March, 1896. The complaint was brought in December, 1889, by the New
York Board of Trade against the Pennsylvania Railroad and others. The
New York Central, B. & O., B. & M., Ill. Central, Union Pacific,
Southern Pacific, Northern Pacific, Texas & Pacific, etc., 33
railroads in all, were joined as defendants. The Commission held
(Jan., 1891) that import traffic is entitled to no preference. 3 I. C.
C. Decis. 417. (See also 4 I. C. C. 447.) The Circuit Court sustained
the Commission in Oct., 1892 (52 Fed. Rep. 187), and the Court of
Appeals in Oct., 1893 (57 Fed. Rep. 948), but the Texas & Pacific
carried the case to the U. S. Supreme Court and the majority of the
Court, reversing the Commission and the Circuit Court, interpreted the
Commerce Act of Congress in such a way as to render substantially
inoperative the main clauses relating to discrimination and the long
haul, and practically nullify another Act of Congress so far as it
imposes duties on imports for the purpose of protecting home
industries. The Court accomplished this by focussing its attention on
the phrase relating to dissimilar conditions, instead of aiming to
enforce the act according to its clear purpose and intent. Chief
Justice Fuller and Justices Harlan and Brown dissented, holding that
the Interstate Act requires railways to make the same charge for the
same service, whether the goods carried are domestic or foreign.
Footnote 115:
For many other facts along the same lines, showing rates on flour from
the West to Baltimore, Philadelphia, New York, Boston, etc., 6 to 8
cents higher than the rates on wheat, and much lower rates on the same
products for export than for domestic use, see Industrial Commission,
1900, iv, 70.
The Interstate Commerce Commission in 1899 found the export rates on
corn and wheat much lower than the domestic rates. I. C. C. Rep.,
1899, pp. 20–28, 31.
Footnote 116:
8 I. C. C. Decis. 214 n.
Footnote 117:
Lewis, “National Consolidation of Railways,” p. 101.
Footnote 118:
Industrial Commission, 1900, vol. iv, pp. 441–442. Shippers in
Norfolk, Nebr. for example, pay the local rate of 45 cents per cwt.
(on first-class goods) to Sioux City on the Missouri River, plus the
rate from Sioux City to Chicago, while Fremont, a rival town near
Norfolk, has the same rates as Sioux City, the local rate not being
added in this case to the Missouri River rate. This gives Fremont
manufacturers and shippers a decided advantage over those of Norfolk,
and tends to build up Fremont and stunt the growth of Norfolk. The
witness suggested that “if the rates were established by the
Government instead of at the will and pleasure of the railway
managers, it is a natural conclusion that points having the same
general conditions would receive equal benefits.”
Footnote 119:
Cator’s “Rescue the Republic,” p. 15.
Footnote 120:
“National Consolidation of Railways,” Lewis, p. 102.
Footnote 121:
“National Consolidation of Railways,” Lewis, p. 83.
Footnote 122:
Martin _v._ Southern Pacific, Central Pacific, and Union Pacific
Railroads. 1 I. C. C. Decis. 1.
Footnote 123:
8 I. C. C. Decis. 481. The Commission made an order that the Kearney
rate should not exceed the Omaha rate by more than 15 cents, but the
Southern Pacific refused to obey, and the Circuit Court declined to
enforce the order on the ground that the Commission had not found the
rate to Kearney unreasonable in itself, but only in comparison, citing
190 U. S. 273.
Footnote 124:
9 I. C. C. Decis. 17: Rep. 1901, 30.
Footnote 125:
I. C. C. Rep. 1899, p. 31.
Footnote 126:
The Commission ordered the roads to discontinue this practice. They
refused. And the United States Supreme Court sustained them in their
refusal. (4 I. C. C. Decis., July, 1890, p. 104; Rep. 1901, p. 25.)
Footnote 127:
Nov. 1895, the Commission ordered that the rates from Pueblo to
California should not exceed 75 percent of the rates from Chicago to
California. The railroads refused to obey. Proceedings in court were
begun by the Commission to enforce their order. Then the railroads
yielded. They kept the rates down about 2 years, till Oct. 17, 1898.
Then the Southern Pacific increased the rates. The Colorado Fuel &
Iron Company on whose complaint the investigation and order were made,
sued for damages and an injunction, Oct. 1898. The Circuit Court
enjoined the railroads from charging more than the rates fixed by the
Commission. But April 16, 1900, the Circuit Court of Appeals reversed
the decision on the ground that the United States Supreme Court had
ruled that the Commission cannot fix rates. (I. C. C. Rep. 1895, pp.
41–43; and Rep. 1900, pp. 55–61); also (101 Fed. Rep. 779) an appeal
to the Supreme Court was dismissed per stipulation, Nov. 1901 (46 L.
Ed. 1264).
Footnote 128:
Ind. Com. iv, 257.
Footnote 129:
Ind. Com., iv, 257.
Footnote 130:
_Ibid._, 67.
Footnote 131:
_Ibid._
Footnote 132:
Ind. Com. iv, 252.
Footnote 133:
_Ibid._, 257.
Footnote 134:
Alabama Midland Case. Decis. of U. S. Supreme Court, Nov. 8, 1897, 168
U. S. 144; Behlmer Case, 175 U. S. 648, 676; 181 U. S. 1, 29; Dallas
Case, I. C. C. Rep. 1901, p. 27. Actual and controlling competition of
any sort is now held to justify a less charge for the longer than for
the shorter haul. 10 I. C. C. Decis. 289, June, 1904. See also Senate
Committee, 1905, 3339, where Chairman Knapp of the Interstate
Commission declares that the courts have interpreted the law so that
if the circumstances substantially differ, no matter what the reason,
the prohibition does not apply. Brooks Adams says, “The Supreme Court
is antagonistic to that clause,” (the long and short haul clause) and
does not intend to enforce it. “They have simply thrown out every
suitor but one who came in under that clause.” (Sen. Com., 1905, p.
2922.)
Footnote 135:
I. C. C. Rep. 1887. Nearly a hundred pages are filled with both the
statements and petitions of railroads relating to the long-haul
clause. See also Rep. for 1895, pp. 24–28. Exemption from the
long-haul clause was allowed in the case of passenger fares to the
World’s Fair at Chicago.
Footnote 136:
_In re_ Louisville and Nashville, 1 I. C. C. Decis., 1887, p. 31. See
also Ga. Rd. Commission _v._ Clyde Steamship Co., 5 I. C. C. Decis.
326.
Footnote 137:
Alabama Midland or Troy Case, 168 U. S. 144, 164, 166. Reference was
made to 31 Fed. Rep. 315, 862; 50 Fed. Rep. 295; 56 Fed. Rep. 925,
943; 71 Fed. Rep. 835, Behlmer Case; 73 Fed. Rep. 409, I. C. C. _v._
Louisville and Nashville.
Footnote 138:
I. C. C. Rep. 1899, pp. 66–68; 85 Fed. Rep. 1898, p. 107; 99 Fed. Rep.
1899, p. 52.
Footnote 139:
181 U. S. 1, April, 1901.
Footnote 140:
_Ibid._, 29, 1901.
Footnote 141:
Rep. 1895, p. 29. See Louisville & Nashville Case, 1 I. C. C. Decis.
31; C. B. & Q. Case, 2 I. C. C. Decis. 46; Krewer Case, 4 I. C. C.
Decis. 686; Nashville, Chattanooga and St. Louis R. R. Co., 6 I. C. C.
Decis. 343. See also 8 I. C. C. Decis. 503.
Footnote 142:
H. P. Newcomb, _Popular Science Monthly_, p. 815, Oct. 1897.
Footnote 143:
I. C. C. Rep. 1894, p. 19; 1900, p. 52. The Railways declined to obey;
the Circuit Court ruled against the Commission (71 Fed. Rep. Jan.
1896, p. 835); the Circuit Court of Appeals reversed the Circuit Court
decision (83 Fed. Rep. Nov. 1897, p. 898); and finally, in Jan. 1900,
the U. S. Supreme Court reversed the Court of Appeals and sustained
the railroads. (Behlmer Case, 175 U. S. 648.)
Footnote 144:
I. C. C. Rep. 1895, p. 29; 1896, pp. 16–23. In March, 1896, the U. S.
Supreme Court considered the case on appeal, and apparently accepted
the decision of the Commission on the question of similar conditions,
but overruled another part of its order, requiring the railroad not to
charge more than $1 per hundred on first-class goods from Cincinnati
to Atlanta. The Court placed its decision on the ground that the
Commission has no authority to fix rates, maximum, minimum, or
absolute. It may determine that a past rate is unreasonable, but
cannot fix a rate for the future. Interstate Commission _v._
Cincinnati, New Orleans, and Texas Pacific, 162 U. S. 184; and 167 U.
S. 479. I. C. C. _v._ Texas and Pacific, 162 U. S. 197.
Footnote 145:
6 I. C. C. Decis. 343; and Rep. 1895, pp. 29–31.
Footnote 146:
Rep. 1895, p. 31.
Footnote 147:
I. C. C. Rep. 1899, p. 68; 7 I. C. C. Decis. Dec. 1897, p. 431. The
Commission ordered that the charge to La Grange should not exceed the
rate for the longer haul to Atlanta, and two years later the Circuit
Court sustained the order (102 Fed. Rep. 709), but the Circuit Court
of Appeals reversed the decision in May, 1901 (108 Fed. Rep. 988), and
in May, 1903, the Supreme Court affirmed the ruling of the Court of
Appeals against the Commission (190 U. S. 273).
Footnote 148:
I. C. C. Rep. 1902, p. 48; 7 I. C. C. Decis. 431; 8 I. C. C. Decis.
377; 118 Fed. Rep. 613; Sen. Com. 1905, pp. 2316, 2317, 2926. No
appeal appears to have been taken from the Circuit Court.
Footnote 149:
8 I. C. C. Decis. Feb. 1900, p. 409; Rep. 1900, p. 34.
Footnote 150:
8 I. C. C. Decis. 93, reversed by the Circuit Court, August, 1902 (117
Fed. Rep. 741), and by the Court of Appeals, May, 1903 (122 Fed. Rep.
800); now on appeal to U. S. Supreme Court.
Footnote 151:
8 I. C. C. Decis. 142.
Footnote 152:
I. C. C. Rep. 1895, p. 39.
Footnote 153:
See 6 I. C. C. Decis. 257, 361, 458, 488, 568, 601; 7 I. C. C. 61,
224, 286; 8 I. C. C. 93, 214, 277, 290, 304, 316, 346. See also vol. 9
of the Decisions, and Rep., 1898, pp. 33, 246; 1899, p. 28; 1900, p.
40; 1901, pp. 57, 65; etc. Wherein conditions substantially differ the
exemption is applied. For example, the Santa Fe is justified in
charging lower rates from the Pacific to the Missouri River than to
Denver on rice, hemp, blankets, books, boots, etc. (9 I. C. C. Decis.
606); and a higher rate on lumber to Wichita from Western points than
to Kansas City is approved (9 I. C. C. Decis. 569).
