INDEX

[References are to pages.]

[1]. See New England Exp. Co. v. Maine Central R. R., 57 Me. 188; Fitchburg R. R. v. Gage, 12 Gray (Mass.), 393; Kenny v. Grand Trunk R. R., 47 N. Y. 525; Messenger v. Penn. R. R., 8 Vroom (N. J.), 531; Chicago, etc., R. R. v. People, 67 Ill. 11; Wheeler v. San Francisco R. R., 31 Cal. 46.

[2]. Pass discrimination alone, it is estimated, amounts to some 200,000 free transits a day, or over 70 millions in a year. And as for freight discriminations, the reader who follows this history through will see that like the leaves of the forest they defy computation. Just a hint may be given here. Every day that one of the 300,000 private cars is carried at the present mileage rates, a discrimination is made in favor of the owner of the private car,—a hundred millions of unjust discriminations, possibly, in this one item.

[3]. The New York Central, Baltimore and Ohio, and some other lines announced the same purpose as the Pennsylvania in respect to passes after January 1, 1906, but with them as with the Pennsylvania it appears to be a case of more careful discrimination in the use of discrimination, and an appreciation of the fact that it is very important to make a good impression on the public mind just now, in view of the widespread demand for drastic legislation in the direction of railroad regulation.

[4]. A number of the States have laws against passes. The Interstate Commerce law forbids them. And they are always against the moral law whether they run beyond the State line or not.

[5]. In one case it appeared that a leading railroad attorney had been for years in the habit of supplying jurors with passes. Opposing counsel brought out the fact that all the jurors in the case on trial had accepted passes from the railroad company which was the defendant in the case, and that to have an equal chance for justice his client would have to give each juror $50 to offset the railroad gifts. The judge discharged the whole jury.

[6]. Condensation of statement of Texas Railroad Commission’s Report for 1898, p. 17. See, further, “Bribery by Railway Passes,” North American Review, 138, p. 89; and Public Opinion, 26, p. 167, Feb. 9, 1899: “The Pass Evil in Three States” (Indiana, Minnesota, and Washington).

[7]. “Railway Passes and the Public,” Forum, 3, p. 392.

[8]. Vol. iv, pp. 456–457.

[9]. American Railroads as Investments, p. 30.

[10]. See C. Wood Davis’ article in The Arena, vi (1891), pp. 281–282.

[11]. See the evidence cited below.

[12]. Report of U. S. Industrial Commission (1900), iv, p. 135.

[13]. Testimony before U. S. Industrial Commission (1900), iv, p. 490.

[14]. Forum, 3, p. 392.

[15]. Railroad Transportation, p. 109.

[16]. In order to test the attitude of the government roads, I did my best to get passes, trying first through the American ambassadors in Vienna, Berlin, and Brussels, and afterward by direct appeal to the railway management. But it was of no use, although I had a letter from the Chairman of the United States Industrial Commission saying that I had rendered the government valuable service in connection with the work of the Commission, and that any courtesies shown me or assistance afforded me in my researches would be a public service. I had other strong letters from men of high distinction in the United States and England, and our ambassador at Berlin had been president of my alma mater when I was in college, and was specially friendly and helpful; but I was assured that no amount of influence or pull could secure a pass or any other personal favor on the State railways.

[17]. See McClure’s Magazine, December, 1905, where Ray Stannard Baker has stated the leading facts.

[18]. See, for example, the testimony of Stuyvesant Fish, President of the Illinois Central, before the United States Industrial Commission, calling attention to the fact that while railway officials could be prohibited by law from selling tickets below published rates, individuals could not be so prohibited, and that some railways sold their tickets to competitive points to brokers, paying them a commission for making the sale, out of which the brokers scalped the rate. (Industrial Commission, 1900, iv, p. 334.)

[19]. Industrial Commission, iv, pp. 457–458.

[20]. Hudson, “The Railways and the Republic,” p. 42.

[21]. Hepburn Report, N. Y. Legislature Investigation, 1879, p. 120.

[22]. The facts appear at full length in the reports of the Hepburn Committee, the Select Committee of the United States on Interstate Commerce, 49th Congress, 1st Session, Lloyd’s “Wealth against Commonwealth,” and Miss Tarbell’s “History of the Standard Oil Company.”

