Rebate equivalents were given in the form of elevator rebates and allowances. Elevators owned or controlled by railroad companies were leased at nominal charges to favored shippers, or secret commissions were paid to favored parties for all grain consigned to specified elevators. One railroad for example paid a concern, holding a line of elevators on the railroad, 1¼ cents per 100 on all grain consigned to those elevators.[[78]]
In this case the consignment was 150 cars a day from November to May, averaging 32,000 to 34,000 lbs. a car. The commissions therefore amounted to $4 a car, $600 a day, $120,000 a year.
The United States Industrial Commission says, under the head of “Freight discriminations and allowances to elevators:” “On each of the leading railways from grain-producing sections to Chicago, allowances, ranging from one-half to 1½ cents per bushel, are made on grain to one or two favored firms.... The favored elevators are thus enabled to pay higher prices for grain. The average profit in handling grain is less than 1½ cents per bushel, and smaller buyers can thus easily be driven out of business.... The small shipper being driven out of business, the large dealer is then in a position to depress the price of grain to the producer.”[[79]]
The railroads deny equal rights in the building of elevators. A railroad which had granted the right for two elevators at Elmwood on the company’s right of way refused to give H. & Co. the same privilege. The State Board of Transportation ordered the railroad to discontinue the discrimination against H. & Co., and give them the same privileges as others. But the United States Supreme Court held that the road could not be forced to grant its property for private use.[[80]]
One method of discrimination I learned of in the West a few years ago is not adequately described in any report.[[81]]
The head of a road running into Chicago from Missouri River points formed a grain company to buy grain in Kansas City and sell it in Chicago. The railway guaranteed the grain company against loss. When wheat was 50 cents in Kansas City and 60 cents in Chicago, the grain company paid 51 cents in Kansas City to get the grain. The railroad charged the regular 10 cent tariff. The grain was sold at 60. The railroad paid back 1 cent on the guarantee and still made 9 cents. And the railroad-grain-company-combine was able to drive other buyers out of the market and other railroads out of the traffic. The Santa Fe, for example, carried 28 percent of the grain going into Kansas City, but only hauled 3 percent out to Chicago.
Railroads sometimes seek to evade the law by contracting to deliver goods at a certain price including the freight and the payment for the goods in one lump sum, so that the freight charge is merged and cannot be ascertained. Nine years ago, in 1896, the Chesapeake and Ohio Railroad contracted with the New York, New Haven and Hartford to deliver 2,000,000 tons of coal at New Haven at $2.75 a ton. The published freight rate at that time was $1.15 and the price of the coal at the mines $2 a ton. The Interstate Commerce Commission held that this was a discrimination by the Chesapeake and Ohio Railroad against every independent mine owner in its territory, and that the railroad had no right to contract to sell coal at any price. The Federal Court sustained this view, and it is stated that the Department of Justice will ask the Supreme Court for a blanket injunction against the two railroads, restraining them from carrying freight at less than the published rates. It is said that J. Pierpont Morgan guaranteed that the Chesapeake and Ohio would perform the contract.
Action against an individual or company is quite as effective a form of discrimination as action in favor of a rival. Shippers at a certain place on the Chicago and Northwestern were handicapped by refusal of through rates on asbestos, compelling them to pay higher rates than their competitors.[[82]] A Southern railroad charged the Bigby Packet Company a much higher rate on cotton from Mobile to New Orleans than the established rate on local shipments of cotton, in order to discourage shipments by way of the Packet Company from the point of origin in Alabama, and compel the cotton to travel all the way by rail.[[83]]
CHAPTER X.
DENIAL OF FAIR FACILITIES.
The refusal to furnish cars in fair proportion is a familiar form of discrimination all through this period, usually in combination with other forms of preference. In Kansas, on the line of the St. Louis and San Francisco Railway, were two coal companies whose plants were of about equal capacity, and several individual shippers. The railway and its officials became interested in one of the coal companies, and by rebate and other process it was given rates which averaged only forty percent of the rates charged other shippers. The result was that all the other shippers were driven out of business, part of them being hopelessly ruined before giving up the struggle. In addition to rate discrimination the railway practised gross favoritism in the distribution of cars. For example, during one period of 564 days, as was proven in court, the road delivered to the Pittsburg Coal Company 2,371 empty cars to be loaded with coal, although such company had sale for, and capacity to produce and load, during the same period, more than 15,000 cars. During the same time this railway company delivered to the Rogers Coal Company, in which the railway company and C. W. Rogers, its vice-president and general manager, were interested, no less than 15,483 coal cars, while 466 were delivered to individual shippers. In other words, the coal company owned in large part by the railway and its officials, was given 82 percent of all the facilities to get coal to market, although the other shippers had much greater combined capacity than the Rogers Coal Company.