The Project Gutenberg eBook of The heart of the railroad problem, by Frank Parsons

144. I. C. C. Rep. 1895, p. 29; 1896, pp. 16–23. In March, 1896, the U. S. Supreme Court considered the case on appeal, and apparently accepted the decision of the Commission on the question of similar conditions, but overruled another part of its order, requiring the railroad not to charge more than $1 per hundred on first-class goods from Cincinnati to Atlanta. The Court placed its decision on the ground that the Commission has no authority to fix rates, maximum, minimum, or absolute. It may determine that a past rate is unreasonable, but cannot fix a rate for the future. Interstate Commission v. Cincinnati, New Orleans, and Texas Pacific, 162 U. S. 184; and 167 U. S. 479. I. C. C. v. Texas and Pacific, 162 U. S. 197.

145. 6 I. C. C. Decis. 343; and Rep. 1895, pp. 29–31.

146. Rep. 1895, p. 31.

147. I. C. C. Rep. 1899, p. 68; 7 I. C. C. Decis. Dec. 1897, p. 431. The Commission ordered that the charge to La Grange should not exceed the rate for the longer haul to Atlanta, and two years later the Circuit Court sustained the order (102 Fed. Rep. 709), but the Circuit Court of Appeals reversed the decision in May, 1901 (108 Fed. Rep. 988), and in May, 1903, the Supreme Court affirmed the ruling of the Court of Appeals against the Commission (190 U. S. 273).

148. I. C. C. Rep. 1902, p. 48; 7 I. C. C. Decis. 431; 8 I. C. C. Decis. 377; 118 Fed. Rep. 613; Sen. Com. 1905, pp. 2316, 2317, 2926. No appeal appears to have been taken from the Circuit Court.

149. 8 I. C. C. Decis. Feb. 1900, p. 409; Rep. 1900, p. 34.

150. 8 I. C. C. Decis. 93, reversed by the Circuit Court, August, 1902 (117 Fed. Rep. 741), and by the Court of Appeals, May, 1903 (122 Fed. Rep. 800); now on appeal to U. S. Supreme Court.

151. 8 I. C. C. Decis. 142.

152. I. C. C. Rep. 1895, p. 39.

153. See 6 I. C. C. Decis. 257, 361, 458, 488, 568, 601; 7 I. C. C. 61, 224, 286; 8 I. C. C. 93, 214, 277, 290, 304, 316, 346. See also vol. 9 of the Decisions, and Rep., 1898, pp. 33, 246; 1899, p. 28; 1900, p. 40; 1901, pp. 57, 65; etc. Wherein conditions substantially differ the exemption is applied. For example, the Santa Fe is justified in charging lower rates from the Pacific to the Missouri River than to Denver on rice, hemp, blankets, books, boots, etc. (9 I. C. C. Decis. 606); and a higher rate on lumber to Wichita from Western points than to Kansas City is approved (9 I. C. C. Decis. 569).

Rates of an individual road cannot be compared with joint rates made by that road with others. Osborne Case, 52 Fed. Rep. 912; Tozer Case, 52 Fed. Rep. 917; Union Pacific Case, 117 U. S. 355.

154. Popular Science Monthly, Oct. 1897, p. 816.

155. M. E. Ingalls, before National Convention of Railway Commissioners, 1898, p. 14.

156. Rep. 1897, p. 6; and 1898, p. 15.

157. “The exaction of the published rate is the exception.... Men who in every other respect are reputable citizens are guilty of acts which, if the statute law of the land were enforced, would subject them to fine or imprisonment.” See Rep. 1898, pp. 5, 6, 18, 19; Rep. 1899, p. 8.

158. Report, vol. iv, 1900, p. 625.

159. Ind. Com. iv, pp. 6, 349, 359.

160. Testimony, p. 25.

161. Sen. Com. 1905, p. 2912.

162. Judge Clements of the Interstate Commission, Senate Committee, 1905, p. 3238. When the reader examines the facts that follow in this book he may wonder what the railroads will do when they are not under a good resolution, in view of the record they have made while under a good resolution.