Rates of an individual road cannot be compared with joint rates made
by that road with others. Osborne Case, 52 Fed. Rep. 912; Tozer Case,
52 Fed. Rep. 917; Union Pacific Case, 117 U. S. 355.
Footnote 154:
_Popular Science Monthly_, Oct. 1897, p. 816.
Footnote 155:
M. E. Ingalls, before National Convention of Railway Commissioners,
1898, p. 14.
Footnote 156:
Rep. 1897, p. 6; and 1898, p. 15.
Footnote 157:
“The exaction of the published rate is the exception.... Men who in
every other respect are reputable citizens are guilty of acts which,
if the statute law of the land were enforced, would subject them to
fine or imprisonment.” See Rep. 1898, pp. 5, 6, 18, 19; Rep. 1899, p.
8.
Footnote 158:
Report, vol. iv, 1900, p. 625.
Footnote 159:
Ind. Com. iv, pp. 6, 349, 359.
Footnote 160:
Testimony, p. 25.
Footnote 161:
Sen. Com. 1905, p. 2912.
Footnote 162:
Judge Clements of the Interstate Commission, Senate Committee, 1905,
p. 3238. When the reader examines the facts that follow in this book
he may wonder what the railroads will do when they are not under a
good resolution, in view of the record they have made while under a
good resolution.
Footnote 163:
See “Rebates” and “Discriminations” in index to Hearings of the Elkins
Committee, 1905.
Some of these witnesses who do not know of any discriminations or
unreasonable rates declare in other parts of their testimony that if
the proposed legislation were enacted the Interstate Commission would
be deluged with complaints. And this is probably true, since
complaints of excessive rates and discriminations have been more
numerous in the last two or three years than in any other equal period
before. (Testimony of Judge Clements of the I. C. C., Senate
Committee, 1905, p. 3242.)
Footnote 164:
Sen. Com. 1905, p. 1331.
Footnote 165:
_Ibid._, pp. 2253, 2284.
Footnote 166:
_Ibid._, p. 3140.
Footnote 167:
_Ibid._, p. 1652.
Footnote 168:
On the question whether or no rebates and discriminations exist, the
testimony of credible witnesses who say they know of these secret
favors far outweighs the proving power of the negative statements of
witnesses who say they do not know of the said phenomena. Lots of
people did not know till recently that the Equitable paid a famous
railroad senator $20,000 a year for “advice.” And the statements of a
multitude that they did not know of it would weigh nothing against the
testimony of 2 or 3 well informed men who positively stated the facts.
Discriminations may go on without the railroad directors or principal
officers knowing about them. They may not know about them on purpose.
Where ignorance is protection ’tis folly to be wise.
Railway men have told me that in many cases leading officers of a
railroad are purposely kept, or keep themselves, in perfect ignorance
of all discriminations and other wrongdoing in order that such
officers may appear in legislative and interstate commerce hearings
without knowledge of any facts that would be prejudicial to the
railroad.
Footnote 169:
Sen. Com. 1905, p. 1474.
Footnote 170:
Sen. Com. 1905, pp. 819, 820, 842.
Footnote 171:
_Ibid._, pp. 2122, 2123.
Footnote 172:
_Ibid._, p. 951.
Footnote 173:
_Ibid._, p. 2329.
Footnote 174:
Sen. Com. 1905, p. 2083.
Footnote 175:
In illustration of his statement the witness referred to the
prevalence of abuses in respect to terminal railroads, private cars,
purchasing agents, switching charges, special tariffs, milling in
transit, etc., describing a number of cases that have come under his
personal observation in the year 1905. Sen. Com. 1905, pp. 2432, 2434.
Footnote 176:
More complaints per annum have been filed with the Commission since
the Elkins Act took effect than were filed before the act was passed.
The reports of the I. C. C. show 145 formal complaints filed in 1903
and 1904, carrying the total to 789, and 888 informal complaints,
carrying the total to 3223, making the whole number 1033 in the two
years, and 4012 since 1887—more than 25 percent of the complaints
having been filed in the last two years which constitute only 11
percent of the time covered by the reports of the Commission. Out of
the 62 suits entered in 1904, 50 charge unjust discrimination of
serious character, and nearly all the rest involve discrimination in
some form. The complaints entered for amicable adjustment also relate
in large part to cases of discrimination between persons and places,
refusal to furnish cars, unreasonable delay, unfair classification,
discrimination in track facilities, unfair estimate of weights,
allowing competitors to underbill, refusal of the Transcontinental
Passenger Association to grant the American Federation of Labor the
usual special convention rate for their meeting at San Francisco,
refusal to route shipments as ordered by shippers, relatively
excessive rates on vegetables, lumber, lead, drugs, corn products,
coal, iron, shoes, leather, etc., violations of the long and short
haul clause, and outright refusal to accept shipments, besides a
number of complaints of overcharges, and rates alleged to be
unreasonable per se.
Adding the figures for 1905, which have come to hand since the above
was written, we find that more than double the number of complaints of
discrimination have been made to the Interstate Commerce Commission in
the last three years, since the Elkins Law was passed, than in any
equal period before. The complaints filed in 1903, 1904, and 1905
constitute more than a third of the whole number of complaints from
the beginning of the Commission in 1887. The average number of
complaints per year from 1887 to 1902 inclusive was 186, while the
yearly average for 1903–1905 is 534—more than double, nearly
threefold—and five-sixths of the suits entered charge facts that
constitute discrimination of serious character, and nearly all the
rest involve discrimination in some form.
Footnote 177:
In the report for 1905, p. 13, the Commission refers to the fact that
in the reports for 1903 and 1904 some favorable comments were made on
the effect of the Elkins Law upon the practice of paying rebates, and
says: “Further experience, however, compels us to modify in some
degree the hopeful expectations then entertained. Not only have
various devices for evading the law been brought into use, but the
actual payment of rebates as such has been here and there resumed. [It
never stopped in a good many places, judging by the La Follette facts
and other evidence, including the statements of many leading railroad
men.] Instances of this kind have been established by convincing
proof. More frequently the unjust preference is brought about by
methods which may escape the penalties of the law, but which plainly
operate to defeat its purpose.”
Footnote 178:
Judge Clements of the Commission, Sen. Com. 1905, p. 3238.
Footnote 179:
See the admirable summary of the investigation by Ray Stannard Baker
in _McClure’s Magazine_ for December, 1905.
Footnote 180:
The Interstate Commission says: “While giving rebates to the fuel and
iron company from tariff rates, it (the Santa Fe Railroad) charged the
full tariff rates on interstate shipments of coal by other shippers in
not only the general coal region involved, but in the same coal field.
This practice of the railway company resulted in closing markets for
coal to shippers competing with the Colorado Fuel and Iron Company.”
10 I. C. C. Decis. 473, February, 1905.
Footnote 181:
10 I. C. C. Decis. 475.
Footnote 182:
10 I. C. C. Decis. 476–480. While the Caledonian Company was trying to
get to market on equal terms with the Colorado Fuel and Iron Company,
they got a letter from the Santa Fe traffic office, Nov. 15, 1900,
saying that they could sell their coal to the Colorado Fuel and Iron
Company, or keep it. Mr. Biddle, however, when shown the letter and
questioned about it, admitted the authorship, but said he did not
construe the letter as saying anything of the kind. (I. C. C. Santa Fe
Hearing, Dec. 1904, p. 154. The text of the letter is not given.)
Footnote 183:
There was a dispute about the relative steam power of the coals from
the different localities, but the point doesn’t seem to be material.
Footnote 184:
Sen. Com. 1905, pp. 3072, 3073. The Caledonian had a good market
before the agreements between the Santa Fe and the Colorado Coal
Company were made, and it had many orders afterwards, but could not
fill them except at a loss because of favoritism in freight rates.
Footnote 185:
I. C. C. Hearing, Dec. 1904, pp. 135, 148, Biddle.
Footnote 186:
Mr. Biddle says the coal rate circular was issued by his authority and
continued a practice that was in effect when the Santa Fe operated the
mines, but he could not say whether it was “simply continued at the
time the Colorado Company acquired the mines or whether there were
negotiations under which it was done” (I. C. C. Hearing, Dec. 1904,
pp. 135, 136, 147, 148).
Footnote 187:
A copy of this circular bearing the name of the traffic manager of the
Santa Fe was taken without permission by a dealer at El Paso from the
Santa Fe office there.
Footnote 188:
I. C. C. Santa Fe Hearing, Dec. 1904, p. 8.
Footnote 189:
I. C. C. Santa Fe Hearing, Dec. 1904, pp. 146–148.
Footnote 190:
Sen. Com., 1905, p. 848.
Footnote 191:
Mr. Morton’s letter to President Roosevelt, June 5, 1905. Secretary
Morton continues: “The tariff covering this arrangement was published
so as to show the freight rate to be $4.05 per ton instead of the
delivered price at El Paso and Deming, and did not separate the
freight rate from the cost of the coal at the mines, as it should have
done. Until the investigation of the case by the Interstate Commerce
Commission I did not know personally how the matter was being handled,
so far as the publication of the tariff was concerned. My own
connection with the case was to see that the traffic was secured to
the Atchison rails, and after that details were left to subordinates.”
Footnote 192:
Mr. Biddle testified that the same thing had been done for other coal
companies, and in one instance at least it was shown that it had been
done for the Victor Fuel Company, but in this case “the price of the
coal and the rate of freight were kept entirely separate, the price of
coal being treated in the nature of an advance charge.” The Commission
says further “If the Colorado Fuel and Iron Company had in all cases
paid the published tariff rate which was exacted from other shippers,
the fact that the price of the coal and the freight were included in a
single item would have worked no practical advantage to that company
so far as we can see. Neither, apparently, would there have been any
reason for this arrangement if the purpose of the parties had been
honest. If, however, there existed upon the part of the Santa Fe
Company an intent to charge the Colorado Fuel and Iron Company less
for the transportation of its coal than the published rate, it is
evident that this method of billing would afford a ready means for
concealing the transaction. In point of fact, during the entire period
covered by this investigation (July 1899 to Nov. 27, 1904) the Santa
Fe Company did transport coal for the Colorado Fuel and Iron Company
for less than its open tariff rates, and these concessions amounted in
many cases to the price of the coal itself.” (10 I. C. C. Decis. 482,
Feb. 1905.)
Footnote 193:
See 10 I. C. C. Decis. 473, 487, 488, Feb. 1, 1905.
Footnote 194:
“Strategy of Great Railroads,” 1904, p. 167.
Footnote 195:
I confess, however, that I do not see how, in the light of the records
in the Colorado Case, the Santa Fe counsel could tell the Senate
Committee this year that his road had made no discriminating rates
(see above, p. 114). Neither is it easy to see how Mr. Biddle could
testify that he had not known of the payment of any rebates for 12
years. The Commission says the Santa Fe paid rebates to the Fuel
Company till November, 1904, and other preferences have been
unearthed, as we shall see hereafter. Some shippers and some
consignees have had better terms than others. Mr. Biddle does not call
these preferences rebates. The Commission sees that when the Santa Fe
collected the published freight rate, $4.05, from the El Paso people
and paid for the coal out of that, instead of collecting the $4.05 as
freight and leaving the El Paso folks to pay for the coal in addition,
the effect was the same to the El Paso people as the payment of a
rebate equal to the value of the coal, and the same to the Fuel
Company in respect to securing a monopoly of the market, and so the
Commission, looking at the substance of the matter and the form too so
far as could be judged from the published tariff, called the payments
rebates, or payments out of, or deductions from, the regular tariff
rates.