[23]. Tarbell’s “History of the Standard Oil Co.,” pp. 185–190; Lloyd’s “Wealth against the Commonwealth,” pp. 87–88.

[24]. The Standard paid nominally 60 cents a barrel, but got a rebate of 49 cents, so that their net rate was 11 cents per barrel against $1.90 for the independents. See report of the Hepburn Committee (N. Y.), 1879, and George Rice’s pamphlet on “The Standard Oil Trust.”

[25]. Quoted from a synopsis of the Report.

[26]. Railroad Freights, Ohio House of Representatives, 1879, pp. 159–163.

[27]. Hardy v. Cleveland & Marietta R. R., Circuit Court, Ohio, E. D., 1887, 31 Fed. Rep. 689; Senate Select Committee on Interstate Commerce, 49th Congress, 1st Session, p. 199.

[28]. Besides the references already given on the Rice affair, see the Trust Investigation of Congress, 1888; the testimony in the Rice case before the Interstate Commerce Commission, Nos. 51–60, 1887; Decisions of the I. C. C., vol. 1, pp. 503, 722; vol. 2, p. 389; vol. 3, p. 186; vol. 4, p. 228; vol. 5, pp. 193, 660; State of Ohio v. Standard Oil Co., 49 Ohio St. Rep. 317; Lloyd, chapters xv, xvi, xvii; and Tarbell’s History.

[29]. I. C. C., First Report, 1887.

[30]. Passes (annual in this case) to persons not in the regular service of the carrier held unlawful. State v. Northern Pacific, p. 359, vol. 2, Decisions, 1888.

[31]. Sale of 1000–mile tickets to commercial travellers at $20 while charging others $25 illegal. Chicago & Grand Trunk, p. 147, vol. 1, Decisions, 1887.

[32]. Paying commissions; selling tickets through brokers at reduced rates; rate wars, etc. Pennsylvania, New York Central, Wabash, Chicago & Alton, vol. 2, 1888, p. 513.

[33]. Discounts to shippers receiving more than 30,000 tons a year illegal. Providence and Worcester, vol. 1, 1887, p. 170.

[34]. In many cases the direct rate between two points, X and Y, was found to be greater than the combination of the rate from X past Y to a competitive point Z and the local rate back from Z to Y. For example, goods could be shipped from the Pacific coast to Kansas City and then back to points west of Kansas City more cheaply than they could be sent direct from the coast to these intermediate points. This enabled a shipper informed of the combination rates to get an advantage over one with less information who relied on the published tariffs stating the rates between his place of business and the points to or from which his shipments were to be sent. The Commission took up this matter in 1887 and the traffic managers of the roads agreed to revise their tariffs so that the direct local rate should in no case exceed the through rate plus the local rate back from the terminus or competitive point. This rule resulted in many material reductions of the rates to intermediate points; for example, the points between Denver and the Missouri River on the lines controlled by the Southern Pacific. See Martin v. Southern Pacific R.R. I. C. C. Decisions, vol. 2, 1888, pp. 1, 4.

[35]. A higher rate on oil in barrels than in tanks held unjust, vol. 2, p. 365. Report, 1888, p. 128.

[36]. Report, 1888, p. 112.

[37]. Ibid., p. 114 et seq.

[38]. Ibid.

[39]. Ibid.

[40]. Ibid.

[41]. The Commission’s reports, 1889 to 1891, dealt with numerous discriminations between localities and persons through free transportation, commissions on the sale of tickets, combination rates, rebates, free cartage, payment of yardage charges, excessive car mileage on private cars, discounts for quantity, unfair classification, distribution of cars, special tariffs, advantage or disadvantage to particular commodities or methods of shipment, low rates on goods for export, etc., etc.

[42]. Report, 1889, p. 10.

[43]. 5 I. C. C. Decis. 69, 1891.

[44]. Ibid.; see also 5 I. C. C. Decis. 153, 1892. Case against the Louisville and Nashville for granting passes to members of the city council of New Orleans.

[45]. Investigation of the Commission, 1889.

[46]. Report, Interstate Commerce Commission, 1889, p. 14.

[47]. Pages 103–107, I. C. C. Rep. 1895.

[48]. Report, 1897, p. 61.

[49]. See p. 20 above.

[50]. Heard v. Georgia R. R., 1 I. C. C. Decis. 428, and 3 I. C. C. Decis. 111. But the United States Supreme Court decided against the Commission on this point May 1, 1892 (145 U. S. 263), and the B. & O. tickets for parties of 10 or more at ⅓ less than the regular rates were sustained.

