Extent of Practice
Evidence showing how radically published rates were reduced by the practice of rebating is to be found in the following testimony by G. W. Luce, now freight traffic manager of the Southern Pacific, and long connected with the traffic department of that company. Speaking before the Interstate Commerce Commission of the period about 1887, Mr. Luce said:
Just prior to that time I had in mind, there had been a very severe war in rates. I do not know whether that was the reason for the creation of this Commission or not, but the struggle had been very disastrous; two or three lines, I think, were very much crippled, going into the hands of receivers; and just before the act was passed, effective in April, 1887, I think, the lines got together and said, “Here, let us stop this foolishness; let us have some standard of rates and see what we can do on that basis. I believe the rates were made 50 per cent of the old tariff rate that had been used for two or three years. I presume the carriers thought that it would not be judicious to put their rates right up to standard 100 per cent, so they decided on a 50 per cent tariff.”
The Chairman. You mean 50 per cent more than the published rate, or 50 per cent of the published rate?
Mr. Luce. Of the published rate....
The Chairman. That means your published rates, which your line had published up to that time in the eighties, were probably about twice that much?
Mr. Luce. Yes, sir.
The Chairman. And yet that was an effort to bring together a stability of rates, and to get more out of the traffic than you had been getting during this war, I suppose?
Mr. Luce. Yes, sir.
The Chairman. So that, as a matter of fact, prior to that, you had not been getting even as much as ... the 50 per cent basis?