Often there are no records of the concessions granted favored shippers except the memoranda in the personal note-books of the traffic managers. Rebates or commissions are frequently paid by messenger boys sent from the general freight office, or treasurer’s office, with the currency and a slip of paper with some pencil marks on it, instead of sending a check and obtaining a voucher.[[354]] The officers forget about the transaction as soon as possible,—sooner than possible it seems sometimes,—or in some other way try to prevent the Commission from getting the facts with sufficient detail to bring suits. For example, in the “Dressed-meat” Hearing at Kansas City, March 21, 1901, fifteen transportation men were subpœnaed and examined without securing any important facts. The witnesses, who occupied positions which would naturally lead one to suppose they would know all about the matters in hand, manifested the most persistent and remarkable ignorance, and the Commission had to go to Chicago and try again before it got any light on the packing-house transportation question.
In March, 1898, the Interstate Commission investigated rebates on flour from St. Paul, Minneapolis, and Duluth to Atlantic seaports. The Commission had information of wide departures from the published tariff. It says: “The inquiry was greatly hampered by the disappearance of material witnesses before subpœnas for their attendance could be served, the inability of several who did testify to recall transactions there of recent date, and the evident reluctance of others to disclose any information bearing on the subject involved. All of 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 them, and that their accounts did not show any such payments. It was nevertheless fully established by the investigation that secret concessions had been generally granted on this traffic, and that the carriers had allowed larger rebates to some shippers than to others.”[[355]]
After the St. Paul investigation in 1898 the Commission entered on an investigation at Portland, Ore., in respect to rates between the coast and points on and east of the Missouri River. “It was established by the proof that secret rates generally prevailed at Portland and common points, and that transportation was, in effect, sold to the lowest bidder. The lawful rates were ignored, except as they might serve as a standard in making agreements for lower charges.... Some of the merchants conformed to the law, but in so doing they were at a disadvantage in competing with those who disregarded the statute; and in many instances this disadvantage represented more than a fair profit upon the commodities involved. Most of the merchants who admitted that they had thus violated the law declared themselves unable to remember who paid them the rebates, or when or upon what shipments any illegal rate concessions had been made. Some testified that they had kept account of the unlawful transactions, but that when they heard of this investigation they destroyed their memoranda in order to defeat prosecutions on account of their illegal acts. They insisted that without these data they could give no specific testimony concerning any of the transactions.”[[356]]
The Commission found in these and other investigations that “unlawful rebates have been and are being paid by a great number of carriers,” but they could not get the specific evidence necessary for prosecutions.[[357]]
In its Report for 1904, p. 104, the Commission says: “Railroad officials often seem to think that it is their duty to withhold facts, on account of some real or supposed liability to make disclosures that will impair the railroad’s rights or interests in future judicial proceedings. Some companies seem to have adopted a settled policy to give the least possible information, at all times, on any and all subjects.”
Discussing the continuance of the payment of rebates and the reasons the Interstate Commission has not been able to stop the practice, Commissioner Prouty says:[[358]] “When I first came onto the Interstate Commerce Commission (1897), I used to see continually in the newspapers statements like these: ‘Rates sadly demoralized,’ ‘agreement between railroad officers to restore rates,’ and everything of that sort. I said to my associates, ‘Gentlemen, this thing will not do; we must stop the payment of rebates.’ They said, ‘How are you going to stop the payment of the rebates?’ I said, ‘We are going to call these gentlemen before us; we are going to put them under oath, and we are going to make them admit they paid these rebates, and we are going to use the evidence which we obtain to convict them.’ We employed Mr. Day, who is now with the Department of Justice. The rates which have been almost uniformly demoralized have been the grain rates from Chicago to the Atlantic seaboard. We called in the chief traffic officials of all these lines and we put them under oath. Now, I would ask these gentlemen, ‘Are you the chief traffic official of this road?’ ‘I am.’ ‘Would you know it if a rebate was paid?’ ‘I would.’ ‘Are any rebates paid on your road?’ ‘There are none.’ ‘The rates are absolutely maintained?’ ‘They are.’
“Well, every traffic official who came before us in that capacity—and we prosecuted it for three days at Chicago—testified that rates were absolutely maintained.”
“Senator Newlands. How many did you have before you?
“Mr. Prouty. We had the official of every trunk line leading from Chicago to New York. They all testified the rates were absolutely maintained from Chicago to New York. Two years after that I examined the chief traffic officer of the Baltimore and Ohio, and of the New York Central—do not think it was the same man in either case—and of the other lines, and they all testified that rates had never been maintained. I would like to know what I could do as Interstate Commerce Commissioner to make those gentlemen admit that they paid rebates, and as they would not tell that they paid rebates, I would be glad to know how I could obtain evidence that they did.
“Having gotten through, Senator, with the lines between Chicago and New York, we said perhaps this is not a fair sample. Now, we will go up in the Northwest, and we will take the lines that carry flour from Minneapolis east. We instituted another investigation, and we put the railroad and the traffic men of the millers on the stand, and they all swore without exception that the rates were absolutely maintained. One traffic official there, when it got a little bit too hot for him, became sick enough so that he threw up his dinner, but he did not throw up the truth. We could not get the admission from any man there that they had ever paid a rebate. We said, ‘This does for the East; now let us go West.’ So we went into the Pacific Coast, to Portland, Oregon, and went over exactly the same performance there. We made one man admit that he burned up his books rather than present them to the Commission, but we could obtain no admission of the payment of any rebate there.”