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

267. Evidence in I. C. C. Hearings on private car-lines, April 28, 1904, p. 8. The Beef Trust report of the Bureau of Commerce, 1905, presents some conflicting evidence and sums up the case with a conservative estimate which places the average daily run of all the cars owned by Armour and his associates and used in the beef business at 90 to 100 miles. In the same report, however, the refrigerator cars of the National Car-Line Company, and of the Provision Dealers’ Dispatch are reported as running 300 miles a day, and the cars of Swift and Company are estimated to make 373 miles a day in Iowa. (“Report of Commissioner of Corporations on the Beef Industry.” March 3, 1905, pp. 274–281.)

268. I. C. C. Rep. 1903, p. 23.

269. National Congress of Railway Commissioners, 1892, statement of the Committee on Private Cars, p. 52 et seq. The Lackawanna Line Stock Express Co., for example, netted 50 percent a year, or $343 per car. See also 4 I. C. C. Decis. 630.

270. I. C. C. Rep. 1903, p. 24. Sometimes the payment for a refrigerator car is much more than $1 a day. James J. Hill says: “If we take another railway company’s car, we pay 20 cents a day for it for the time we have had it, and we are in a hurry to get it back; and we load the other man’s car back if we have anything to put in it. That is always understood. But they do not want anything put in their cars. They say: ‘Hurry it back; get it around quickly, and pay us, in place of 20 cents a day, three-fourths of a cent a mile.’ They used to ask a cent a mile, but I think that has been abandoned.”

“Senator Newlands. How much does that amount to a day, say at the rate of a cent a mile?

“Mr. Hill. If they got a cent a mile and we hurried that car through to the coast, we would take it about 300 miles a day, so that they would get about $3 a day for the car.

“Senator Newlands. So that in the one case you pay 20 cents?

“Mr. Hill. And in the other we pay $3.

“Senator Newlands. And the private car-lines you pay $3.

“Mr. Hill. Yes—well, $3 would be the extreme figure. We will say $2.50.” (Sen. Com. 1905, p. 1505.)

271. A refrigerator car costs $900 to $1000, as a rule. A first-class steel-framed freight car costs about the same. Private stock cars of good build cost about $800 each. (See evidence in Hearings on Private Cars, I. C. C. April, 1904, pp. 19, 100; I. C. C. Rep. 1904, p. 14.) The contracts provide that the railroads are to carry no perishable goods except in Trust cars if the Trust cares to furnish the cars. If by chance the railroads use their own or any other refrigerator cars than those of the Trust they are to charge the full Trust rates and turn over the said charges to the car-line just as if its cars had been used.

272. Sen. Com. 1905, p. 776: 49,807 total, 15,269 railroad and 34,538 private refrigerators; 14,792 tank cars; 11,357 stock cars; 325 poultry cars; vehicle cars and furniture cars, 1,621. These with coal and coke cars and other private cars make a total of 127,331 private cars. The entire freight car equipment belonging to the railroads is about 1,700,000 cars.

273. The Beef Trust is one of the largest shippers in the world. Its packing-house shipments from Chicago are said to amount to some three thousand million pounds (3,000,000,000 lbs.) a year. Its shipments from Kansas City, Omaha, St. Joe, St. Louis, etc., are also enormous. There is also a vast traffic in poultry, eggs, dairy products, fruit, and vegetables, that is controlled by the Trust. Is it any wonder that a railroad president or manager should refrain from action that might lose him his share of this huge business? It would make a sad hole in his receipts. Dividends would be emaciated and might vanish or appear with a minus sign. His stock would sink in Wall Street. Angry directors, bankers, investors, and stockholders would assail him and attack his management. And as a result of defying the Trust he would put himself out of office and his road perhaps in the hands of a receiver.

274. C. B. Hutchins was the inventor of an improved refrigerator car. He built five cars in 1886, and in 1890 he had the California Fruit Transportation Company operating $200,000 worth of cars. In two years, 1890 and 1891, the profits amounted to $250,000 or more than the total investment, and the company thought they had something better than a gold mine. But the Beef Trust undermined them by railroad favoritism and compelled them to sell out to the Swifts.