Footnote 196:
Commissioner Prouty to the Boston Economic Club, March 9, 1905.
Footnote 197:
Sen. Com. 1905, p. 3607.
Footnote 198:
10 I. C. C. Decis. 226, and Rep. 1904, pp. 58–59.
Footnote 199:
Sen. Com. 1905, p. 367. Testimony of E. M. Ferguson, representing 12
organizations of shippers, State and national.
Footnote 200:
Sen. Com. 1905, p. 2432.
Footnote 201:
I. C. C. Decis. 735, March 25, 1905.
Footnote 202:
Ind. Com. iv, 54.
Footnote 203:
Sen. Com. 1905, pp. 2284, 2429.
Footnote 204:
_Ibid._, p. 2432.
Footnote 205:
_Ibid._, p. 18.
Footnote 206:
Sen. Com. 1905, pp. 2484, 2490.
Footnote 207:
Sen. Com. 1905, p. 2912.
Footnote 208:
10 I. C. C. Decis. 675, April 11, 1905; Rep. Dec. 1905, p. 39.
Footnote 209:
Under the milling-in-transit privilege grain may be shipped into the
mill from the West, ground, and shipped out from the mill to New York
or other destination at a total cost but little greater than the
straight through rate from the West to New York. But a mill without
this privilege must pay the rate from the West to Philadelphia, and
then the local rate from Philadelphia to New York, making the total
cost very much greater.
Footnote 210:
Some strong statements about this case may be found in the
Philadelphia _North American_ August 12, August 20, and other dates
during August, 1903.
Footnote 211:
Sen. Com. 1905, p. 2434. See 10 I. C. C. 1905, p. 505.
Footnote 212:
This trick was resorted to by the oily people many years ago, but the
railroads, realizing its potency in eluding the rebate prohibitions,
have lately extended its sphere of usefulness and it is becoming quite
frequent. See Sen. Com. 1905, p. 2123.
Footnote 213:
Ind. Com. iv, 544. The name “midnight tariff” by which this scheme is
known probably fits the case, but “flying tariff” is perhaps still
more appropriate.
Footnote 214:
_Outlook_, July 1, 1905, p. 579.
Footnote 215:
Sen. Com. 1905, pp. 2911, 2912, Commissioner Prouty; 2123, President
Stickney. See also p. 3231, and 10 I. C. C. Decis. 317.
Footnote 216:
Mr. Moffat was asked if he thought the allowances ought to be made. He
said: “I think that it ought to be made to the big shippers. I think
the man who ships 100,000 bushels a month ought to get a little better
deal than the man who ships only 1,000 bushels a year.”
Commissioner Cockrell replied: “There is where I think you are
entirely wrong. No government could live under such a condition. The
rich would soon absorb everything and the small man would be wiped out
of existence. The whole business we are on now started from a railroad
giving a man a rebate. The minute the railroad does a thing like that
it opens the way to a swindling petty graft and bigger grafting and
crooked work. It is wrong, all wrong. It is so wrong that nobody knows
what to call it. Down in Louisville they call it a ‘swag.’ Here you
call it an ‘allowance.’ It is all wrong.”
Footnote 217:
10 I. C. C. Decis. 274, June 4, 1904.
Footnote 218:
_Ibid._, 255, June 4, 1904. The practice was held unjust.
Footnote 219:
_Ibid._, 489, Feb. 2, 1895. Duluth Shingle Co. _v._ Northern Pacific,
Great Northern, Chicago, Milwaukee and St. Paul, and other railroads.
Footnote 220:
10 I. C. C. Decis. 452, Jan. 7, 1905.
Footnote 221:
Sen. Com. 1905, pp. 2432, 2433.
Footnote 222:
11 I. C. C. Decis. 104.
Footnote 223:
10 _ibid._, 428, Jan. 1905.
Footnote 224:
Sen. Com. 1905, pp. 3426, 3427. S. H. Cowan, attorney of Cattle
Growers’ Interstate Committee; Chicago Board of Trade _v._ C. & A. R.
R., 4 I. C. C. Decis. 158.
Footnote 225:
10 I. C. C. Decis. 428. Chicago Live-Stock Exchange _v._ Chicago and
Great Western. See also I. C. C. Rep. 1905, pp. 42, 63.
Footnote 226:
The United States Circuit Court has refused to enforce the order of
the Commission on the ground that the Chicago Great Western reduced
the rate for competitive reasons to get its share of the tariff. The
Commission justly says: “If the decision of the Circuit Court in this
case is sound any carrier is justified in making the widest
discriminations in rates as between competing commodities, regardless
of the effect upon non-favored industries, by simply asserting the
existence of general competition and the desire to increase the
traffic in particular commodities over its line.”
I. C. C. Rep. December, 1905, p. 64. It is to be hoped that the case
will go up on appeal and a reversal of the Circuit decision be
obtained.
Footnote 227:
10 I. C. C. Decis. 590, Feb. 11, 1905; Rep. 1905, p. 31.
Footnote 228:
Cannon Falls to St. Louis, 10 I. C. C. 650, March, 1905.
Footnote 229:
Sen. Com. 1905, p. 1775. Mr. Bacon of Milwaukee, speaking for a
convention of shippers.
Rates to Texas also from Kansas and Missouri points are 5 cents per
hundred higher on flour than on wheat, and this differential is not
applied on shipments in any other direction from those points. (10 I.
C. C. Decis. 1904, 55.)
Footnote 230:
I. C. C. Cases, 707, 1905.
Footnote 231:
Proctor and Gamble Case, I. C. C. Rep., 1903, pp. 57–61; 1905. Rep. p.
63.
Footnote 232:
Sen. Com. 1905, p. 346.
Footnote 233:
_Ibid._, p. 2742.
Footnote 234:
_Ibid._, p. 18.
Footnote 235:
Business Men’s League of St. Louis _v._ many railroads, 9 I. C. C.
Decis. 319, Nov. 17, 1902.
Footnote 236:
10 I. C. C. Decis. 333, June 25, 1904.
Footnote 237:
_Ibid._, 327, June 25, 1904.
Footnote 238:
Sen. Com. 1905, p. 1925.
Footnote 239:
I. C. C. Dressed-meat Hearings, Dec. 1904, Biddle.
Footnote 240:
Sen. Com. 1905, pp. 351, 354, 364, 818, 2496. The routing instructions
to agents of the St. Louis and San Francisco Railroad Company were
introduced. The circular contained a list of the roads over which
shipments were to be routed unless shippers insisted on a different
routing. Agents were cautioned that “these instructions are
confidential and must not be made public. Under no circumstances must
representatives of foreign roads or fast lines be allowed to examine
the instructions contained in the circular.” (p. 351.)
Footnote 241:
Sen. Com. 1905, p. 818.
Footnote 242:
Sen. Com. 1905, p. 354. The witness derived his information as to the
sale of tonnage and reciprocal routing agreements from high officials
of the railroads, pp. 354, 364.
Footnote 243:
10 I. C. C. Decis., 1904, p. 47.
Footnote 244:
_Ibid._, 422, Jan. 7, 1905.
Footnote 245:
_Ibid._, 630.
Footnote 246:
10 I. C. C. Decis. 226, April 28, 1904; Rep. 1904, p. 58,—held
unlawful discrimination. See also p. 78, complaint against W. Va.
Northern for refusing due proportions of coal cars.
Footnote 247:
134 Fed. Rep. 196; I. C. C. Rep., Dec. 1905, p. 65.
Footnote 248:
10 I. C. C. Decis. 699.
Footnote 249:
_Ibid._, 47, 663. The favored party in this case was an agent for the
railroad. No relief could be given.
Footnote 250:
11 I. C. C. Decis. 104. Rep. 1905, p. 45. Citing Wight _v._ United
States, 167 U. S. 512, and the Midland Case, 168 U. S. 144.
Footnote 251:
The Commission holds that the division agreed on must not be excessive
(10 I. C. C. Decis. 1905, p. 385. Harvester Trust and Steel Trust
Cases). But there is nothing in such granting or refusing of rate
concessions that necessarily violates the interstate law, provided the
little roads are common carriers for the public subject to the Act to
regulate commerce. If not, the division is held unlawful (10 I. C. C.
Decis., March 19, 1904, pp. 193, 505, 545, 546. Lumber).
The plea that the division is accorded to the little road because it
controls the business of its routing does not explain cases of
division between a private railroad that brings logs, etc., to the
mill, and the railroad that takes the lumber, etc., from the mill. But
through the milling-in-transit principle a division may be arranged
between the common carrier by rail that brings the logs to the mill
and the carrier that takes the lumber away (10 I. C. C. Decis. 194).
Footnote 252:
I. C. C. Rep. 1903, pp. 18–22.
Footnote 253:
Testimony of Mr. Biddle, General Traffic Manager of the Santa Fe,
Hutchinson Salt Case. I. C. C. Hearing, Dec. 5, 1903, p. 35.
Footnote 254:
10 I. C. C. Decis. 385, 392, Nov. 3, 1904. The Commission held that
$3.50 a car to the Illinois Northern, and $3 a car to the West
Pullman, would be reasonable for switching charges, and that switching
charges in excess of these sums amount to unlawful preferences in
favor of the International Harvester Company.
Footnote 255:
I. C. C. Rep. 1904, p. 21.
Footnote 256:
I. C. C. Rep. 1904, p. 21; 10 I. C. C. Decis. 385, Nov. 1904. The
Commission held that “the divisions are grossly excessive for the
services rendered and afford unlawful preference for the U. S. Steel
Corporation, which owns the Ill. Steel Co.”
Footnote 257:
10 I. C. C. Decis., March 25, 1905, pp. 661, 667–669 _et seq._
Footnote 258:
_Ibid._, p. 661.
Footnote 259:
I. C. C. Decis., 664, March 12, 1904.
Footnote 260:
_Ibid._, 707, Feb. 7, 1905; also p. 681, March 19, 1904.
Footnote 261:
The oil cars, dressed-meat cars, etc., of course are in use the year
round, and even fruit and vegetables need refrigerator cars in the
winter to keep them from freezing as well as in summer to keep them
from spoiling. (Sen. Com., 1905, p. 370.)
Footnote 262:
The present system, however, does not always give good service. In
April and May, 1905, for instance, hundreds and hundreds of cars of
strawberries rotted at the stations in North Carolina for want of
cars. The Armour Car-Line could not, or at least did not supply the
needed cars, and as they have an exclusive contract with the Atlantic
Coast Line no other cars are in the field. At one station only 4 cars
were furnished in two days and 125 carloads of berries were left on
the platform and the ground to spoil. The loss this season to the
truck growers of this one section from insufficient car service is
estimated at $600,000. (Sen. Com., 1905, pp. 2596, 2619.)