163. See “Rebates” and “Discriminations” in index to Hearings of the Elkins Committee, 1905.

Some of these witnesses who do not know of any discriminations or unreasonable rates declare in other parts of their testimony that if the proposed legislation were enacted the Interstate Commission would be deluged with complaints. And this is probably true, since complaints of excessive rates and discriminations have been more numerous in the last two or three years than in any other equal period before. (Testimony of Judge Clements of the I. C. C., Senate Committee, 1905, p. 3242.)

164. Sen. Com. 1905, p. 1331.

165. Ibid., pp. 2253, 2284.

166. Ibid., p. 3140.

167. Ibid., p. 1652.

168. On the question whether or no rebates and discriminations exist, the testimony of credible witnesses who say they know of these secret favors far outweighs the proving power of the negative statements of witnesses who say they do not know of the said phenomena. Lots of people did not know till recently that the Equitable paid a famous railroad senator $20,000 a year for “advice.” And the statements of a multitude that they did not know of it would weigh nothing against the testimony of 2 or 3 well informed men who positively stated the facts. Discriminations may go on without the railroad directors or principal officers knowing about them. They may not know about them on purpose. Where ignorance is protection ’tis folly to be wise.

Railway men have told me that in many cases leading officers of a railroad are purposely kept, or keep themselves, in perfect ignorance of all discriminations and other wrongdoing in order that such officers may appear in legislative and interstate commerce hearings without knowledge of any facts that would be prejudicial to the railroad.

169. Sen. Com. 1905, p. 1474.

170. Sen. Com. 1905, pp. 819, 820, 842.

171. Ibid., pp. 2122, 2123.

172. Ibid., p. 951.

173. Ibid., p. 2329.

174. Sen. Com. 1905, p. 2083.

175. In illustration of his statement the witness referred to the prevalence of abuses in respect to terminal railroads, private cars, purchasing agents, switching charges, special tariffs, milling in transit, etc., describing a number of cases that have come under his personal observation in the year 1905. Sen. Com. 1905, pp. 2432, 2434.

176. More complaints per annum have been filed with the Commission since the Elkins Act took effect than were filed before the act was passed. The reports of the I. C. C. show 145 formal complaints filed in 1903 and 1904, carrying the total to 789, and 888 informal complaints, carrying the total to 3223, making the whole number 1033 in the two years, and 4012 since 1887—more than 25 percent of the complaints having been filed in the last two years which constitute only 11 percent of the time covered by the reports of the Commission. Out of the 62 suits entered in 1904, 50 charge unjust discrimination of serious character, and nearly all the rest involve discrimination in some form. The complaints entered for amicable adjustment also relate in large part to cases of discrimination between persons and places, refusal to furnish cars, unreasonable delay, unfair classification, discrimination in track facilities, unfair estimate of weights, allowing competitors to underbill, refusal of the Transcontinental Passenger Association to grant the American Federation of Labor the usual special convention rate for their meeting at San Francisco, refusal to route shipments as ordered by shippers, relatively excessive rates on vegetables, lumber, lead, drugs, corn products, coal, iron, shoes, leather, etc., violations of the long and short haul clause, and outright refusal to accept shipments, besides a number of complaints of overcharges, and rates alleged to be unreasonable per se.

Adding the figures for 1905, which have come to hand since the above was written, we find that more than double the number of complaints of discrimination have been made to the Interstate Commerce Commission in the last three years, since the Elkins Law was passed, than in any equal period before. The complaints filed in 1903, 1904, and 1905 constitute more than a third of the whole number of complaints from the beginning of the Commission in 1887. The average number of complaints per year from 1887 to 1902 inclusive was 186, while the yearly average for 1903–1905 is 534—more than double, nearly threefold—and five-sixths of the suits entered charge facts that constitute discrimination of serious character, and nearly all the rest involve discrimination in some form.