[51]. 2 I. C. C. Decis. 649, and 3 I. C. C. Decis. 465.

[52]. This rule of exemption works great injustice under present conditions. It was built into the common law when people were struggling against oppressors in high places. But the conditions which made it useful have long since passed away, and it is now simply a millstone about the neck of justice.

[53]. Senate Committee, 1905, iv, pp. 2900–2901. Speaking of an investigation of rebates on flour from Minneapolis and Duluth, the Commission says (p. 8, Report for 1898): “All the railway witnesses denied knowledge of any violation of the statute, and most of the accounting officers testified to the effect that if rebates had been paid they would necessarily know about it and that their accounts did not show any such payments. It was nevertheless fully established by the investigation that secret rate concessions had been generally granted on this traffic and that the carrier had allowed larger rebates to some of the flour shippers than to others.”

[54]. I. C. C. Rep. 1889, p. 75.

[55]. See I. C. C. Rep. 1889, pp. 15, 16, 126, 130, 132, 237, 239, 240–242; Decisions, vol. 3, 1889, p. 89, 25% rebates on coal to certain points; p. 137, low rates on goods marked for export (10 cents on one hundred lbs. discount); p. 652, unlawful discount of 50% on emigrants’ movables; Rep. 1890, pp. 111, 190, 192, coal rates; 183, discount for quantity; 189, export; 101, 192, hogs and hog rates; 184, stock yards; 99, 100, 185–187, oil; 112, 192, wheat and flour; 187, 190, private cars; 188, special tariffs; and other unjust discriminations relating to localities, privileges, etc., and not directly in point under the head we are dealing with.

[56]. Testimony, U. S. Ind. Com. iv, p. 353.

[57]. I. C. C. Rep. 1890, p. 25.

[58]. I. C. C. Rep. 1896, p. 78.

[59]. Ibid., p. 82.

[60]. Industrial Commission, 1900, iv, p. 442.

[61]. I. C. C. Dressed-meat Hearing, December, 1901, p. 94; Chicago and Alton manager to same effect for his road, p. 136.

[62]. I. C. C. Rep. 1898, p. 6.

[63]. 4 I. C. C. Decis. 1891, p. 630. For example, on one line between Chicago and New York, “200 stock cars more than paid for themselves and all repairs, etc., in 2 years, and thereafter earned for the owners upwards of $100,000 a year on no investment.” See Report Iowa Railroad Commission, 1891, p. 30.

[64]. I. C. C. Rep. 1889, pp. 15–16.

[65]. 9 I. C. C. Decis. 1, 1901 Rep., p. 36. As the circumstances were substantially different in the two cases, the Commission said the local charge to the drummer was “not necessarily unjust.”

[66]. An additional charge by the Santa Fe of $2 a car on cattle consigned to the Union Stock Yards at Chicago, where the Santa Fe had for years delivered cattle, was held unlawful by the Commission, and its judgment was sustained by the United States Circuit Court, but overruled by the Court of Appeals. I. C. C. Rep. 1896, p. 45.

[67]. Free cartage for a distant shipper and not for a nearer one is equivalent to a rebate for the former. Hegel Milling Company v. St. Louis, etc., Railroad, 5 I. C. C. Decis. 1891, p. 57.

[68]. The railway charged the same rates from the East to Grand Rapids as to Ionia, although the former was 33 miles a longer distance point on the same line of road, and in addition gave free cartage to Grand Rapids companies. Complaint was made in September, 1888; April 26, 1890, the Commission held the free cartage to be in effect a rebate, and ordered the railroad to desist from giving free cartage in Grand Rapids. (3 I. C. C. Decis. 60; I. C. C. Rep. 1896, pp. 37–39; 1897, pp. 94–95.) The Circuit Court upheld the order October, 1893 (57 Fed. Rep. 1002), but the Circuit Court of Appeals overruled the decision April, 1896 (74 Fed. Rep. 803), and the United States Supreme Court sustained the Court of Appeals. (167 U. S. 633, May, 1897.) The Commission made the mistake of resting the case on the 4th or long-haul section instead of the 2d or 3d sections relating to undue preference, and the railway should have been allowed the option of removing the discrimination by giving free cartage in Ionia or making a lower rate there. The order to discontinue free cartage in Grand Rapids was arbitrary and unnecessary.