Footnote 263:
Some railroads have refrigerator lines of their own; the Pennsylvania,
for example, and the Vanderbilts, the Goulds, the Santa Fe, the
Northern Pacific, the Great Northern, etc., but they carry the private
refrigerators also. Packers and other shippers owning cars insist on
sending their goods in their own cars, and making the roads pay
mileage. If the road refuses, the freight goes by some other line.
“They compel us to take it in their cars and pay them for the use of
them while our own cars stand on the side track, or else some other
road gets the business.” (Testimony of James J. Hill, Sen. Com., 1905,
pp. 1504–1505.)
Footnote 264:
See above, pp. 57, 58.
Footnote 265:
This mileage rebate system began long ago. Way back in the seventies
the Erie and other roads allowed the Standard Oil Company to put tank
cars on their tracks and paid it a mileage sufficient to pay back the
values of the cars in less than 3 years.
Footnote 266:
The 1 cent rate applies to 15 to 25 percent of the total mileage of
the cars and the ¾ cent rate to the remaining mileage. (Bureau of
Commerce Rep. on Beef Industry, March, 1905, p. 273.)
Footnote 267:
Evidence in I. C. C. Hearings on private car-lines, April 28, 1904, p.
8. The Beef Trust report of the Bureau of Commerce, 1905, presents
some conflicting evidence and sums up the case with a conservative
estimate which places the average daily run of _all_ the cars owned by
Armour and his associates and used in the beef business at 90 to 100
miles. In the same report, however, the refrigerator cars of the
National Car-Line Company, and of the Provision Dealers’ Dispatch are
reported as running 300 miles a day, and the cars of Swift and Company
are estimated to make 373 miles a day in Iowa. (“Report of
Commissioner of Corporations on the Beef Industry.” March 3, 1905, pp.
274–281.)
Footnote 268:
I. C. C. Rep. 1903, p. 23.
Footnote 269:
National Congress of Railway Commissioners, 1892, statement of the
Committee on Private Cars, p. 52 _et seq._ The Lackawanna Line Stock
Express Co., for example, netted 50 percent a year, or $343 per car.
See also 4 I. C. C. Decis. 630.
Footnote 270:
I. C. C. Rep. 1903, p. 24. Sometimes the payment for a refrigerator
car is much more than $1 a day. James J. Hill says: “If we take
another railway company’s car, we pay 20 cents a day for it for the
time we have had it, and we are in a hurry to get it back; and we load
the other man’s car back if we have anything to put in it. That is
always understood. But they do not want anything put in their cars.
They say: ‘Hurry it back; get it around quickly, and pay us, in place
of 20 cents a day, three-fourths of a cent a mile.’ They used to ask a
cent a mile, but I think that has been abandoned.”
“SENATOR NEWLANDS. How much does that amount to a day, say at the rate
of a cent a mile?
“MR. HILL. If they got a cent a mile and we hurried that car through
to the coast, we would take it about 300 miles a day, so that they
would get about $3 a day for the car.
“SENATOR NEWLANDS. So that in the one case you pay 20 cents?
“MR. HILL. And in the other we pay $3.
“SENATOR NEWLANDS. And the private car-lines you pay $3.
“MR. HILL. Yes—well, $3 would be the extreme figure. We will say
$2.50.” (Sen. Com. 1905, p. 1505.)
Footnote 271:
A refrigerator car costs $900 to $1000, as a rule. A first-class
steel-framed freight car costs about the same. Private stock cars of
good build cost about $800 each. (See evidence in Hearings on Private
Cars, I. C. C. April, 1904, pp. 19, 100; I. C. C. Rep. 1904, p. 14.)
The contracts provide that the railroads are to carry no perishable
goods except in Trust cars if the Trust cares to furnish the cars. If
by chance the railroads use their own or any other refrigerator cars
than those of the Trust they are to charge the full Trust rates and
turn over the said charges to the car-line just as if its cars had
been used.
Footnote 272:
Sen. Com. 1905, p. 776: 49,807 total, 15,269 railroad and 34,538
private refrigerators; 14,792 tank cars; 11,357 stock cars; 325
poultry cars; vehicle cars and furniture cars, 1,621. These with coal
and coke cars and other private cars make a total of 127,331 private
cars. The entire freight car equipment belonging to the railroads is
about 1,700,000 cars.
Footnote 273:
The Beef Trust is one of the largest shippers in the world. Its
packing-house shipments from Chicago are said to amount to some three
thousand million pounds (3,000,000,000 lbs.) a year. Its shipments
from Kansas City, Omaha, St. Joe, St. Louis, etc., are also enormous.
There is also a vast traffic in poultry, eggs, dairy products, fruit,
and vegetables, that is controlled by the Trust. Is it any wonder that
a railroad president or manager should refrain from action that might
lose him his share of this huge business? It would make a sad hole in
his receipts. Dividends would be emaciated and might vanish or appear
with a minus sign. His stock would sink in Wall Street. Angry
directors, bankers, investors, and stockholders would assail him and
attack his management. And as a result of defying the Trust he would
put himself out of office and his road perhaps in the hands of a
receiver.
Footnote 274:
C. B. Hutchins was the inventor of an improved refrigerator car. He
built five cars in 1886, and in 1890 he had the California Fruit
Transportation Company operating $200,000 worth of cars. In two years,
1890 and 1891, the profits amounted to $250,000 or more than the total
investment, and the company thought they had something better than a
gold mine. But the Beef Trust undermined them by railroad favoritism
and compelled them to sell out to the Swifts.
While the California Fruit Transportation Company was fighting for its
life with the Armour lines, it presented the Southern Pacific Railway
Company with $100,000 of its stock on condition of receiving an
exclusive contract. The contract was made, but the Armour cars
continued to go. An influence was at work stronger than the exclusive
contract and the power of the California Fruit Transportation Company.
Footnote 275:
Evidence, pp. 101, 133, 134, 146, etc. For example the manager of the
“Missouri River Despatch” operating 250 refrigerator cars testified
that the Erie paid 12½ percent commissions on the freight rates in
addition to the mileage. And the manager of the Santa Fe car-line said
the B. & O. paid them 12½ percent commissions on dairy products in
addition to the ¾ cent mileage, etc. etc.
Footnote 276:
Evidence, pp. 54–55, Armour Cars.
Footnote 277:
National Congress Railway Commissioners, above cited.
Footnote 278:
_Ibid._
Footnote 279:
I. C. C. Rep. 1904, p. 14. Aug. 1, 1904 the Armour lines made an
exclusive contract with the Pere Marquette Railroad, the fruit carrier
of Michigan. Before that the railroad iced carloads of fruit free of
charge. On the date named icing charges went into effect as follows:
$25 to Chicago, Detroit, Grand Rapids, and other Michigan points.
$30 to Cleveland, Columbus, Cincinnati, Indianapolis, and other points
in Ohio and Indiana.
$35 to Buffalo, Bloomington, and various other points in New York,
Illinois, and Wisconsin.
$40 to Des Moines, Minneapolis, Nashville, and other points in Iowa,
Minnesota, Tennessee, etc.
$45 to Duluth, Lincoln, Wichita, etc.
$50 to New York City, Baltimore, Washington, Denver, etc.
$55 to Boston, Hartford, Mobile, New Orleans, etc.
$60 to Spokane, etc.
From $25 to $60 for what a year ago the railroad gave free of charge.
Footnote 280:
Rep. 1904, p. 15, 10 I. C. C. Decis. 1904, p. 360. Dealers have
protested against paying 4 or 5 or 6 times the fair charge for ice,
and have now and then refused to pay, telling the companies they could
sue for the charges. But the car companies knew a better way. They
ordered the cars of the disobedient dealers delayed and notified them
that in future icing charges must be prepaid on all shipments to them
or from them. These orders were enforced by the railroads and the
kicking dealers were helpless. (Evidence, etc., 201–203.)
With a commission business such as that involved in the case referred
to, an order for prepayment of icing charges or freight rates or both
means ruin. For farmers and other producers will not prepay charges on
perishables, and will not therefore ship to commission merchants to
whom the railroads do not give credit that permits the payment of
charges at their end of the line, _i. e._, on delivery.
Footnote 281:
Evidence, etc., 206, 207.
Footnote 282:
_Ibid._, 207.
Footnote 283:
Sen. Com. 1905, p. 2596; and the next item in the text.
Footnote 284:
11 I. C. C. Decis, 129, and Rep. 1905, p. 30, holding the Pere
Marquette Armour charges excessive and approving the Michigan Central
charge of $2.50 per ton on interstate shipments by the car.
Footnote 285:
Sen. Com. 1905, p. 369.
Footnote 286:
I. C. C. Beef Hearing, 1904, p. 165 _et seq._ It is a physical
impossibility for a man to inspect the loading of 75 or 100 cars a
day, and if an inspector is overzealous and conscientious in watching
the cars he can attend to, the Trust has the railroad dismiss him.
Footnote 287:
_McClure’s_ for January, 1906, p. 323.
Footnote 288:
See testimony before the I. C. C. April, 1904, p. 27. Mr. Watson’s
memory was very hazy. He could not remember what he had formerly
testified on this subject before the referee. Neither could he tell
what “U. P.” meant nor recognize the clear meaning of “C. & A.” in the
car-line account books, though every one familiar with railway matters
knows that “U. P.” stands for Union Pacific and “C. & A.” for Chicago
and Alton. Mr. Marchand, counsel for the Commission, drew some curious
non-information and mal-information from Mr. Watson, the former head
of Porter Brothers, who were large shippers of fruit in Chicago.
“MR. MARCHAND. What commission did you receive from the railroads on
account of Porter Brothers up to that time?
“MR. WATSON. I told you that was all stopped about four years ago, to
the best of my recollection.”
“MR. MARCHAND. Do you remember receiving from the Union Pacific
Railroad Company $1,400 in 1898—January 25, 1898?
“MR. WATSON. I do not.
“MR. MARCHAND. You have no recollection of that?
“MR. WATSON. No, sir.
“MR. MARCHAND. In 1899 there appears upon the ledger of Armour & Co.,
or rather the Fruit Growers’ Express, an item of $47,000, a credit. Do
you know where that came from?
“MR. WATSON. I do not know anything about the books of Armour & Co.
“MR. MARCHAND. Do you remember having received from C. & A. as on the
books of Armour & Co., on the 10th of October, 1899, the sum of
$45,219?
“MR. WATSON. I do not. I guess if you look it up you will find it is
‘credits and allowances.’
“MR. MARCHAND. ‘C. & A.’ stands for ‘credits and allowances’? What
does ‘U. P.’ stand for?
“MR. WATSON. I do not know.
“MR. MARCHAND. Does that stand for ‘Union Pacific’?
“MR. WATSON. I do not know whether it does or not.”
Mr. Robbins, vice-president and manager of the Armour Car-Lines, was
also afflicted with loss of memory, which was specially unfortunate in
view of the fact that the Trust had destroyed the accounts some time
before the Hearing.
“MR. MARCHAND. Can you explain the item of $14,000 paid to the Union
Pacific?
“MR. ROBBINS. No, sir; I can not.
“MR. MARCHAND. Is there anybody in your employ that can?
“MR. ROBBINS. I do not think so.
“MR. MARCHAND. You say you have destroyed your records.
