Then Mr. Depew gave an instance of “one of the great merchants of the West” who, on the organization of the Joint Traffic Association, said:
“I never have paid within twenty-five cents a hundred of tariff rates, and I won’t do it now.” “His business,” continued Mr. Depew, “was on what we call one of the weak lines. He took it off that line and put it on one of the strongest lines. That left the weak line without any westbound business.
“Then the weak line said: ‘We have got to have business.’ So we simply closed our eyes while the weak line gave a rate twenty-five cents a hundred less than the rest of us charged, and this firm advanced while the others were stationary or went out of business. This firm advanced by leaps and bounds to the front rank and toward the control of the business.” If all the roads in the field do not come into the pool there is every temptation for the outsider to cut rates. For example, in 1896 one of the trunk lines outside of the Joint Traffic Association was carrying grain from Chicago to the seaboard at 13 cents per hundred when the established tariff, which the Association was supposed to be maintaining, was 20 cents.[[389]]
The whole history of the traffic associations shows that discriminations can be guarded against by pooling only to a very limited extent.[[390]] The legalization of pooling would enable railroads that wished to insist on the maintenance of rates to bring suit against roads disregarding the agreement. This would make it harder to get all the railroads into a pool, for part of the inducement is the impunity with which the agreement may be shuffled off, while on the other hand the degree of respect manifested by the railroads for the law does not justify much hope that it would be effective in holding them to any pooling contract if they thought they could make more by breaking it than by keeping it. The fact is that the railroads understand each other now about as well as if pooling were legalized. They constantly make rate agreements and have no hesitation in securing whatever degree of unity they desire with or without law. Pools at best do not apply to local traffic, but only to business between competing points, so that all discriminations in local traffic are left absolutely untouched. And as to competitive points, pooling is far less effective than consolidation, and consolidation has shown no tendency to do away with any more than one of the six classes of discrimination, while it emphasizes and extends the discriminations in favor of the great industrial interests whose ownership is interlocked with that of the big railroad systems, so that the advance of consolidation means the extension of the influence of the giant industrials in whose favor the most grievous discriminations are granted.
Pooling and combination are good in many ways,[[391]] and ought to be legalized;[[392]] but they cannot be relied on to abolish discrimination,—they leave the worst forms untouched, intensify some of them, and diminish only one of the six classes of preference. Shippers have a strong prejudice against pooling, and the railroads do not care so much about it as they used to, for consolidation and mutual understanding have enabled them to accomplish in part the purposes they had in view in the traffic agreements of earlier years.[[393]]
Wrestling with the Long-Haul Abuse.
In respect to the long and short haul abuse, Commissioner Fifer, Brooks Adams, and others argue that the practical remedy is to make the long-haul clause of the Commerce Act binding except where the railroads come in and get an order releasing them to a specified extent from the operation of the clause.[[394]] The idea is to put the burden of showing the need of an exception on the railroad. At present the burden really rests on the complainant. The railroads disregard the law with impunity. It is easy to show dissimilar circumstances, and then it is necessary for the plaintiff to show that the circumstances are not so dissimilar as to warrant the discrimination made. It is very difficult to satisfy a court on this point, and so the rates stand and the clause is practically nullified. Forbid departure from the clause absolutely unless the carrier has obtained an order of release, and you put the burden of proof where it should lie, namely, on the party that desires to depart from the rule of equal treatment.
A Drastic Cure for Rebating.
For the cure of discrimination, the Transportation Committee of the New York Board of Trade suggests that Congress enact a law authorizing the Interstate Commission, in case of any rebate or other device for securing low rates, to declare that the net rate so made by the railway or car owners shall be the regular tariff rate, published as such, and open to all shippers; said new rate to take effect immediately, subject to appeal within 60 days upon questions of law.[[395]] The Committee says the proposal is based on the plan suggested by “Albert Fink, the ablest of all American railroad managers,” and adopted by the joint executive committee of the associated railroads in 1882.[[396]] “The giving of unlawful rebates by traffic agents would be preventable if the agent felt assured that such acts would be followed by his dismissal, and the officers of the company would find a way to remove an offending agent or to bring him under control if a punishment of suitable severity were certain to be imposed upon the road for the violation of the law against the giving of rebates.”
This would indeed be a drastic remedy, and very effective for the prevention of the discovery of discrimination. An association of railroads might ferret out preferences under such a rule, but it would be almost impossible for a public board to do it. It has been for the most part, as we have seen, practically impossible for the Commission to get evidence of specific facts of discrimination, even under the comparatively mild laws they have tried to enforce. And under such a law the difficulty would be increased tenfold. Moreover, if discrimination were discovered and the rule proposed were put in action, discriminations would thereby be crystallized and legalized, and great disturbances produced in the business of railroads and of the community. Suppose it were discovered that a certain shipper of wheat from Chicago east had a 10 cent rate over the Erie, while the published rate on all the lines was 15 cents. Immediately the 10 cent rate would be open to all shippers over the Erie. The Erie might be stricken with a sudden dearth of cars, and be unable to handle the traffic at all. It would pay the other roads to arrange with the Erie to be stricken that way. For if the Erie handled the traffic, the other roads would have to come down to 10 cents and suffer a severe loss, or lose the business and suffer a severe loss that way. Moreover, the difference in rates on wheat and flour and other commodities would constitute serious discrimination, petrified and perpetuated by law. Again, if many cut rates were discovered in various lines of business and various degrees of discount, the whole tariff would be thrown into confusion worse than the normal chaos. Rates not in the discovered list would have to be raised to save the revenues of the roads, the long and short haul rule would go to the winds, and bankruptcy would threaten not only the culprit railroads but individuals and communities not conditioned so as to be favored by the cut-rate lists. On the other hand, if the railroads tried to be good, the pressure of the big shippers for concessions would put many roads to serious inconvenience and threaten them with dangers and losses almost as great as those accompanying disobedience, and far more immediate and certain. Under such circumstances the temptation to secure secrecy at any cost, and if need be to control the Commission and the courts, would be irresistible.