[69]. I. C. C. Rep. 1889, pp. 18–19.

[70]. Commercial Club v. Rock Island, 6 I. C. C. Decis. 1896, p. 647.

[71]. Pennsylvania Millers Association v. Reading R. R., 8 I. C. C. Decis. 1900, p. 531.

[72]. I. C. C. Rep., 1898, pp. 46–47; 7 I. C. C. Decis. 1898, p. 556: Illinois Central, charging some shippers for storage while others are not charged for it, unlawful.

[73]. Industrial Commission, iv, 541.

[74]. Ibid., 543.

[75]. Investigation of expense bill frauds on grain shipments from Missouri River points to Chicago and other destinations. I. C. C. Rep. 1896, p. 75, on Santa Fe case. 7 I. C. C. Decis. 1897, p. 240, expense bill system held illegal.

[76]. I. C. C. Rep. 1896, p. 79.

[77]. Ibid., p. 77.

[78]. Ibid., p. 80. The Commission has not felt able to declare such an allowance unlawful (10 I. C. C. Decis. 1904, p. 309), but it seems clear that substantial preferences may be given in this way.

[79]. Report, U. S. Industrial Commission, 1900, iv, p. 79.

[80]. I. C. C. Rep. 1896, pp. 46–48.

[81]. There is a statement concerning it in the I. C. C. Rep. 1896, p. 81, but it does not bring out the facts at the core of the matter as stated to me by the railway men.

[82]. 8 I. C. C. Decis. 1898, p. 316.

[83]. I. C. C. Rep. 1894, p. 9.

[84]. It was held in the Nichols case (66 P. A. C. Rep. 768) that where a shipper orders cars to be delivered at a certain date, the company’s action in filling subsequent orders before complying with the first is unlawful. (Oregon Short Line.)

[85]. Report, Texas Railway Commission, 1896, p. 11.

[86]. The Commission holds that the difference must not be so great as to be destructive of competition between large and small dealers. (5 I. C. C. Decis. 638, following Thurber v. New York Central, Delaware & Lackawanna, B. & O.; and 3 I. C. C. Decis. p. 473, March, 1890; Rep. 1890, p. 87.) Many articles of groceries were so classified as to make the difference between carload rates and less-than-carload rates unjustly great in violation of the principles of the Interstate Act.

[87]. Industrial Commission, iv, 207.

[88]. Paine v. Lehigh Valley R. R., 7 I. C. C. Decis. 1897, p. 218.

[89]. 9 I. C. C. Decis. 78; 1901 Rep. 38.

[90]. 5 I. C. C. Decis. 663.

[91]. 7 I. C. C. Decis. 43.

[92]. 8 I. C. C. Decis. 214, 1898. See also 4 I. C. C. Decis. 417. and 7 I. C. C. Decis. 481, Chicago, Milwaukee & St. Paul case, held that a higher rate on wheat than on flour is unjust.

[93]. 8 I. C. C. Decis. 304. See also 3 I. C. C. Decis. 400, and 4 I. C. C. 417.

[94]. 4 I C. C. Decis. 1891, p. 733: N. Y. Central, Pa., B. & O., C. B. & Q., Wabash, Santa Fe, etc.,—a whole page full of railroads.

[95]. Rice cases, Nos. 51–60, I. C. C. Decis. 1887, 65, 131.

[96]. Rice v. R. R., 4 I. C. C. Decis. 131; 5 ibid., 193, 415. Railroads commenced charging for barrel packages in 1888, and in a case tried in 1892 against the Reading, Boston & Maine, and other roads the Commission ordered them to cease, but they did not, and damages were awarded two years later from 1888 to 1894. A similar order to desist from charging for the barrel was issued against the Pennsylvania in September 1890 and it complied. I. C. C. Rep. 1895, pp. 33–35.

[97]. Trust Investigation, Congress, 1888, pp. 531–533, 646–647.

[98]. Testimony, Rice cases, 1 I. C. C. Decis. 28.

[99]. See Trust Investigation, Congress, 1888, pp. 598–599.

[100]. Lloyd’s “Wealth against the Commonwealth,” pp. 427, 480–481.

[101]. U. S. Industrial Commission, iv, 53.

[102]. 4 I. C. C. Decis. 158.