177. In the report for 1905, p. 13, the Commission refers to the fact that in the reports for 1903 and 1904 some favorable comments were made on the effect of the Elkins Law upon the practice of paying rebates, and says: “Further experience, however, compels us to modify in some degree the hopeful expectations then entertained. Not only have various devices for evading the law been brought into use, but the actual payment of rebates as such has been here and there resumed. [It never stopped in a good many places, judging by the La Follette facts and other evidence, including the statements of many leading railroad men.] Instances of this kind have been established by convincing proof. More frequently the unjust preference is brought about by methods which may escape the penalties of the law, but which plainly operate to defeat its purpose.”

178. Judge Clements of the Commission, Sen. Com. 1905, p. 3238.

179. See the admirable summary of the investigation by Ray Stannard Baker in McClure’s Magazine for December, 1905.

180. The Interstate Commission says: “While giving rebates to the fuel and iron company from tariff rates, it (the Santa Fe Railroad) charged the full tariff rates on interstate shipments of coal by other shippers in not only the general coal region involved, but in the same coal field. This practice of the railway company resulted in closing markets for coal to shippers competing with the Colorado Fuel and Iron Company.” 10 I. C. C. Decis. 473, February, 1905.

181. 10 I. C. C. Decis. 475.

182. 10 I. C. C. Decis. 476–480. While the Caledonian Company was trying to get to market on equal terms with the Colorado Fuel and Iron Company, they got a letter from the Santa Fe traffic office, Nov. 15, 1900, saying that they could sell their coal to the Colorado Fuel and Iron Company, or keep it. Mr. Biddle, however, when shown the letter and questioned about it, admitted the authorship, but said he did not construe the letter as saying anything of the kind. (I. C. C. Santa Fe Hearing, Dec. 1904, p. 154. The text of the letter is not given.)

183. There was a dispute about the relative steam power of the coals from the different localities, but the point doesn’t seem to be material.

184. Sen. Com. 1905, pp. 3072, 3073. The Caledonian had a good market before the agreements between the Santa Fe and the Colorado Coal Company were made, and it had many orders afterwards, but could not fill them except at a loss because of favoritism in freight rates.

185. I. C. C. Hearing, Dec. 1904, pp. 135, 148, Biddle.

186. Mr. Biddle says the coal rate circular was issued by his authority and continued a practice that was in effect when the Santa Fe operated the mines, but he could not say whether it was “simply continued at the time the Colorado Company acquired the mines or whether there were negotiations under which it was done” (I. C. C. Hearing, Dec. 1904, pp. 135, 136, 147, 148).

187. A copy of this circular bearing the name of the traffic manager of the Santa Fe was taken without permission by a dealer at El Paso from the Santa Fe office there.

188. I. C. C. Santa Fe Hearing, Dec. 1904, p. 8.

189. I. C. C. Santa Fe Hearing, Dec. 1904, pp. 146–148.

190. Sen. Com., 1905, p. 848.

191. Mr. Morton’s letter to President Roosevelt, June 5, 1905. Secretary Morton continues: “The tariff covering this arrangement was published so as to show the freight rate to be $4.05 per ton instead of the delivered price at El Paso and Deming, and did not separate the freight rate from the cost of the coal at the mines, as it should have done. Until the investigation of the case by the Interstate Commerce Commission I did not know personally how the matter was being handled, so far as the publication of the tariff was concerned. My own connection with the case was to see that the traffic was secured to the Atchison rails, and after that details were left to subordinates.”

