination to overcome. In the
recent investigations in Wisconsin and other States this method has been
found in frequent use, along with underbilling and underweighing of
freight, the allowance of cartage or switching charges to favored
shippers, permission to hold cars as a means of storage for considerable
time without demurrage, midnight tariffs, direct rebates, etc., etc.