[103]. Senate Committee, 1905, 3457.

[104]. Testimony of McCabe, Pennsylvania traffic manager, I. C. C. Beef Hearing, Dec. 1901, pp. 101, 102, 103.

[105]. Ibid., pp. 101, 102.

[106]. Mr. Cost, traffic manager of the Big Four, I. C. C. Beef Hearing, Dec. 1901, p. 105.

[107]. I. C. C. Beef Hearing, Dec. 1901, p. 114.

[108]. Ibid., pp. 113, 119.

[109]. I. C. C. Beef Hearing, Dec. 1901, pp. 85, 86.

[110]. I. C. C. Beef Hearing, Dec. 1901, p. 107.

[111]. I. C. C. Hearing in the dressed-meat cases, Chicago, Jan. 7, 1902, pp. 152–154.

[112]. Evidence in the I. C. C. Hearing in the dressed-meat cases, Chicago, Jan. 5, 1902, pp. 145, 148, 149.

[113]. Report, Industrial Commission, vol. iv, pp. 69, 493.

[114]. Import Rate Case. Texas and Pacific v. I. C. C., 162 U. S. 197, 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.

[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.

[116]. 8 I. C. C. Decis. 214 n.

[117]. Lewis, “National Consolidation of Railways,” p. 101.

[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.”

[119]. Cator’s “Rescue the Republic,” p. 15.

[120]. “National Consolidation of Railways,” Lewis, p. 102.

[121]. “National Consolidation of Railways,” Lewis, p. 83.

[122]. Martin v. Southern Pacific, Central Pacific, and Union Pacific Railroads. 1 I. C. C. Decis. 1.

[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.

[124]. 9 I. C. C. Decis. 17: Rep. 1901, 30.

[125]. I. C. C. Rep. 1899, p. 31.

[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.)

[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).

[128]. Ind. Com. iv, 257.

[129]. Ind. Com., iv, 257.

[130]. Ibid., 67.

[131]. Ibid.

[132]. Ind. Com. iv, 252.

[133]. Ibid., 257.

[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.)

[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.

[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.

[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.

[138]. I. C. C. Rep. 1899, pp. 66–68; 85 Fed. Rep. 1898, p. 107; 99 Fed. Rep. 1899, p. 52.

[139]. 181 U. S. 1, April, 1901.

[140]. Ibid., 29, 1901.

[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.

[142]. H. P. Newcomb, Popular Science Monthly, p. 815, Oct. 1897.

[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.)

[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.

[145]. 6 I. C. C. Decis. 343; and Rep. 1895, pp. 29–31.

[146]. Rep. 1895, p. 31.

[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).

[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.

[149]. 8 I. C. C. Decis. Feb. 1900, p. 409; Rep. 1900, p. 34.

[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.

[151]. 8 I. C. C. Decis. 142.

[152]. I. C. C. Rep. 1895, p. 39.

[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.

[154]. Popular Science Monthly, Oct. 1897, p. 816.

[155]. M. E. Ingalls, before National Convention of Railway Commissioners, 1898, p. 14.

[156]. Rep. 1897, p. 6; and 1898, p. 15.

[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.

[158]. Report, vol. iv, 1900, p. 625.

[159]. Ind. Com. iv, pp. 6, 349, 359.

[160]. Testimony, p. 25.

[161]. Sen. Com. 1905, p. 2912.

[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.

[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.)

[164]. Sen. Com. 1905, p. 1331.

[165]. Ibid., pp. 2253, 2284.

[166]. Ibid., p. 3140.

[167]. Ibid., p. 1652.

[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.

[169]. Sen. Com. 1905, p. 1474.

[170]. Sen. Com. 1905, pp. 819, 820, 842.

[171]. Ibid., pp. 2122, 2123.

[172]. Ibid., p. 951.

[173]. Ibid., p. 2329.

[174]. Sen. Com. 1905, p. 2083.

[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.

[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.

[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.”

[178]. Judge Clements of the Commission, Sen. Com. 1905, p. 3238.

[179]. See the admirable summary of the investigation by Ray Stannard Baker in McClure’s Magazine for December, 1905.

[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.

[181]. 10 I. C. C. Decis. 475.

[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.)

[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.

[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.

[185]. I. C. C. Hearing, Dec. 1904, pp. 135, 148, Biddle.

[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).

[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.

