The “Elkins Act,” approved Feb. 19, 1903, amended the Interstate Act in some important particulars. It provides that any failure to publish rates and charges, or any departure from the published tariffs, or any offer or grant of any discrimination, rebate, concession, or device of any kind whereby transportation is obtained at a less rate than the tariffs published and filed with the Commission, shall be a misdemeanor of the corporation as well as of the officers or agents concerned. Every shipper also who solicits or accepts any such rebate, concession, or discrimination is guilty of a misdemeanor. In each case, whether the suit is against the railway company, or its officials, or a shipper, the punishment is a fine of $1,000 to $20,000 for each offence, the imprisonment clause of the Interstate Act being repealed.
Under these provisions the railroad companies themselves may be attacked, in addition to the suits against the guilty officials provided for by the Interstate Act, and shippers may be convicted by showing that by any device they have obtained a lower rate than the published rate, without proving that some one else paid more than the defendant, as was formerly necessary.
The act also expressly authorizes the United States Circuit courts to restrain by injunction or other appropriate process any departure from published rates, or any discrimination forbidden by law, without prejudice to the bringing of suits for damages or other action under the Commerce Act. And it further declares that “in proceedings under this act and the acts to regulate commerce, the said courts shall have the power to compel the attendance of witnesses, both upon the part of the carrier and the shipper, who shall be required to answer on all subjects relating directly or indirectly to the matter in controversy, and to compel the production of all books and papers, both of the carrier and the shipper, which relate directly or indirectly to such transaction; the claim that such testimony or evidence may tend to criminate the person giving such evidence shall not excuse such person from testifying or such corporation from producing its books and papers, but no person shall be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which he may testify or produce evidence, documentary or otherwise, in such proceeding.”
This is considered one of the best railroad measures so far enacted. It is said by many that direct rebates have practically ceased since its passage, and some declare that it has stopped all sorts of discriminations.
While Mr. Bacon, an important witness from Milwaukee, was speaking to the Senate Committee, 1905, of which Senator Elkins was chairman, the following conversation took place regarding the Elkins Act.[160]
“Senator Elkins. The Pennsylvania Railroad has not given a rebate since the act was passed, and they do not want to. It has been a benefit to the railroads, don’t you think so?
“Mr. Bacon. It has benefited the railroads, by millions of dollars.
“Senator Elkins. I mean the good railroads.
“Mr. Bacon. It will undoubtedly effect a saving of upwards of a hundred million dollars a year.”
Mr. Prouty of the Interstate Commission said to the Boston Economic Club in March, 1905: “The Elkins Bill is one of the most beneficent measures touching railway regulation of recent times. I have no words of commendation too strong for that measure; but this bill, which has very largely stopped the payment of rebates, as such, was a railroad measure, conceived by the railroads, passed by the railroads, and in the interest of the railroads, and no one thing in recent times has put into the treasuries of railways of this country more money than that same enactment.”
Senator Elkins who drew the bill is the political “boss” of West Virginia. He is director of a railroad that belongs to the Pennsylvania system and is otherwise identified with railroad interests. He acted in harmony with leading railroads in drawing the bill. In fact, it is said on high authority that it was framed in the office of A. J. Cassatt, President of the Pennsylvania Railroad. The law is in many respects a good one, although there is a clause in it which may protect the railroads from the consequences of wrongdoing, and it is thought by many that the real effect of the law has not yet become apparent. Railroad managers do undoubtedly desire to protect themselves from the importunities of shippers to whom they do not wish to give concessions, and to be free from the danger of imprisonment, and so far as possible from any danger, in case they are caught giving preferences to persons or companies in whose property they or their railroads have a special interest. The Elkins Act accomplished all these purposes. It is claimed that the words italicized in the above quotation from the act will prevent the prosecution of any officer or road on account of any cause in respect to which they give evidence or produce books. In other words, they can only be prosecuted where the discrimination or departure from schedule rates can be proved without their help. Commissioner Prouty says: “I have no doubt that rebates to a greater or less extent are paid in many parts of this country. And if it turns out, as the railroads contend, that the disclosure by any officer of a railroad gives the company its exemption under the Elkins Bill your law is good for nothing. They can resume the payment of rebates whenever they desire.”[161]
The fact is, apparently, that for some months after the act was passed the railroads in large measure discontinued rebates and some other notorious forms of discrimination, just as they did for some months after the Interstate Act was passed in 1887. The abuses “grew up again afterwards, and almost every 1st of January, from that time down to this, these railroad gentlemen get together and make a gentlemen’s agreement that they will quit and reform and turn a new leaf and not do it any more. They break down again and make a resolution again. They are now under a good resolution.”[162]
Some of the sweeping declarations of railway men and others about discriminations, and especially about rebates, are as follows:[163]
“All stopped.” “Eliminated.” “Almost annihilated since Elkins Law” (February, 1903). “Almost entirely wiped out.” “Have known of no such payments for over 12 years.” “Do not know of any in last three years.” “Have not had any for about 20 years.” “Never had any.” “Know of none.” “Have been practically abandoned.” “Past issue.” “Have no knowledge of.” “No complaints of.” “None so far as I know.”