“MR. ROBBINS. Yes, sir.”
Footnote 289:
I. C. C. Hearing on Private Cars, 1904, pp. 147–149. Mr. Brown,
counsel for the Santa Fe, said to the Senate Committee, 1905, that he
wished to put on record a sweeping denial that the A. T. & S. F. Co.
has made any discriminatory rates or paid any rebates. The next
moment, in answer to a question about the reduction of $25 a car below
the published tariff, to which Mr. Leeds testified as given by the
Santa Fe car-line, Mr. Brown said: “It was a rebate given to every
one.” (Rep. Sen. Com. on Interstate Commerce, May, 1905, p. 3140.) He
first said the road did not give any rebates, and then admitted it did
give rebates, but said it gave the same rebate to every one that
shipped. The coal mines that paid the Santa Fe $4 against $2.90 paid
by the Colorado Fuel Co. would hardly agree to that statement. But Mr.
Brown had in mind the car-line case in which they said the same rebate
was given to every shipper. Mr. Leeds said it was a secret rate, and
that he went to California and solicited business from various
shippers. Under such circumstances, the fact that every one who
shipped got the rebate does not eliminate discrimination but
accentuates it. The discrimination is against the man who does not
ship, the man who is not informed of the secret rebate. The Santa Fe
car-line informed such dealers as it chose. No others could afford to
ship on the Santa Fe. The instructed dealers could easily hold the
market at prices that would prevent the uninstructed from thinking
about shipping such goods.
Footnote 290:
Rep. 1904, p. 13.
Footnote 291:
Mr. Streychmans has been accused of stealing this code book and also
certain letters and papers, but in fact he took no original papers,
but only carbon copies of letters and statements he wrote for the
company, and the code book was put into his possession for use in his
work by the secretary of Armour’s general manager. If any charge of
stealing or any other criminal charge could be made, Streychmans would
long ago have been prosecuted by the Beef Trust people. When he began
giving publicity to the facts in his possession the general manager
tried to buy him off. He was shamefully treated by some of the Armour
officers, and partly in revenge, probably, and partly in gratitude to
the editor of the San Francisco _Examiner_ for helping him out of
California and the Armour grip, he gave the editor copies of letters,
etc., the publication of which led to his examination by the
Commission.
Footnote 292:
Testimony of J. W. Midgley, for over 20 years commissioner, chairman
and arbitrator for various Western railroads. I. C. C. Hearing, April,
1904, p. 8. The reader who is specially interested in the Beef Trust
and its doings should send for a copy of this Hearing, and those of
1901–1902. The report of the Bureau of Commerce Mar. 3, 1905, and Mr.
Baker’s articles in _McClure’s_ for Jan. 1906 and following months,
are also of the deepest interest.
Footnote 293:
Sen. Com. 1905, p. 311. The organizations represented by Mr. Ferguson
are the Western Fruit Jobbers’ Association; the National Retail
Grocers’ Association; the Minnesota Jobbers’ Association; Wisconsin
Retail and General Merchandise Association; Wisconsin Master Butchers’
Association; Minnesota State Retail Grocers’ Association, Superior,
Wis.; Lake Superior Butchers’ Association, Duluth, Minn.; Duluth
Commercial Club; Duluth Produce and Fruit Exchange, and the Iowa Fruit
Jobbers’ Association.
Footnote 294:
Rep. U. S. Industrial Commission, iv, p. 53.
Footnote 295:
The Standard has the tanks and private sidings all over the New
Haven’s territory while few are owned by the independents. Persons
without these facilities must pay 2d-class rates, while the Standard
Oil pays 5th class. The 5th class rate between Boston and New Haven is
10 cents per hundred, while the 2d class is 20 cents, the difference
probably representing several times the profit in handling one hundred
lbs. of kerosene. (Commissioner Prouty, in Annals of American Academy
of Political and Social Science, January, 1900.)
Footnote 296:
Ind. Com. iv, p. 53.
Footnote 297:
Sen. Com., 1905, pp. 2740, 2742.
Footnote 298:
See _The Outlook_, July 1, 1905, p. 578.
Footnote 299:
See Miss Tarbell’s vigorous description of what the Standard did to
Kansas in _McClure’s_ for September, 1905.
Footnote 300:
Ind. Com. vi, pp. 663–665. The seaboard pipe line was completed in
1884.
Footnote 301:
Sen. Com. 1905, p. 2322, Professor Ripley.
Footnote 302:
_Ibid._, p. 48. A member of the Florida State Commission says the
roads also show favoritism in the supply of cars and by giving rebates
to large shippers. (_Ibid._, p. 47, R. H. Burr.)
Footnote 303:
Sen. Com. 1905, pp. 3339, 3340, Commissioner Fifer.
Footnote 304:
_Ibid._, pp. 1816–1820, 3439, 3440.
Footnote 305:
10 I. C. C. Decis. 342, June 25, 1904.
Footnote 306:
Sen. Com. 1905, p. 3441. Other witnesses agreed as to the oppressive
freight rates, and said the town had subsidized two roads, both of
which are now controlled by the Southern Railway, but they did not
think town values had decreased or that population had diminished (pp.
2006, 2018).
Footnote 307:
_Ibid._, pp. 1761, 1762.
Footnote 308:
_Ibid._, p. 3294.
Footnote 309:
_Ibid._, p. 1878.
Footnote 310:
Sen. Com. 1905, p. 2040.
Footnote 311:
Sen. Com. 1905, p. 34.
Footnote 312:
_Ibid._ See 10 I. C. C. Decis. 650, and Rep. 1905, p. 36.
Footnote 313:
Complaint of Denver Chamber of Commerce, Sen. Com. 1905, p. 3257.
Footnote 314:
Sen. Com. 1905, p. 3336.
Footnote 315:
Question of Mr. Fifer of Interstate Commission to Sen. Com. 1905, p.
3337.
Footnote 316:
Sen. Com. 1905, pp. 2930, 2940.
Footnote 317:
_Ibid._, p. 2914.
Footnote 318:
See statements of Chamber of Commerce of Spokane and testimony of its
representative, Brooks Adams, Sen. Com. 1905, pp. 2917, 2928.
Footnote 319:
Sen. Com. 1905, pp. 2527–2529.
Footnote 320:
Senator Dolliver, Sen. Com. 1905, p. 2094.
Footnote 321:
Sen. Com. 1905, p. 1870.
Footnote 322:
10 I. C. C. Decis. 456, Jan. 13, 1905.
Footnote 323:
See the series of broadsides on these subjects in the Philadelphia
_North American_ during August, 1903, and the early part of 1904. An
excursion ticket from Washington to New York and return allowed 10
days in New York. Formerly a southern buyer going north on such a
ticket could stop over in Philadelphia. But in 1903 this stop-over
privilege was revoked, and if the buyer stopped in Philadelphia and
then bought an excursion to New York he could only stay five days in
New York. The result was that southern buyers began to leave
Philadelphia out in the cold and merchants found that “the present
tariff arrangements are working incalculable injury to wholesale
houses in Philadelphia,” and some of them had to open houses in New
York.
Footnote 324:
Ind. Com. ix, p. 133.
Footnote 325:
4 I. C. C. Decis. 593. The order was made May 29, 1894, on petition of
the Freight Bureau of the Cincinnati Chamber of Commerce _v._ 23
railway companies, and the Chicago Freight Bureau _v._ 31 railways and
5 steamship companies. The companies refused to comply and the Circuit
Court dismissed the bill for an enforcement, October, 1896, 62 Fed.
Rep. 690; 76 Fed. Rep. 183.
Footnote 326:
I. C. C. _v._ Railway, 167 U. S. 479, May, 1897, reaffirming 162 U. S.
184 and citing 145 U. S. 263, 267. Justice Harlan dissented.
Footnote 327:
“Railroad Transportation,” p. 114.
Footnote 328:
Sen. Com. 1905, p. 844.
Footnote 329:
_Atlantic Monthly_, vol. 73, p. 803, June, 1894.
Footnote 330:
E. P. Alexander in “Railway Practice,” p. 8.
Footnote 331:
Ind. Com. iv, p. 194.
Footnote 332:
10 I. C. C. Decis. 1904, p. 58.
Footnote 333:
Sen. Com., 1905, p. 19, Bacon.
Footnote 334:
_Ibid._, p. 19.
Footnote 335:
J. C. Wallace of the American Shipbuilding Co., June 28, 1904, to the
Congressional Merchant Marine.
Footnote 336:
See Wright’s letter printed in the speech of Senator Bacon of Georgia,
_Congressional Record_, April 25, 1904.
Footnote 337:
Testimony of James J. Hill before the Marine Commission.
Footnote 338:
10 I. C. C. Decis. 1904, p. 81.
Footnote 339:
Sen. Com. 1905, p. 919.
Footnote 340:
_Ibid._, p. 20. Glass, for example, costs 53 cents a hundred from
Boston to Chicago, while it will go all the way from Antwerp to
Chicago for 40 cents, and the railroads get only a fraction of the
through charge.
Footnote 341:
Ind. Com. iv, p. 194.
Footnote 342:
I. C. C. Beef Hearing, Dec. 1901, pp. 106–107; see also pp. 87, 88.
Footnote 343:
Sen. Com. 1905, p. 1462.
Footnote 344:
See evidence adduced in Chapter II. The words of the Industrial
Commission are still true: “There seems to be a general agreement that
the issue of free passes is carried to a degree which makes it a
serious evil.... Passes are still frequently granted to the members of
State and national legislatures and to public officers of many
classes.... And stress is often laid on the opinion that the issue of
passes to public officers and legislators involves an element of
bribery.” (Vol. iv, p. 18.)
Footnote 345:
Salaries are paid to favored persons; stock is given to influential
people; and tips on the market are given to congressmen and others
whose favor may be of advantage. And the railroads act against those
they dislike as vigorously as they act in favor of their friends. A
curious illustration of the extent to which railways will sometimes go
in their breaches of neutrality occurred in connection with the recent
trip of Thomas W. Lawson in the West. During the Chatauqua exercises
at Ottawa, Kansas, the Santa Fe advertised specials to run every day.
The day that Lawson was to speak, however, no specials ran, and
thousands of people were unable to go, as they had expected, to hear
the man who was attacking Standard Oil and its allies. The specials
ran as advertised every day up to “Lawson Day,” and began running
again the day after. The Santa Fe may not approve of Mr. Lawson’s
statements and in common with all other citizens it has the right to
oppose him with disproof, but isn’t it a little strange in this land
of liberty, free speech, and equal rights, for one of the best
railroads in the country to boycott a Chatauqua day because a man it
does not approve of is to speak?
Similar experiences with the railroad service are reported from the
Chatauqua at Fairbury, Neb., when Lawson spoke there.
Footnote 346:
Mr. Appleton Morgan, writing in the _Popular Science Monthly_ for
March, 1887, said (p. 588): “Rebates and discriminations are neither
peculiar to railways nor dangerous to the ‘republic.’ They are as
necessary and as harmless to the former as is the chromo which the
seamstress or the shopgirl gets with her quarter-pound of tea from the
small tea-merchant, and no more dangerous to the latter than are the
aforesaid chromos to the small recipients.”