[188]. I. C. C. Santa Fe Hearing, Dec. 1904, p. 8.

[189]. I. C. C. Santa Fe Hearing, Dec. 1904, pp. 146–148.

[190]. Sen. Com., 1905, p. 848.

[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.”

[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.)

[193]. See 10 I. C. C. Decis. 473, 487, 488, Feb. 1, 1905.

[194]. “Strategy of Great Railroads,” 1904, p. 167.

[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.

[196]. Commissioner Prouty to the Boston Economic Club, March 9, 1905.

[197]. Sen. Com. 1905, p. 3607.

[198]. 10 I. C. C. Decis. 226, and Rep. 1904, pp. 58–59.

[199]. Sen. Com. 1905, p. 367. Testimony of E. M. Ferguson, representing 12 organizations of shippers, State and national.

[200]. Sen. Com. 1905, p. 2432.

[201]. I. C. C. Decis. 735, March 25, 1905.

[202]. Ind. Com. iv, 54.

[203]. Sen. Com. 1905, pp. 2284, 2429.

[204]. Ibid., p. 2432.

[205]. Ibid., p. 18.

[206]. Sen. Com. 1905, pp. 2484, 2490.

[207]. Sen. Com. 1905, p. 2912.

[208]. 10 I. C. C. Decis. 675, April 11, 1905; Rep. Dec. 1905, p. 39.

[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.

[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.

[211]. Sen. Com. 1905, p. 2434. See 10 I. C. C. 1905, p. 505.

[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.

[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.

[214]. Outlook, July 1, 1905, p. 579.

[215]. Sen. Com. 1905, pp. 2911, 2912, Commissioner Prouty; 2123, President Stickney. See also p. 3231, and 10 I. C. C. Decis. 317.

[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.”

[217]. 10 I. C. C. Decis. 274, June 4, 1904.

[218]. Ibid., 255, June 4, 1904. The practice was held unjust.

[219]. Ibid., 489, Feb. 2, 1895. Duluth Shingle Co. v. Northern Pacific, Great Northern, Chicago, Milwaukee and St. Paul, and other railroads.

[220]. 10 I. C. C. Decis. 452, Jan. 7, 1905.

[221]. Sen. Com. 1905, pp. 2432, 2433.

[222]. 11 I. C. C. Decis. 104.

[223]. 10 ibid., 428, Jan. 1905.

[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.

[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.

[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.

[227]. 10 I. C. C. Decis. 590, Feb. 11, 1905; Rep. 1905, p. 31.

[228]. Cannon Falls to St. Louis, 10 I. C. C. 650, March, 1905.

[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.)

[230]. I. C. C. Cases, 707, 1905.

[231]. Proctor and Gamble Case, I. C. C. Rep., 1903, pp. 57–61; 1905. Rep. p. 63.

[232]. Sen. Com. 1905, p. 346.

[233]. Ibid., p. 2742.

[234]. Ibid., p. 18.

[235]. Business Men’s League of St. Louis v. many railroads, 9 I. C. C. Decis. 319, Nov. 17, 1902.

[236]. 10 I. C. C. Decis. 333, June 25, 1904.

[237]. Ibid., 327, June 25, 1904.

[238]. Sen. Com. 1905, p. 1925.

[239]. I. C. C. Dressed-meat Hearings, Dec. 1904, Biddle.

[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.)

[241]. Sen. Com. 1905, p. 818.

[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.

[243]. 10 I. C. C. Decis., 1904, p. 47.

[244]. Ibid., 422, Jan. 7, 1905.

[245]. Ibid., 630.

[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.

[247]. 134 Fed. Rep. 196; I. C. C. Rep., Dec. 1905, p. 65.

[248]. 10 I. C. C. Decis. 699.

[249]. Ibid., 47, 663. The favored party in this case was an agent for the railroad. No relief could be given.

[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.

[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).

[252]. I. C. C. Rep. 1903, pp. 18–22.

[253]. Testimony of Mr. Biddle, General Traffic Manager of the Santa Fe, Hutchinson Salt Case. I. C. C. Hearing, Dec. 5, 1903, p. 35.

[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.

[255]. I. C. C. Rep. 1904, p. 21.

[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.”

[257]. 10 I. C. C. Decis., March 25, 1905, pp. 661, 667–669 et seq.

[258]. Ibid., p. 661.

