CHAPTER III.
PASSENGER REBATES AND OTHER FORMS OF DISCRIMINATION IN PASSENGER TRAFFIC.
In addition to the passengers who travel free on passes, there are many who have free transportation in other forms. One method of favoritism is the payment of rebates, which are in use in the passenger departments as well as in the freight departments of our railroads. Passenger rebates are repayments of a part or the whole of the amounts paid by favored parties for tickets or mileage. For example, large concerns that employ travelling men buy ordinary passenger mileage books, and when the mileage is used the cover of the book is returned to the railroad and a refund is made.[17] In the investigation of the Wisconsin railroads, instituted by Governor La Follette in 1903, it was found that every railroad of importance in the State had been paying passenger rebates in large amounts every year for the whole six years that were covered by the search. From 1897 to the end of 1903 the Chicago, Milwaukee and St. Paul refunded $170,968 in passenger rebates, the Chicago and Northwestern refunded $614,361; adding the Chicago, St. Paul, Minneapolis and Omaha, the Wisconsin Central, and the “Soo Line,” the total passenger rebates paid by the five roads named in the said time was over $972,000.
In the case of some favored shippers in Wisconsin it was found that the railroads secretly refunded the entire original cost of the mileage books bought by the said shippers for themselves or their agents, or $60 per book. So that these favored houses “were able to send out their entire force of travelling men without paying one cent of railroad fare, while their competitors paid full fares.”
One of these Wisconsin concerns, the Northern Grain Company, received from the Northwestern Railroad alone $151,447 rebates in five years, or over $30,000 a year, partly as refunds on the passenger mileage books of their travelling men and partly as cash rebates on their business. The president of the Northern Grain Company is O. W. Mosher, who was a State senator in 1901 and 1903 and fought the railroad reforms proposed by Governor La Follette. He vigorously defended “individual liberty” and the right of the railroads to “control their own property,” and it is easy to understand his earnest opposition to railroad regulation since it has come out that “individual liberty” and railroad laissez faire meant $30,000 a year to his company.
The Deadhead Passenger Car.
Along with the less-than-carload lots of deadheads travelling on trip passes or annual passes, or transportation with a rebate attachment, there are carload lots going deadhead in private passenger cars.
In a tour to the Pacific coast and back a score of private cars at different times were attached to the various trains I was on. A friend who went a year or so later counted nine private cars on his journey in California, four of them being attached to the same train at the same time, and in the whole 9000 miles he travelled the total number of private cars ran up to 54. Any trust or railroad magnate or governor of a State may have a private car with his retinue, while the lesser deadheads ride in the ordinary cars or Pullman coaches; and the common people pay for it all.
Ticket Scalping.
For many years the railroads aided and abetted the ticket scalpers, paying commissions on the sale of tickets,[18] or making arrangements so that scalpers could get tickets from the railway offices for less than the regular prices. Railroad offices have been known to sell tickets systematically to scalpers at 33, 50, and 66 percent off, or ⅔, ½, and ⅓ of the regular rates. The scalper shared the discount with the passenger, and the railway prevented some other line from getting the traffic.
In some cases scalpers induced conductors not to cancel tickets taken up, so that they could be resold in the scalping offices, the profits being divided with the conductors. In 10 States where statutes were passed against scalping, the brokers and the railroads practically nullified the law. And by collusion with these brokers the railroads secretly violated the Interstate Commerce Act.
A mass of facts upon this subject appears in the expert testimony pro and con before committees of both Houses of Congress, notably in January, 1898. It was shown that at that time 346 newspapers, substantially all the railway and steamship passenger lines of the United States, the laws of 10 States, the long example of Canada, the resolutions of numerous national, State, and mercantile associations, the resolutions of the railway commissioners of 19 States, the insistent and repeated views of the Interstate Commerce Commission, the lesson taught by every other railway country of the earth, the due protection of the large organizations to whom special fares are granted and of the railways granting them, the due observance of law, and the best moral sense of all the commercial world, were all arrayed on the honest side of every phase of this question. Ticket brokerage was defended by not over 3 railroads and 560 ticket brokers. The two organized bodies of scalpers, the American Ticket Brokers’ Association and the Guarantee Ticket Brokers’ Association, stood behind the scalping business.
George R. Blanchard, former commissioner of the Joint Traffic Association, says in his testimony before the United States Industrial Commission (IV, 623): “There are two organized bodies of scalpers: the American Ticket Brokers’ Association and the Guarantee Ticket Brokers’ Association. They have their directors, officers, and agents, rules and regulations, and they adopt resolutions and discuss and decide questions of cut fares.”
One railroad president told me that most of the tickets the scalpers sold they got directly from the railroads. Another railroad president has given similar testimony before the Industrial Commission, and also stated that he did not believe the railroads could stop the scalping trade in unused tickets.[19]
This method of discrimination has, however, received a serious setback so far as railway collusion is concerned. The presidents of the leading railroads have agreed with each other to support the law, and scalping is a more limited profession than it formerly was. In fact, a much larger claim than this is made by some. In going over this year the materials I have collected on the subject, I came upon the statement that “scalping has been practically abolished.” I put up my pen and went down town to see. I found on Washington Street (Boston), in the ticket-office district, a man with “Cut Rates” printed in large letters on his back. The same sign was above a door near by, and on the stairway. I went up.
“What will it cost me to go to Chicago?” I asked.
“I can give you a ticket for $12 if you are going within a few days.”
“Suppose I don’t go for a month or two?”
“Well, I can give you a $15 rate most any time.”
“First-class?”
“Yes.”
“Over what route?”
“The Boston & Maine and Grand Trunk.”
“What can you do over the Boston & Albany?”
“I’ll give you transportation on that route for $18.”
“Will that be first-class?”
“No.”
“Tourist?”
“Yes.”
“Do you have the $12 tickets often?”
“Sometimes; but I can give you a $15 rate any time.”
I went to the railway ticket offices and learned that the fare from Boston to Chicago by the Boston & Maine and Grand Trunk was $18 first-class, and $17 tourist; by the Boston & Albany $22 first-class, and $19 tourist, and through New York $25.
It is clear, therefore, that scalping is not a lost art. The regular one-price ticket agents say that the cut-rate business is still in flourishing condition. It may be that railway offices no longer act with scalpers to evade the law, but when a scalper says he will give you a first-class ticket (worth $18 at the depot) for $15 any time you want it, it looks as though he had some pretty certain source of supply. One scalper here, I am told, is the brother of the advertising manager of a monthly magazine. Railroads advertising in the magazines pay in tickets and the manager turns these tickets over to the scalper. The same thing is done in New York and Chicago, and probably in other places. Scalpers also get unused portions of excursion and other tickets. And perhaps some of the railways are still in direct collusion with scalpers. Every freight pool or agreement to prevent cutting freight rates that was ever made was broken by some railroad secretly cutting prices, and it may be that an agreement to maintain fares is not safe against secret cutting either.
One of the most peculiar things about scalping is that, unlike other forms of discrimination, its benefits go to the poor man instead of the rich man. It is the only kind of discrimination that gives the poor man any comfort or tends to diffuse wealth instead of concentrating it. In this one case the rich help to pay for the poor man’s transportation; in all other cases the poor man and the man of moderate wealth help to pay for the service the rich man gets. Perhaps this partly explains why it is that many railroads have taken a more decided stand against this abuse than against any other in the long list of evils that afflict transportation in this country.