General Manager Van Etten of the B. & A. says discrimination is the
American principle. You find it everywhere. You buy goods at wholesale
much cheaper than you can get them at retail. It is the same with gas
and water and electric light.
A number of railroad men take the view that “railroad service” is a
commodity to be sold like any other sort of private property at
whatever price the owner can get or chooses to take.
The trouble with these statements (aside from the quantity plea which
may be allowed within reasonable limits) is that the differences
between railway service and ordinary mercantile service are not taken
into account.
If people found they were unfairly treated by the bakeries or
groceries or shoe stores of a town, it would be easy to establish a
new store co-operatively or otherwise, that would be fair and
reasonable, and that possibility keeps the store fair as a rule even
where there is no direct competition. But when the railways do not
deal justly with the people of a town they cannot build a new road to
Chicago or San Francisco. It is the monopoly element, together with
the vital and all-pervading influence of transportation, that
differentiates the railroad service from any ordinary sort of
commerce. If bread stores or shoe stores combined, and, by means of
control of raw material or transportation facilities, erected a
practical monopoly or group of monopolies, and favoritism were shown
in the sale of goods by means of which those who were favored by the
monopolists got all the chromos and low rates, and grew prosperous and
fat, while those who were not favored went chromoless and grew thin in
body and emaciated in purse, it is not improbable that the President
would write a message on the bread question and the leather question,
and a Senate committee would be considering legislation to alleviate
the worst evils of the bread and shoe monopolies without stopping the
game entirely.
Footnote 347:
In their established tariffs our railroads do apply the same rates per
hundred whether the goods moved in carloads or train loads. The
Commission has held that the law requires this, and Commissioner
Prouty says that the open adoption of any different rule would create
an insurrection that Congress would hear from from all parts of the
country; but he thinks that in certain cases, live-stock and
perishable fruit for example, the railroads should have a right to
make lower rates by the train-load than by the carload. In reference
to cost of service there is ground for such a difference, but on
grounds of public policy is it not a mistake to favor the giant
shipper in this way and so help the building of trusts and monopolies?
Footnote 348:
Sixth Annual Report, Interstate Commerce Commission, p. 7.
Footnote 349:
_Outlook_, July 1, 1905, p. 577.
Footnote 350:
We have seen earlier in this chapter that a number of railroad men and
others told the Senate Committee that they believed rebates and
discriminations to have ceased. In his excellent book, “The Strategy
of Great Railroads,” Mr. Spearman says: “Alexander J. Cassatt has made
unjust discrimination in railroad traffic a thing of the past.”
Sometimes we are assured: “There can be no doubt but that, on the
whole, the freight rates of the country have been adjusted in very
nearly the best way possible for the upbuilding of the country’s
commerce.” (See “Freight Rates that were made by the Railroads,” W. D.
Taylor, _Review of Reviews_, July, 1905, p. 73.) For one who has in
mind the facts brought out in this book, comment on these statements
is hardly necessary. There is no doubt that President Cassatt is a
railroad commander of exceptional power, but he has not vanquished the
smokeless rebate, nor driven the hosts of unjust discrimination from
the railroads of the United States.
Footnote 351:
Ind. Com. Q. & Ans. iv, p. 596.
Footnote 352:
Sen. Com. 1905, p. 1474.
Footnote 353:
Sen. Com. 1905, p. 1521. The Texas Railway Commission says: “It is
plain that, if a railway company is permitted to become interested in
any kind of business competitive with business in the carrying on of
which for others it is engaged, the business in which it is interested
can be made to prosper at the expense of the business in which it has
no interest. The temptation to unfair discrimination in such a case is
so powerful that it ought to be removed.” (Report, 1896, p. 29.)
Footnote 354:
Sen. Com. 1905, p. 17.
Footnote 355:
I. C. C. Rep. 1898, p. 6.
Footnote 356:
I. C. C. Rep. 1898, p. 8.
Footnote 357:
On pages 65 and 66 of the last Report, Dec. 1905, the Commission
discusses a decision of the Circuit Court for the Southern District of
New York, in June last, to the effect that a _subpœna duces tecum_,
commanding the secretary and treasurer of a corporation supposed to
have violated the law to testify before the grand jury, and bring
numerous agreements, letters, telegrams, etc.,—practically all the
correspondence and documents of the company originating since the date
of its origin,—to enable the district attorney to ascertain whether
evidence of the alleged breach of law exists, constitutes an
unreasonable search and seizure of papers prohibited by the Fourth
Amendment to the Constitution.
Footnote 358:
Sen. Com. 1905, pp. 2899–2901, 2911.
Footnote 359:
Sen. Com. 1905, p. 829.
Footnote 360:
I. C. C. Beef Hearing, Dec. 1901, pp. 100, 101.
Footnote 361:
I. C. C. Beef Hearing, Dec. 1901, pp. 114–115.
Footnote 362:
_Ibid._, p. 126.
Footnote 363:
Report of Oregon Railway Commission, 1889, p. 32.
Footnote 364:
See above, p. 237.
Footnote 365:
See above, p. 113.
Footnote 366:
“There is ample law to-day” to stop rebates and unjust
discriminations, says President Tuttle of the Boston and Maine (Sen.
Com. 1905, p. 951), and he backs up his statement with vigorous
reasons for believing that the Government has never earnestly enforced
existing laws. President Ramsey of the Wabash also says that the
present law is ample to cover every unjust charge, and no further
legislation is needed to stop discrimination (Same, p. 1959).
George R. Peck, general counsel for the Chicago, Milwaukee & St. Paul,
testified that “existing law is entirely adequate” (Same, p. 1301).
Mr. Robbins, manager of the Armour Car-Lines and director in Armour &
Co., declares that the “Elkins Law is ample” (Same, p. 2387). See also
p. 2117, James J. Hill; pp. 2179, 2181, Carle; p. 2228, Grinnell; p.
3068, Faxon; pp. 3274, 3276, 3285, 3290, Elliott; p. 2360, Woodworth;
p. 2829, Smith.
Footnote 367:
A number of witnesses declare that the delays and uncertainties and
inadequacies of redress under existing laws discourage shippers from
efforts to obtain relief. Mr. C. W. Robinson, representing the New
Orleans Board of Trade and the Central Yellow Pine Association, says
they had such bad luck with their lumber cases before the United
States courts that they are discouraged.
“‘Don’t you think that the question of rebates and discriminations is
already covered by law and can be stopped by summary proceedings?’
“MR. ROBINSON. That they are not stopped is patent to every one who
uses a railway company as a shipper and who keeps his eyes open.
“‘Has there been any suit brought within the last two or three years
for rebates and discriminations in this section of the country?’
“MR. ROBINSON. No; generally speaking, we have decided down there that
life is too short to litigate with the railroad companies” (Sen. Com.
1905, p. 2492).
Governor Cummins of Iowa says that no suits have been brought in Iowa
for discrimination under the Elkins Law because the remedy under that
law is regarded as inadequate (Sen. Com. p. 2081). It appears that
only one case, the Wichita sugar differential, is before the I. C. C.
under the Elkins Law (Sen. Com. p. 2874).
Footnote 368:
Fifer, Adams, etc., Sen. Com. pp. 2923, 3338.
Footnote 369:
Vining, Sen. Com. p. 1691, Knapp, p. 3294, etc. Robbins, however,
manager of the Armour Car-Lines, says they are opposed to being made
common carriers (pp. 2384, 2397, 2400). He says they do not indulge in
rebates, generally speaking (pp. 2382, 2387, 2403), and thinks they
would be worse off if put under the Interstate Law (pp. 2390, 2397,
2401).
Footnote 370:
President Roosevelt, Governor La Follette, Governor Cummins, Sen. Com.
p. 2046; Professor Ripley, pp. 2330, 2338: Commissioner Knapp, p.
3305, Commissioner Prouty, pp. 2794, 2873, 2881, and 2886, where he
says: “I do not think the Commission has to-day in its docket a case
that can be satisfactorily disposed of without determining the rate
for the future.” Commissioner Clements, p. 3243, Commissioner Fifer,
pp. 3344, 3350, and many other witnesses; also writers and speakers
throughout the country.
On the other hand, James J. Hill, President of the Great Northern,
says he cannot imagine a greater misfortune than to attempt to fix
rates by law, p. 1486; it would hamper transportation and hinder
development. President Tuttle says that rate-making is practically the
only property right the railways have, p. 913. Railway men generally
are strongly opposed to fixing rates by commissions.
Footnote 371:
Sen. Com. p. 3482, N. Y. Chamber of Commerce.
Footnote 372:
Several witnesses suggest this. See, for example, Sen. Com. p. 3280.
But James J. Hill says that if present laws were enforced not one of
the car-lines could exist a moment, p. 1486.
Footnote 373:
Professor Ripley, p. 2345, Fordyce, p. 2202, and many railroad men;
see below, p. 265. But see p. 61, Cowan; p. 822, Victor Morawetz; pp.
973 and 1003, President Tuttle.
Footnote 374:
James J. Hill, p. 1521.
Footnote 375:
Knapp, p. 3299; without such a provision the old roads can cripple a
new road unless it goes clear across the continent.
Footnote 376:
Morawetz, pp. 818, 824; Bacon, pp. 16, 23; Davies, p. 3470; and Report
of Industrial Commission. Publicity is an excellent aid, but is
insufficient alone. It must keep steady company with adequate
legislation and efficient enforcement of it. What has been the effect
of publicity on the Standard Oil Trust up to date?
Footnote 377:
Commissioner Prouty, p. 2912. “That would stop discriminations,” said
the Commissioner. “Unless they got possession of the man,” said
Senator Dolliver.
Footnote 378:
Judge Gaynor proposes that the traffic managers shall be appointed by
the Government. The present writer has suggested that the public might
be represented on the board of direction in consideration of the
franchises, etc.
Footnote 379:
_Arena_, vol. 24, p. 569, Parsons.
Footnote 380:
Many of the States have strong laws, but the inharmonious,
uncoordinated efforts of individual States have proved of little avail
against the giant railway systems. Of the 31 States which have
established railway commissions, 22 have given the commissions more or
less of the rate-making power. For example, the Alabama Code, 1886,
gives the Commission authority “to revise the tariffs and increase or
reduce any of the rates.” The California Constitution, 1880, confers
power “to establish rates;” Florida Laws, 1887, “to make and fix
reasonable and just rates;” Georgia Code, 1882, “to make reasonable
and just rates;” Illinois Laws, 1878, “to make for each railway a
schedule of reasonable maximum rates;” Iowa, 1888, and South Carolina,
1888, the same as Illinois; Minnesota, 1887, power “to compel railways
to adopt such rates and classification as the Commission declares to
he equal and reasonable;” South Dakota, 1890, the same; Mississippi,
1884, “to revise tariffs;” New Hampshire, 1883, “to fix tables of
maximum charges.” (See 63 N. H. 259.) Kansas: on complaint and proof
of unreasonable charge Commission may fix reasonable rates, and if
companies don’t comply they may be sued for damages. The Massachusetts
Commission has “authority to revise the tariffs and fix the rates for
the transportation of milk” (158 Mass. 1). In New York the board may
notify the railways of changes in the rates, etc., it deems requisite,
and the Supreme Court may in its discretion issue mandamus, etc.,
subject to appeal. In Nebraska the State Supreme Court has held that
general language prohibiting unreasonable rates, and giving the
Commission power to enforce the law, is sufficient to confer authority
to fix reasonable rates in place of those found unreasonable, such
authority being essential to the efficient execution of the law
against excessive rates (22 Neb. 313).