[259]. I. C. C. Decis., 664, March 12, 1904.

[260]. Ibid., 707, Feb. 7, 1905; also p. 681, March 19, 1904.

[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.)

[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.)

[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.)

[264]. See above, pp. 57, 58.

[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.

[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.)

[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.)

[268]. I. C. C. Rep. 1903, p. 23.

[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.

[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.)

[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.

[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.

[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.

[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.

[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.

[276]. Evidence, pp. 54–55, Armour Cars.

[277]. National Congress Railway Commissioners, above cited.

[278]. Ibid.

[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.

[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.

[281]. Evidence, etc., 206, 207.

[282]. Ibid., 207.

[283]. Sen. Com. 1905, p. 2596; and the next item in the text.

[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.

[285]. Sen. Com. 1905, p. 369.

[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.

[287]. McClure’s for January, 1906, p. 323.

[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.”

[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.

[290]. Rep. 1904, p. 13.

[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.

[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.

[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.

[294]. Rep. U. S. Industrial Commission, iv, p. 53.

[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.)

[296]. Ind. Com. iv, p. 53.

[297]. Sen. Com., 1905, pp. 2740, 2742.

[298]. See The Outlook, July 1, 1905, p. 578.

[299]. See Miss Tarbell’s vigorous description of what the Standard did to Kansas in McClure’s for September, 1905.

[300]. Ind. Com. vi, pp. 663–665. The seaboard pipe line was completed in 1884.

[301]. Sen. Com. 1905, p. 2322, Professor Ripley.

[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.)

[303]. Sen. Com. 1905, pp. 3339, 3340, Commissioner Fifer.

[304]. Ibid., pp. 1816–1820, 3439, 3440.

[305]. 10 I. C. C. Decis. 342, June 25, 1904.

[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).

[307]. Ibid., pp. 1761, 1762.

[308]. Ibid., p. 3294.

[309]. Ibid., p. 1878.

[310]. Sen. Com. 1905, p. 2040.

[311]. Sen. Com. 1905, p. 34.

[312]. Ibid. See 10 I. C. C. Decis. 650, and Rep. 1905, p. 36.

[313]. Complaint of Denver Chamber of Commerce, Sen. Com. 1905, p. 3257.

[314]. Sen. Com. 1905, p. 3336.

[315]. Question of Mr. Fifer of Interstate Commission to Sen. Com. 1905, p. 3337.

[316]. Sen. Com. 1905, pp. 2930, 2940.

[317]. Ibid., p. 2914.

[318]. See statements of Chamber of Commerce of Spokane and testimony of its representative, Brooks Adams, Sen. Com. 1905, pp. 2917, 2928.

[319]. Sen. Com. 1905, pp. 2527–2529.

[320]. Senator Dolliver, Sen. Com. 1905, p. 2094.

[321]. Sen. Com. 1905, p. 1870.

[322]. 10 I. C. C. Decis. 456, Jan. 13, 1905.

[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.

[324]. Ind. Com. ix, p. 133.

[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.

[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.

[327]. “Railroad Transportation,” p. 114.

[328]. Sen. Com. 1905, p. 844.

[329]. Atlantic Monthly, vol. 73, p. 803, June, 1894.

[330]. E. P. Alexander in “Railway Practice,” p. 8.

[331]. Ind. Com. iv, p. 194.

[332]. 10 I. C. C. Decis. 1904, p. 58.

[333]. Sen. Com., 1905, p. 19, Bacon.

[334]. Ibid., p. 19.

[335]. J. C. Wallace of the American Shipbuilding Co., June 28, 1904, to the Congressional Merchant Marine.

[336]. See Wright’s letter printed in the speech of Senator Bacon of Georgia, Congressional Record, April 25, 1904.

[337]. Testimony of James J. Hill before the Marine Commission.

[338]. 10 I. C. C. Decis. 1904, p. 81.

[339]. Sen. Com. 1905, p. 919.

[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.

[341]. Ind. Com. iv, p. 194.

[342]. I. C. C. Beef Hearing, Dec. 1901, pp. 106–107; see also pp. 87, 88.

[343]. Sen. Com. 1905, p. 1462.

[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.)

[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.

[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.

[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?

[348]. Sixth Annual Report, Interstate Commerce Commission, p. 7.

[349]. Outlook, July 1, 1905, p. 577.

[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.