192. Mr. Biddle testified that the same thing had been done for other coal companies, and in one instance at least it was shown that it had been done for the Victor Fuel Company, but in this case “the price of the coal and the rate of freight were kept entirely separate, the price of coal being treated in the nature of an advance charge.” The Commission says further “If the Colorado Fuel and Iron Company had in all cases paid the published tariff rate which was exacted from other shippers, the fact that the price of the coal and the freight were included in a single item would have worked no practical advantage to that company so far as we can see. Neither, apparently, would there have been any reason for this arrangement if the purpose of the parties had been honest. If, however, there existed upon the part of the Santa Fe Company an intent to charge the Colorado Fuel and Iron Company less for the transportation of its coal than the published rate, it is evident that this method of billing would afford a ready means for concealing the transaction. In point of fact, during the entire period covered by this investigation (July 1899 to Nov. 27, 1904) the Santa Fe Company did transport coal for the Colorado Fuel and Iron Company for less than its open tariff rates, and these concessions amounted in many cases to the price of the coal itself.” (10 I. C. C. Decis. 482, Feb. 1905.)

193. See 10 I. C. C. Decis. 473, 487, 488, Feb. 1, 1905.

194. “Strategy of Great Railroads,” 1904, p. 167.

195. I confess, however, that I do not see how, in the light of the records in the Colorado Case, the Santa Fe counsel could tell the Senate Committee this year that his road had made no discriminating rates (see above, p. 114). Neither is it easy to see how Mr. Biddle could testify that he had not known of the payment of any rebates for 12 years. The Commission says the Santa Fe paid rebates to the Fuel Company till November, 1904, and other preferences have been unearthed, as we shall see hereafter. Some shippers and some consignees have had better terms than others. Mr. Biddle does not call these preferences rebates. The Commission sees that when the Santa Fe collected the published freight rate, $4.05, from the El Paso people and paid for the coal out of that, instead of collecting the $4.05 as freight and leaving the El Paso folks to pay for the coal in addition, the effect was the same to the El Paso people as the payment of a rebate equal to the value of the coal, and the same to the Fuel Company in respect to securing a monopoly of the market, and so the Commission, looking at the substance of the matter and the form too so far as could be judged from the published tariff, called the payments rebates, or payments out of, or deductions from, the regular tariff rates.

196. Commissioner Prouty to the Boston Economic Club, March 9, 1905.

197. Sen. Com. 1905, p. 3607.

198. 10 I. C. C. Decis. 226, and Rep. 1904, pp. 58–59.

199. Sen. Com. 1905, p. 367. Testimony of E. M. Ferguson, representing 12 organizations of shippers, State and national.

200. Sen. Com. 1905, p. 2432.

201. I. C. C. Decis. 735, March 25, 1905.

202. Ind. Com. iv, 54.

203. Sen. Com. 1905, pp. 2284, 2429.

204. Ibid., p. 2432.

205. Ibid., p. 18.

206. Sen. Com. 1905, pp. 2484, 2490.

207. Sen. Com. 1905, p. 2912.

208. 10 I. C. C. Decis. 675, April 11, 1905; Rep. Dec. 1905, p. 39.

209. Under the milling-in-transit privilege grain may be shipped into the mill from the West, ground, and shipped out from the mill to New York or other destination at a total cost but little greater than the straight through rate from the West to New York. But a mill without this privilege must pay the rate from the West to Philadelphia, and then the local rate from Philadelphia to New York, making the total cost very much greater.

210. Some strong statements about this case may be found in the Philadelphia North American August 12, August 20, and other dates during August, 1903.

211. Sen. Com. 1905, p. 2434. See 10 I. C. C. 1905, p. 505.

212. This trick was resorted to by the oily people many years ago, but the railroads, realizing its potency in eluding the rebate prohibitions, have lately extended its sphere of usefulness and it is becoming quite frequent. See Sen. Com. 1905, p. 2123.

213. Ind. Com. iv, 544. The name “midnight tariff” by which this scheme is known probably fits the case, but “flying tariff” is perhaps still more appropriate.