In none of the States does the power to regulate rates appear to have
produced results of much value. In some States, Georgia, Texas,
Nebraska, Iowa, etc., the power has been at times vigorously used, but
the effect has been to antagonize the railroads, which have so much
power that is beyond the reach of any State Commission that they can
arrange their tariffs and service so as to work against the aggressive
States and disgust the people with the consequences of trying to
control the rates. Senator Newlands, who is sincerely on the people’s
side in the struggle for justice in transportation, voiced the common
opinion when he said in the United States Senate, January 11, 1905,
“As to the rate-regulating power, my judgment is, and it is the belief
of almost all experienced men in this country, that the
rate-regulating power exercised by the States has not, as a rule, been
beneficially exercised.”
Footnote 381:
The Bill provides that “Whenever ... the Interstate Commerce
Commission shall ... make any finding or ruling declaring any rate,
regulation or practice whatsoever affecting the transportation of
persons or property to be unreasonable or unjustly discriminatory the
Commission shall have power and it shall be its duty to declare and
order what shall be a just and reasonable rate, practice or regulation
to be ... imposed or followed in the future in place of that found to
be unreasonable” etc. It also provides that the order of the
Commission shall take effect 30 days after notice, but may on appeal
within 60 days be reviewed by a special transportation court having
exclusive jurisdiction of all such cases. By Section 12, the case is
to be reviewed on the original record, except when there is newly
discovered evidence which was not known at the hearing before the
Commission, or could not have been known with due diligence, and the
findings of fact by the Commission are _prima facie_ evidence of each
and every fact found. The only appeal from the court of transportation
is to the United States Supreme Court.
Footnote 382:
I. C. C. Rep. 1905, p. 9.
Footnote 383:
The granting of such power of inspection and publicity has been urged
by the Commission upon Congress in previous reports. On page 11 of the
Report for December, 1905, the Commission says: “We have also called
attention to the fact that certain carriers now refuse to make the
statistical returns required by the Commission. For example, railways
are required, among other things, to indicate what permanent
improvements have been charged to operating expenses. Without an
answer to this question it is impossible to determine to what extent
gross earnings have been used in improving the property and the actual
cost of operation proper.... Certain important railways decline to
furnish this information at all, and others furnish it in a very
imperfect and unsatisfactory manner.”
Footnote 384:
I. C. C. Rep. 1905, pp. 9, 10.
Footnote 385:
This clause together with the words italicized in the next paragraph
make the ruling of the Commission final so far as the merits of the
case are concerned. (See Appendix B.)
Footnote 386:
As the galley proofs of this book go back to the printer, the Hepburn
Bill has passed the House by a big majority. If passed by the Senate
and put in force, it promises to operate as a serious check upon the
abuses connected with private cars, terminal railroads and midnight
tariffs, but it does not touch at all nine-tenths of the methods of
discrimination. We have seen that between 60 and 70 different methods
of unjust discrimination between persons and places are in use in our
railway business to-day. The fixing of a maximum rate cannot prevent
either secret rate cutting or favoritism in facilities and services,
or even open discrimination in the arrangement of classifications and
adjustment of rates between different localities.
No doubt this law in the hands of an able and honest commission would
do much good, but it cannot reach the heart of the railroad problem,
which is the unjust discrimination between persons and places. No
amount of maximum rate-fixing or prescribing of regulations can
destroy discrimination so long as we have the pressure of great
private interests driving the railroads into the practice of
favoritism.
The history of railroad legislation in this country shows that the
railways do not respect or obey the law when it conflicts with the
fundamental financial interests and orders of the railway owners and
trust magnates, whose gigantic power represents the real sovereignty
and control in America to-day.
On page 3 of the House Report, 59th Congress, 1st Session, No. 591,
January 27, 1906, accompanying the Hepburn Bill the Committee on
Interstate and Foreign Commerce says: “It is proper to say to those
who complain of this legislation that the necessity for it is the
result of the misconduct of carriers.... If the carriers had in good
faith accepted existing statutes and obeyed them there would have been
no necessity for increasing the powers of the Commission or the
enactment of new coercive measures.”
What reason is there to believe that the railroads will accept a new
statute in good faith and obey it any more than any former law? On the
contrary, the probability is that if the Hepburn Bill becomes a law
the main effect will be to compel railway managers and counsel to sit
up nights for a time planning methods to evade and overcome the new
provisions. Even if Congress gave the full power at first demanded by
the President, to fix the precise rate to be charged, the general
effect would probably be that railways would exert themselves to
control the Commission. They have always at hand the weapon of
practically interminable litigation, and it is very doubtful whether
the railroad representatives in the United States Senate will permit
any law to pass until it is amended so that the review in the courts
shall go to the merits of the Commission’s order in each case.
Powerful interests are opposed to any provision that will permit the
fixing of a rate, even a maximum, to go into effect before it is
connected already with the Federal courts.
Footnote 387:
See statement earlier in this discussion.
Footnote 388:
Sen. Com. 1905, p. 3485.
Footnote 389:
Dept. of Commerce, Monthly Summary, April, 1900, p. 3991.
Footnote 390:
See Ind. Com. vols. iv and ix, and Hudson, Hadley, etc.
Footnote 391:
They tend to stability, economy, and efficiency, diminishing the
fluctuation of rates, railroad wars, and the wastes of competition,
and improving the service by better co-ordination, distribution of
traffic, etc.
Footnote 392:
See the powerful statements of President Ingalls, President Fish, Paul
Morton, Professor Seligman, Commissioner Prouty, etc., Ind. Com. vol.
iv; and statements of Professor Ripley, Morawetz, Fordyce, etc., Sen.
Com. 1905. It is absurd to forbid co-operation for the maintenance of
reasonable rates and prevention of superfluous transportation, or any
other honest purpose. Traffic agreements may secure a co-ordination of
service approaching that which would be attained by unity of
management. The fetish-worship of competition is one of the prime
curses of our economic ignorance. We might as well worship
destruction, injustice, and inefficiency. Moreover, competition of the
kind that protects the public from oppressive rates cannot be
maintained in the railway world. Let the railways unite, and then
control them, insisting on the dominance of the public interest so far
as necessary to accomplish justice.
Footnote 393:
The United States Supreme Court held in the Trans-Missouri Case, March
22, 1897, and the Joint Traffic Association Case, Oct. 24, 1898, that
railroads cannot lawfully agree on rates to competitive points. But no
law or decision can well prevent railroad managers from meeting and
coming to an understanding that they will adopt the same rates to such
points. No contract in restraint of trade or to limit competition is
necessary,—if each railroad publishes the same rates between
“competitive” points and maintains them, competition as to rates is
killed as effectually as if there were a pool or a traffic association
with a written agreement.
Footnote 394:
Sen. Com. 1905, pp. 2923, 3338.
Footnote 395:
Sen. Com. 1905, p. 3482.
Footnote 396:
_Ibid._, pp. 3485, 3486. The railroad managers decided to notify
offending railroads that unless rates were restored, the lowest cut
rates that had been made by any line would be adopted by all, to
punish the rebaters and stop them from getting business thereby. At a
meeting July 26, 1882, 30 railroads being represented, a resolution
was unanimously adopted, directing agents at connecting points to
examine waybills, and when rates were found to have been cut, to hold
the freight at the expense of the initial line until the waybills had
been corrected.
Footnote 397:
Sen. Com. 1905, p. 1908, and index, “Rate-Making.”
Footnote 398:
The Senate is too full of men interested in railroads in one way or
another to make it easy to pass any measure that might seriously
affect either the power or the profits of the roads.
Footnote 399:
President Tuttle agrees with the Commission on this point. In his
testimony to the Senate Committee, 1905, he said that the company’s
books would not show rebates, etc., “unless they wanted them to. I
will say to you frankly that if a company intended to evade the law by
giving rebates and commissions they would find some way of so covering
them up that all the experts on the face of the earth could not find
them. If you assume at the beginning that the railroad management is
deliberately going into violations of the law it is not going to make
records of those things which can ever be found out.” (Sen. Com. 1905,
p. 952.) But President Tuttle said: “There is ample opportunity to
ascertain if rebates exist. There are always opportunities. The
competitive shipper knows about it. There is always enough of the
loose end hanging out somewhere so that if the Interstate Commerce
Commission or whoever is authorized to move in those matters will take
the time to proceed upon the lines of information that they can always
get they will be easily ferreted out and punished. I do not think
there is any evidence that the Interstate Commerce Commission has
tried to enforce the Elkins Law.” (Same, p. 951.) Shippers have,
however, often stated that they felt sure some concession was being
made to their rivals, but they could not tell what, and in many cases
there is simply a vague suspicion; no one knows whether others are
paying the tariff rates or not. And railroad men have admitted, as in
the B. & A. case, that no shipper knew what rates others were getting.
Footnote 400:
Sen. Com. 1905, p. 3644.
Footnote 401:
Out of 37 passenger cases (20 rate cases and 17 miscellaneous) the
decision was favorable to the complainant in 9; and in 316 freight
cases the decision was for the complainant in 185 cases. In 70 of the
freight cases the complaint was of excessive charges (half of them
charging discrimination also, or relative excess as well as absolute
excess); 119 related to charges relatively unreasonable; 52 concerned
long and short haul abuses; 20 unreasonable classification, 8 unfair
distribution of cars, 41 miscellaneous. Ninety-six of the 316 freight
cases were dismissed, 13 settled while pending, 4 left without a
general statement and no order, and 17 held for further action. Nearly
90 percent of all the cases, passenger and freight, related directly
to some form of discrimination, and indirectly discrimination of some
sort was an element in practically every case.
Footnote 402:
The 8 cases are the New York and Northern Case (3 I. C. C. 542) the
Social Circle Case (4 I. C. C. 744) the Minneapolis Case (5 I. C. C.
571) the Colorado Fuel and Iron Case (6 I. C. C. 488) the St. Cloud
Case (89 I. C. C. 346) the Savannah Case (8 I. C. C. 377) the Tifton
Case (9 I. C. C. 160) and the California Orange Routing Case (9 I. C.
C. 182). Mr. Willcox thinks the Minneapolis Case and the Colorado Case
should be crossed off because the carriers complied with the orders
while suit was pending, so that there was no decision on the merits.
He says the decision was not on the merits in the New York Case, the
St. Cloud Case, or the Tifton Case. In the Social Circle Case the
Supreme Court sustained the order in respect to discrimination, but
reversed it so far as it attempted to fix a maximum rate. In the
Orange Case the Circuit Court sustained the Commission, but an appeal
was taken at once to the Supreme Court. In the Savannah Naval Stores
Case the Circuit Court sustained the Commission and no appeal was
taken. Two cases in favor of the Commission in the Court of Appeals
and one-half a case in the Supreme Court, and one of the circuit
decisions is on appeal—one and one-half final affirmatives on the
merits out of 34. One would think that Mr. Willcox might allow the
Commission the three cases that were decided in their favor although
the court did not find it necessary to go into the merits of the
matter, and he seems to be less generous about the Colorado Case than
Mr. Newcomb, who says the Commission was sustained by the court.
