Turning to freight discriminations, we find that a bewildering mass of questions and complaints has pressed upon the Commission. It has shown an earnest desire for justice, and for the most part good judgment, but it has accomplished comparatively little in the way of stopping unjust discriminations. Witnesses refused to testify, on the ground that testimony in respect to rebates and other forms of discrimination might be used to convict them of crime.
In the Counselman case (142 U. S. 547), Jan., 1892, the U. S. Supreme Court decided that a witness could not be compelled to testify in regard to discrimination in which he was involved, since the Federal law made it a criminal offence to make or benefit by discrimination. Unless the law exempts the witness from prosecution in consequence of his answers or in relation to the subject of them, he is not obliged to answer a question when the answer might tend to incriminate him.[[52]] Refusal to answer on such a plea is of course equivalent to confession of guilt. In this case Counselman, a large grain shipper, had been given rates on corn some 5 cents less per hundred than the rates paid by others from Kansas and Nebraska points to Chicago, over the Rock Island, Burlington, and other railroads. Five cents a hundred is an enormous profit on corn which the farmer had sold at 18 to 22 cents per hundred, and such a margin would enable the favored shipper to drive every one else out of the trade; and on many western roads it has been practically the case that only the railway officials and their secret partners can do business. Counselman refused to tell a United States grand jury whether or no he had had any rebates from the railroads in 1890. He said he had received none from Stickney’s road, nor from the Santa Fe, had had no business with the latter, he thought, but as to the Rock Island, C. B. & Q., etc., he declined to answer on the plea that to do so might incriminate him.
Some railroad officials testified freely, but neglected to tell the truth.[[53]] Discriminations as a rule were secret. Even when it was clearly known that favoritism was being shown, shippers were generally afraid to complain, and in the small percent of cases where complaint and investigation took place it seemed impossible to get at the truth in any large way, because the railroad men for the most part would not “cough up” the facts. Still, something was done by the Interstate Commission, the courts, and the Industrial Commission. Some progress was made and some light secured. The jets of flame that here and there came up through the cracks from the under-world showed very clearly what was going on beneath the surface of railway affairs.
Direct Rebates.
Direct rebates on interstate traffic appear to have been checked for a few months after the passage of the Commerce Act, but the railroads admitted that they still gave rebates on traffic within a State[[54]] just as they continued to give passes, making them good within one State, insisting in respect to both rebates and passes that they had a right to give them because the law did not reach State traffic. Nevertheless, as the Commission remarked, such rebates inevitably affect the rates upon interstate traffic, and a competing road whose traffic is taken a little further, crossing the state line, may be compelled to give rebates or surrender important business.
As a matter of fact, discriminating rates and rebates on interstate as well as State business were soon as much in fashion as ever.[[55]]
In one small town in the Middle West judgments for nearly $40,000 were recovered against a railroad for illegal discriminations in that one town. In some cases the discriminations amount to $40 a car. These cases were all subsequent to the Interstate Act.
Some years ago the Chief Justice of Kansas declared that the Santa Fe management preceding the present one was notorious for giving secret rebates. The president of the road was asked to resign because the railroad funds were some millions short, due, it is said, to the secret rebates the company had paid. An expert went over the books and discovered that some $7,000,000 had been paid in rebates by the Santa Fe in a few years.
Shippers who would not or could not get rebates or concessions were in danger of serious loss and perhaps ruin. Mr. H. F. Douseman, for many years a grain shipper in Chicago, and chairman of the board of trade of that city, had to go out of business because he would not take the rebates he might have had. Before 1887 he took rebates of 10 or 15 percent (2 or 3 cents on the cwt.), but after that he refused them. “Virtue is its own reward,” and Mr. Houseman got his pay in that form. “I feel that I have been driven out of business because I would not accept a rebate,” he told the Industrial Commission. “I have never taken a rebate since the Interstate Law went into effect. I did not propose to put myself in the shape of a criminal.”[[56]]
It may be a matter of surprise to many that even one man of this kind could be found in Chicago. If such virtue were prevalent the enforcement of law would be easy. Mr. Douseman says that for 6 months after the Interstate Law was passed no rebates were paid; everybody was on an equality. “After the first six months, rebates began to be given. At the end of the first year they were quite frequent, and they have continued ever since. Prior to 1887 the only time when rates were absolutely solid, when every one was on the same basis, was when the Vanderbilts were trying to bankrupt the West Shore road, and rates were down to 12 cents in New York. Everybody then, as I understand, had the same rates.”