Some of the witnesses give the railways a clean bill of character and even put a coat of whitewash over the record of the Standard Oil from 1887 on. Mr. Hiland, head of the traffic department of the Chicago, Milwaukee and St. Paul, says: “Unjust discriminations and rebates have ceased.”[164]
Mr. Bird, Vice-President of the Gould lines, says: “I believe there are no rebates paid.”
“Chairman. And discriminations?
“Mr. Bird. No secret discriminations. There may be discriminations that are open and published in the tariffs.... I do not believe that the Standard Oil Company has received a rebate since 1887.... I do not believe that the beef trusts are getting rebates.”[165]
Mr. Brown, counsel for the Santa Fe, said: “My sole purpose in appearing here is to put on record a sweeping denial that the A. T. and S. F. Company has made any discriminatory rates or paid any rebates.”[166]
Mr. Biddle, traffic manager of the Santa Fe, was not quite so sweeping. He said: “It is true that rebates have been paid, although personally I have not known of any such payments for over twelve years.”[167]
A more impressive mass of negative evidence could hardly have been secured, even if the Commission had selected the witnesses with a view to their ignorance of rebates and kindred manœuvres. It is peculiarly fortunate, just at this time, to have the statements of so many who seem to have refrained from associating with rebates or seeing any discriminations, in view of the vigorous anti-rebate remarks of President Roosevelt in his recent messages to Congress, asking for further legislation to check railroad abuses. The President is under the impression that rebates and other evils still exist, but if the Senate Committee can report to Congress that this is a mistake it will be clear that the said new legislation is not needed.
Unfortunately, however, the weight of evidence is against those who affirm the conversion of the railroads to the ways of virtue. The cessation of discriminations is denied by a large number of authorities including railroad men of the highest position.[168]
James J. Hill, President of the Great Northern, says discriminations still exist and must exist. He thinks discriminations will never cease, and declares that railroads “have to discriminate.”[169]
Victor Morawetz, Chairman of the Executive Committee of the Santa Fe and its chief counsel, says that discrimination still exists and is “bound to exist” under present conditions. Many things the traffic managers do are not authorized by their superiors and would not be approved by them, but it is understood that concessions are given and must be given.[170]
President Stickney of the Chicago and Great Western says that prior to the injunctions against paying rebates “it was understood among business men that schedules were made for the small shippers and those unsophisticated enough to pay the established rates,” and since the injunctions the knowledge of the traffic directors has been exerted in “the problem of how to pay rebates without paying rebates.” They use “elevator fees” and “midnight schedules” or sudden changes of tariff known beforehand to favored shippers. These special tariffs “are of frequent occurrence and result in greater injustice than secret rebates.”[171]
Mr. Rich, the general solicitor for the B. & M., said to the Providence Economic Club, in the spring of 1905, that 75 percent of products is carried below the published rates. He added that the rates are mostly open. The published rates no doubt are open, but it is hard to believe that the cut rates are mostly open. If they were, there would be no reason for publishing rates other than those in use. Every rate below the published tariff is a violation of law. And it is not easy to see why the railroads should risk multitudinous violations of law simply to establish open rates which might be published without interfering with any purpose that is honest. I quoted Mr. Rich’s words to an excellent authority and he said, “Cut rates are not open rates. Can’t make people believe that.”
Senator Dolliver said:[172] “A famous railway president, speaking in this city a month ago, stated that the whole railway practice of America was honeycombed with secret rebates and discriminations as late as last January.”
Professor Ripley says[173] that discriminations between localities and between commodities through classification, etc., are still serious evils.
Governor Cummins of Iowa said:[174] “So long as there is competition among the railroads in securing business, so long they will find some way of getting that business through favors.”
Mr. C. W. Robinson, representing the New Orleans Board of Trade, said: “The direct rebate has been stopped by the Elkins law, but there still remains the indirect rebate, or the almost innumerable forms of discrimination, which are difficult to reach by legislation, and in the practice of which some of the traffic managers are unquestionably experts.”[175]
The complaints made to the Interstate Commission in the last few years[176] and the facts brought out in the investigations of the Interstate Commission from March, 1903, to the present time, and in the Hearings of the Senate Committee, 1905, abundantly confirm the opinions of these witnesses.
The Elkins Bill became law in February, 1903. In December of the same year the Interstate Commerce Commission reported that they believed the payment of rebates was largely discontinued, but that pressure upon the companies to maintain published rates had “begotten a new crop of expedients for the purpose of favoring particular shippers.”[177] Private-car abuses and terminal-railway abuses especially have “grown up much more intensely and to an aggravated degree since the Elkins Act than ever before.”[178] In 1902, in consequence of the exposure of wholesale rebates in the dressed-meat traffic, etc., temporary injunctions were issued against 14 leading railroads of the West, and while the matter was still before the court the Elkins Bill was passed, settling the injunction question in favor of the Commission. The railroads, convinced that rebates were dangerous, for the time at least, turned their attention to methods of discrimination not so subject to injunction or other judicial disorder. To these they have given their main allegiance, though they have by no means abandoned the rebate.