Footnote 403:
Work of the Interstate Commission, p. 14, 1905. (See Appendix A.)
Footnote 404:
As the average time required to reach a final decision in a case that
goes from the Commission through the Federal courts up to the United
States Supreme Court is 7½ years, it is clear that there is plenty of
time for the accumulation of a congregation of cases, birds of a
feather, waiting for judgment, on the same point.
Footnote 405:
Sen. Com. 1905, p. 2888.
Footnote 406:
The railroads would prefer a court to a Commission if any public body
is to have power over rates. They know that proceedings in court are
likely to be troubled with long delays, and great expense, and that
courts are very delicate about determining what is a reasonable rate.
In the Reagan case (154 U. S. 362) the Supreme Court says: “It has
always been recognized that if the carrier attempted to charge a
shipper an unreasonable sum the courts had jurisdiction to inquire
into that matter and award to the shipper any amount exacted from him
in excess of a reasonable rate; and, also, in a reverse case, to
render judgment in favor of the carrier for the amount found to be a
reasonable rate.”
In any case of suit by a shipper to recover damages for unreasonable
charges the court would have to determine what was a reasonable rate
in order to fix the measure of damages, but Chairman Knapp of the I.
C. C. says he does not know of a case in which suit was ever brought
(Sen. Com. 1905, p. 3301). The fact that very many complaints have
been made of unreasonable rates and no suits brought in the courts
indicates that court procedure is regarded as inadequate. Courts are
by nature judicial, not legislative or executive. And the remedy which
can be administered by them in these railroad cases is uncertain,
limited, and indirect. (Sen. Com. p. 3362.)
Footnote 407:
Sen. Com. 1905, pp. 3297, 3298.
Footnote 408:
Sen. Com. 1905, p. 975.
Footnote 409:
9 I. C. C. Decis. 318, Nov. 17, 1902.
Footnote 410:
10 I. C. C. Decis. 590; Rep. 1905, p. 31.
Footnote 411:
Essex Milk Producers’ Association _v._ Railroads, 7 I. C. C. Decis.
92, March 13, 1897. See also Howell _v._ New York, Lake Erie, and
Western, 2 I. C. C. Decis. 272, equal milk rates from all distances
unlawful.
Footnote 412:
11 I. C. C. Decis. 31.
Footnote 413:
Sen. Com. 1905, p. 1339.
Footnote 414:
Sen. Com. 1905, p. 1165. The fact is that neither the Elkins Bill nor
the Esch-Townsend Bill reaches the private car abuses or terminal
railroads, or flying tariffs, or other evasive forms of
discrimination, and neither adds much to the power of the Commission
to deal with the subject. (See Sen. Com. pp. 2889, 2905, 2911).
Footnote 415:
Sen. Com. 1905, pp. 1675, 1676.
Footnote 416:
See Chamber of Commerce _v._ C. M. & St. P. Rd., 7 I. C. C. Decis.
1898, p. 510 and I. C. C. Rep. 1898, p. 24.
Footnote 417:
The reasons for and against public ownership of railroads are dealt
with in the testimony of the writer before the Industrial Commission,
vol. ix., pp. 123–193, 883–890. President Roosevelt had the
possibility of public ownership in mind when he said in his message
that we must choose between an increase of existing evils, or
increased Government supervision, or a “still more radical policy.”
Footnote 418:
The railways of Italy were operated by private companies when I was
there; since then, in 1905, the Government has undertaken the
operation of them.
Footnote 419:
A few illustrations of the vigorous manner in which this law works out
in practice may be of advantage here:
The Hungarian Government at a single stroke, in 1889, reduced State
railway fares 40 to 80 percent. Austria and Prussia have also made
great reductions in railway charges. Belgium started in the thirties
with the very low rate of ⅘ of a cent on her public railways. In New
Zealand and Australia also the Government managements have adopted the
settled policy of reducing railroad rates as fast as possible.
When England made the telegraph public in 1870, rates were lowered 30
to 50 percent at once, and still further reductions were afterwards
made.
When France took over the telephone in 1889, rates were reduced from
$116 to $78 per year in Paris, and from $78 to $39 elsewhere, except
in Lyons, where the charge was made $58.50.
Private turnpikes, bridges and canals levy sufficient tolls to get
what profit may be possible; but when the same highways, bridges and
canals become public the tolls are often abolished entirely, rendering
such facilities of transportation free, and when charges are made they
are lower than the rates of private monopolies under similar
conditions, and generally reach the vanishing point as soon as the
capital is paid off or before.
When Glasgow took the management of her street railways in 1894, fares
were reduced at once about 33 percent, the average fare dropped to
about 2 cents, and 35 percent of the fares were 1 cent each. Since
then further reductions have been made, and the average fare now is
little more than a cent and a half; over 50 percent reduction in 6
years, while we pay the 5 cent fare to the private companies in Boston
and other cities of the United States the same as we did 6 years ago,
instead of the 2½ cent fare we would pay if the same percentage of
reduction had occurred here as in Glasgow.
According to Baker’s Manual of American Waterworks, the charges of
private water companies in the United States average 43 percent excess
above the charges of public waterworks for similar service. In some
states investigation shows that private water rates are double the
public rates.
For commercial electric lighting Prof. John R. Commons says that
private companies charge 50 to 100 percent more than public plants.
We could offer many other illustrations of the law that public
ownership tends to lower rates than private monopoly, but this
discussion may be sufficient to indicate the complexion of the facts.
Footnote 420:
The sixteenth annual report of the Commission, dated 1905, and
covering the year 1904, has come just in time for a note before the
galleys are made up into pages. Of the 103 suits entered before the
Commission in 1904, about a quarter (25) relate to undue preference,
rebates, refusal or neglect to afford such reasonable facilities as
were accorded to others under similar circumstances; and most of the
other cases, charging unreasonable rates, etc., were really based on
some element of unjust discrimination in one form or another. (See
Appendix B.)
Footnote 421:
While this book is on the press, the eighth report, covering 1902 and
1903, has come to hand. More than half the 180 new complaints filed in
the 2 years directly relate to questions of discrimination—undue
preference, rebates, denial of facilities accorded to others,
excessive charges as compared with other rates, etc., and nearly all
the 180 cases involve discrimination directly or indirectly. (See
Appendix B.)
Footnote 422:
From the _Progressive Review_, vol. II, no. 11, pp. 441, 442, where a
number of facts relating to import rates are condensed from the
testimony before Parliamentary committees.
Footnote 423:
See “The Railway Act” 1903.
Footnote 424:
This and other phases of the problem relating to the comparison of
private management, government control, and government ownership, are
more fully dealt with in “The Railways, the Trusts and the People” by
the same author. Oct. 1905, Equity Series, 1520 Chestnut St.,
Philadelphia.
[Illustration]
------------------------------------------------------------------------
THE RAILWAYS, THE TRUSTS AND THE PEOPLE.
BY PROF. FRANK PARSONS, PH.D.
_Edited and Published by C. F. TAYLOR, M.D., Editor and Publisher of
Equity Series, 1520 Chestnut Street, Philadelphia._
THE CONTENTS ARE AS FOLLOWS:
PART I.
THE RELATIONS OF THE RAILROADS TO THE PUBLIC, OR VITAL FACTS FROM THE
RAILWAY HISTORY OF THE UNITED STATES.
CHAPTER
The Railway Empire I.
The Allied Interests II.
Railway Favoritism III.
Railways in Politics IV.
Fostering Monopoly V.
Watered Stock and Capital Frauds VI.
Gambling and Manipulation of Stock VII.
Railroad Graft and Official Abuse VIII.
Railways and the Postal Service IX.
The Express X.
The Chaos of Rates XI.
Taxation without Representation XII.
Railways and Panics XIII.
Railway Strikes XIV.
Railway Wars XV.
Defiance of Law XVI.
Nullification of the Protective Tariff XVII.
Railway Potentates XVIII.
The Failure of Control, How Far and Why XIX.
The Irrepressible Conflict XX.
PART II.
THE RAILROAD PROBLEM IN THE LIGHT OF COMPARATIVE RAILROAD HISTORY
COVERING THE LEADING SYSTEMS OF THREE CONTINENTS.
CHAPTER
The Problem XXI.
The Supreme Test XXII.
Lessons from Other Lands XXIII.
The Aim XXIV.
Contrasts in General Policy XXV.
Location.—Construction.—Capitalization, etc.
Management XXVI.
Safety.—Service.—Economy.—Progress.
The Rate Question XXVII.
General Policy.—Rate Level under Public and Private
Management.—Zone System.
Employees XXVIII.
Political, Industrial, and Social Effects XIX.
Remedies Proposed XXX.
Pooling.—Consolidation.—Regulation.—Public Ownership.
AMERICAN RAILROAD RATES
BY JUDGE WALTER C. NOYES
_Author of “The Law of Intercorporate Relations,” etc._
* * * * *
A masterly work, reviewing the most highly controversial economic issue
of the day in this country.—_New York Commercial._
Judge Noyes is the possessor of a thorough knowledge of the complicated
subject of rate-making.—_Chicago Record-Herald._
=The most intelligent discussion of the subject which has yet
appeared.=—_New York Law Journal._
Judge Noyes’ handling of the question is clear, impressive, and
indicative of a mastery of the legal or constitutional side of the
subject.—_Springfield Republican._
A careful reading will help toward a solution of the problem of federal
regulation of railway rates.—_Railway Age._
=We know of no book which will give the lay reader so clear and so
authoritative a statement of the fundamental legal principles which must
govern in the determination of the pending question concerning
government regulation of railway rates.=—_Outlook_, New York.
It is truly refreshing to turn to the book. Every aspect, historical or
actual, of the question is dealt with, including discrimination,
pooling, competition.—_Chicago Evening Post._
A book covering completely a field heretofore only touched in
spots.—_Indianapolis News._
=A remarkable book, considered from every point of view—economic,
practical, legal.=—EDGAR J. RICH, _General Solicitor of the Boston &
Maine R. R._
For readers desirous of reaching a clear understanding both of the legal
and economic questions involved in the fixing of railroad rates there is
probably no better handbook. His whole attitude is eminently judicial,
open-minded, and impartial.—_St. Paul Pioneer Press._
The author is an expert in railroad management and his opinions are
judicial and wholly unbiased.—_American Law Review._
* * * * *
PRICE, $1.50 net. Sent Postpaid on Receipt of $1.64 by
LITTLE, BROWN, & CO., _Publishers_, BOSTON
------------------------------------------------------------------------
TRANSCRIBER’S NOTES
1. Silently corrected obvious typographical errors and variations in
spelling.
2. Retained archaic, non-standard, and uncertain spellings as printed.
3. Re-indexed footnotes using numbers and collected together at the end
of the last chapter.
4. Enclosed italics font in _underscores_.
5. Enclosed bold font in =equals=.