[351]. Ind. Com. Q. & Ans. iv, p. 596.

[352]. Sen. Com. 1905, p. 1474.

[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.)

[354]. Sen. Com. 1905, p. 17.

[355]. I. C. C. Rep. 1898, p. 6.

[356]. I. C. C. Rep. 1898, p. 8.

[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.

[358]. Sen. Com. 1905, pp. 2899–2901, 2911.

[359]. Sen. Com. 1905, p. 829.

[360]. I. C. C. Beef Hearing, Dec. 1901, pp. 100, 101.

[361]. I. C. C. Beef Hearing, Dec. 1901, pp. 114–115.

[362]. Ibid., p. 126.

[363]. Report of Oregon Railway Commission, 1889, p. 32.

[364]. See above, p. 237.

[365]. See above, p. 113.

[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.

[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).

[368]. Fifer, Adams, etc., Sen. Com. pp. 2923, 3338.

[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).

[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.

[371]. Sen. Com. p. 3482, N. Y. Chamber of Commerce.

[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.

[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.

[374]. James J. Hill, p. 1521.

[375]. Knapp, p. 3299; without such a provision the old roads can cripple a new road unless it goes clear across the continent.

[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?

[377]. Commissioner Prouty, p. 2912. “That would stop discriminations,” said the Commissioner. “Unless they got possession of the man,” said Senator Dolliver.

[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.

[379]. Arena, vol. 24, p. 569, Parsons.

[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.”

[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.

[382]. I. C. C. Rep. 1905, p. 9.

[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.”

[384]. I. C. C. Rep. 1905, pp. 9, 10.

[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].)

[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.

[387]. See statement earlier in this discussion.

[388]. Sen. Com. 1905, p. 3485.

[389]. Dept. of Commerce, Monthly Summary, April, 1900, p. 3991.

[390]. See Ind. Com. vols. iv and ix, and Hudson, Hadley, etc.

[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.

[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.

[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.

[394]. Sen. Com. 1905, pp. 2923, 3338.

[395]. Sen. Com. 1905, p. 3482.

[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.

[397]. Sen. Com. 1905, p. 1908, and index, “Rate-Making.”

[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.

[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.

[400]. Sen. Com. 1905, p. 3644.

[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.

[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.

[403]. Work of the Interstate Commission, p. 14, 1905. (See Appendix [A].)

[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.

[405]. Sen. Com. 1905, p. 2888.

[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.)

[407]. Sen. Com. 1905, pp. 3297, 3298.

[408]. Sen. Com. 1905, p. 975.

[409]. 9 I. C. C. Decis. 318, Nov. 17, 1902.

[410]. 10 I. C. C. Decis. 590; Rep. 1905, p. 31.

[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.

[412]. 11 I. C. C. Decis. 31.

[413]. Sen. Com. 1905, p. 1339.

[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).

[415]. Sen. Com. 1905, pp. 1675, 1676.

[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.

[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.”

[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.

[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.

[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].)

[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].)

[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.

[423]. See “The Railway Act” 1903.

[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.

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 EmpireI.
The Allied InterestsII.
Railway FavoritismIII.
Railways in PoliticsIV.
Fostering MonopolyV.
Watered Stock and Capital FraudsVI.
Gambling and Manipulation of StockVII.
Railroad Graft and Official AbuseVIII.
Railways and the Postal ServiceIX.
The ExpressX.
The Chaos of RatesXI.
Taxation without RepresentationXII.
Railways and PanicsXIII.
Railway StrikesXIV.
Railway WarsXV.
Defiance of LawXVI.
Nullification of the Protective TariffXVII.
Railway PotentatesXVIII.
The Failure of Control, How Far and WhyXIX.
The Irrepressible ConflictXX.
PART II.
The Railroad Problem in the light of Comparative Railroad History covering the Leading Systems of Three Continents.
Chapter
The ProblemXXI.
The Supreme TestXXII.
Lessons from Other LandsXXIII.
The AimXXIV.
Contrasts in General PolicyXXV.
Location.—Construction.—Capitalization, etc.
ManagementXXVI.
Safety.—Service.—Economy.—Progress.
The Rate QuestionXXVII.
General Policy.—Rate Level under Public and Private Management.—Zone System.
EmployeesXXVIII.
Political, Industrial, and Social EffectsXIX.
Remedies ProposedXXX.
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.