214. Outlook, July 1, 1905, p. 579.

215. Sen. Com. 1905, pp. 2911, 2912, Commissioner Prouty; 2123, President Stickney. See also p. 3231, and 10 I. C. C. Decis. 317.

216. Mr. Moffat was asked if he thought the allowances ought to be made. He said: “I think that it ought to be made to the big shippers. I think the man who ships 100,000 bushels a month ought to get a little better deal than the man who ships only 1,000 bushels a year.”

Commissioner Cockrell replied: “There is where I think you are entirely wrong. No government could live under such a condition. The rich would soon absorb everything and the small man would be wiped out of existence. The whole business we are on now started from a railroad giving a man a rebate. The minute the railroad does a thing like that it opens the way to a swindling petty graft and bigger grafting and crooked work. It is wrong, all wrong. It is so wrong that nobody knows what to call it. Down in Louisville they call it a ‘swag.’ Here you call it an ‘allowance.’ It is all wrong.”

217. 10 I. C. C. Decis. 274, June 4, 1904.

218. Ibid., 255, June 4, 1904. The practice was held unjust.

219. Ibid., 489, Feb. 2, 1895. Duluth Shingle Co. v. Northern Pacific, Great Northern, Chicago, Milwaukee and St. Paul, and other railroads.

220. 10 I. C. C. Decis. 452, Jan. 7, 1905.

221. Sen. Com. 1905, pp. 2432, 2433.

222. 11 I. C. C. Decis. 104.

223. 10 ibid., 428, Jan. 1905.

224. Sen. Com. 1905, pp. 3426, 3427. S. H. Cowan, attorney of Cattle Growers’ Interstate Committee; Chicago Board of Trade v. C. & A. R. R., 4 I. C. C. Decis. 158.

225. 10 I. C. C. Decis. 428. Chicago Live-Stock Exchange v. Chicago and Great Western. See also I. C. C. Rep. 1905, pp. 42, 63.

226. The United States Circuit Court has refused to enforce the order of the Commission on the ground that the Chicago Great Western reduced the rate for competitive reasons to get its share of the tariff. The Commission justly says: “If the decision of the Circuit Court in this case is sound any carrier is justified in making the widest discriminations in rates as between competing commodities, regardless of the effect upon non-favored industries, by simply asserting the existence of general competition and the desire to increase the traffic in particular commodities over its line.”

I. C. C. Rep. December, 1905, p. 64. It is to be hoped that the case will go up on appeal and a reversal of the Circuit decision be obtained.

227. 10 I. C. C. Decis. 590, Feb. 11, 1905; Rep. 1905, p. 31.

228. Cannon Falls to St. Louis, 10 I. C. C. 650, March, 1905.

229. Sen. Com. 1905, p. 1775. Mr. Bacon of Milwaukee, speaking for a convention of shippers.

Rates to Texas also from Kansas and Missouri points are 5 cents per hundred higher on flour than on wheat, and this differential is not applied on shipments in any other direction from those points. (10 I. C. C. Decis. 1904, 55.)

230. I. C. C. Cases, 707, 1905.

231. Proctor and Gamble Case, I. C. C. Rep., 1903, pp. 57–61; 1905. Rep. p. 63.

232. Sen. Com. 1905, p. 346.

233. Ibid., p. 2742.

234. Ibid., p. 18.

235. Business Men’s League of St. Louis v. many railroads, 9 I. C. C. Decis. 319, Nov. 17, 1902.

236. 10 I. C. C. Decis. 333, June 25, 1904.

237. Ibid., 327, June 25, 1904.

238. Sen. Com. 1905, p. 1925.

239. I. C. C. Dressed-meat Hearings, Dec. 1904, Biddle.

240. Sen. Com. 1905, pp. 351, 354, 364, 818, 2496. The routing instructions to agents of the St. Louis and San Francisco Railroad Company were introduced. The circular contained a list of the roads over which shipments were to be routed unless shippers insisted on a different routing. Agents were cautioned that “these instructions are confidential and must not be made public. Under no circumstances must representatives of foreign roads or fast lines be allowed to examine the instructions contained in the circular.” (p. 351.)

241. Sen. Com. 1905, p. 818.

242. Sen. Com. 1905, p. 354. The witness derived his information as to the sale of tonnage and reciprocal routing agreements from high officials of the railroads, pp. 354, 364.

243. 10 I. C. C. Decis., 1904, p. 47.

244. Ibid., 422, Jan. 7, 1905.

246. 10 I. C. C. Decis. 226, April 28, 1904; Rep. 1904, p. 58,—held unlawful discrimination. See also p. 78, complaint against W. Va. Northern for refusing due proportions of coal cars.

247. 134 Fed. Rep. 196; I. C. C. Rep., Dec. 1905, p. 65.

248. 10 I. C. C. Decis. 699.

249. Ibid., 47, 663. The favored party in this case was an agent for the railroad. No relief could be given.

250. 11 I. C. C. Decis. 104. Rep. 1905, p. 45. Citing Wight v. United States, 167 U. S. 512, and the Midland Case, 168 U. S. 144.

251. The Commission holds that the division agreed on must not be excessive (10 I. C. C. Decis. 1905, p. 385. Harvester Trust and Steel Trust Cases). But there is nothing in such granting or refusing of rate concessions that necessarily violates the interstate law, provided the little roads are common carriers for the public subject to the Act to regulate commerce. If not, the division is held unlawful (10 I. C. C. Decis., March 19, 1904, pp. 193, 505, 545, 546. Lumber).

The plea that the division is accorded to the little road because it controls the business of its routing does not explain cases of division between a private railroad that brings logs, etc., to the mill, and the railroad that takes the lumber, etc., from the mill. But through the milling-in-transit principle a division may be arranged between the common carrier by rail that brings the logs to the mill and the carrier that takes the lumber away (10 I. C. C. Decis. 194).

252. I. C. C. Rep. 1903, pp. 18–22.

253. Testimony of Mr. Biddle, General Traffic Manager of the Santa Fe, Hutchinson Salt Case. I. C. C. Hearing, Dec. 5, 1903, p. 35.

254. 10 I. C. C. Decis. 385, 392, Nov. 3, 1904. The Commission held that $3.50 a car to the Illinois Northern, and $3 a car to the West Pullman, would be reasonable for switching charges, and that switching charges in excess of these sums amount to unlawful preferences in favor of the International Harvester Company.

255. I. C. C. Rep. 1904, p. 21.

256. I. C. C. Rep. 1904, p. 21; 10 I. C. C. Decis. 385, Nov. 1904. The Commission held that “the divisions are grossly excessive for the services rendered and afford unlawful preference for the U. S. Steel Corporation, which owns the Ill. Steel Co.”

257. 10 I. C. C. Decis., March 25, 1905, pp. 661, 667–669 et seq.

258. Ibid., p. 661.

259. I. C. C. Decis., 664, March 12, 1904.

260. Ibid., 707, Feb. 7, 1905; also p. 681, March 19, 1904.

261. The oil cars, dressed-meat cars, etc., of course are in use the year round, and even fruit and vegetables need refrigerator cars in the winter to keep them from freezing as well as in summer to keep them from spoiling. (Sen. Com., 1905, p. 370.)

262. The present system, however, does not always give good service. In April and May, 1905, for instance, hundreds and hundreds of cars of strawberries rotted at the stations in North Carolina for want of cars. The Armour Car-Line could not, or at least did not supply the needed cars, and as they have an exclusive contract with the Atlantic Coast Line no other cars are in the field. At one station only 4 cars were furnished in two days and 125 carloads of berries were left on the platform and the ground to spoil. The loss this season to the truck growers of this one section from insufficient car service is estimated at $600,000. (Sen. Com., 1905, pp. 2596, 2619.)