While the California Fruit Transportation Company was fighting for its life with the Armour lines, it presented the Southern Pacific Railway Company with $100,000 of its stock on condition of receiving an exclusive contract. The contract was made, but the Armour cars continued to go. An influence was at work stronger than the exclusive contract and the power of the California Fruit Transportation Company.

275. Evidence, pp. 101, 133, 134, 146, etc. For example the manager of the “Missouri River Despatch” operating 250 refrigerator cars testified that the Erie paid 12½ percent commissions on the freight rates in addition to the mileage. And the manager of the Santa Fe car-line said the B. & O. paid them 12½ percent commissions on dairy products in addition to the ¾ cent mileage, etc. etc.

276. Evidence, pp. 54–55, Armour Cars.

277. National Congress Railway Commissioners, above cited.

279. I. C. C. Rep. 1904, p. 14. Aug. 1, 1904 the Armour lines made an exclusive contract with the Pere Marquette Railroad, the fruit carrier of Michigan. Before that the railroad iced carloads of fruit free of charge. On the date named icing charges went into effect as follows:

$25 to Chicago, Detroit, Grand Rapids, and other Michigan points.

$30 to Cleveland, Columbus, Cincinnati, Indianapolis, and other points in Ohio and Indiana.

$35 to Buffalo, Bloomington, and various other points in New York, Illinois, and Wisconsin.

$40 to Des Moines, Minneapolis, Nashville, and other points in Iowa, Minnesota, Tennessee, etc.

$45 to Duluth, Lincoln, Wichita, etc.

$50 to New York City, Baltimore, Washington, Denver, etc.

$55 to Boston, Hartford, Mobile, New Orleans, etc.

$60 to Spokane, etc.

From $25 to $60 for what a year ago the railroad gave free of charge.

280. Rep. 1904, p. 15, 10 I. C. C. Decis. 1904, p. 360. Dealers have protested against paying 4 or 5 or 6 times the fair charge for ice, and have now and then refused to pay, telling the companies they could sue for the charges. But the car companies knew a better way. They ordered the cars of the disobedient dealers delayed and notified them that in future icing charges must be prepaid on all shipments to them or from them. These orders were enforced by the railroads and the kicking dealers were helpless. (Evidence, etc., 201–203.)

With a commission business such as that involved in the case referred to, an order for prepayment of icing charges or freight rates or both means ruin. For farmers and other producers will not prepay charges on perishables, and will not therefore ship to commission merchants to whom the railroads do not give credit that permits the payment of charges at their end of the line, i. e., on delivery.

281. Evidence, etc., 206, 207.

283. Sen. Com. 1905, p. 2596; and the next item in the text.

284. 11 I. C. C. Decis, 129, and Rep. 1905, p. 30, holding the Pere Marquette Armour charges excessive and approving the Michigan Central charge of $2.50 per ton on interstate shipments by the car.

285. Sen. Com. 1905, p. 369.

286. I. C. C. Beef Hearing, 1904, p. 165 et seq. It is a physical impossibility for a man to inspect the loading of 75 or 100 cars a day, and if an inspector is overzealous and conscientious in watching the cars he can attend to, the Trust has the railroad dismiss him.

287. McClure’s for January, 1906, p. 323.

288. See testimony before the I. C. C. April, 1904, p. 27. Mr. Watson’s memory was very hazy. He could not remember what he had formerly testified on this subject before the referee. Neither could he tell what “U. P.” meant nor recognize the clear meaning of “C. & A.” in the car-line account books, though every one familiar with railway matters knows that “U. P.” stands for Union Pacific and “C. & A.” for Chicago and Alton. Mr. Marchand, counsel for the Commission, drew some curious non-information and mal-information from Mr. Watson, the former head of Porter Brothers, who were large shippers of fruit in Chicago.

“Mr. Marchand. What commission did you receive from the railroads on account of Porter Brothers up to that time?

“Mr. Watson. I told you that was all stopped about four years ago, to the best of my recollection.”

“Mr. Marchand. Do you remember receiving from the Union Pacific Railroad Company $1,400 in 1898—January 25, 1898?

“Mr. Watson. I do not.

“Mr. Marchand. You have no recollection of that?

“Mr. Watson. No, sir.

“Mr. Marchand. In 1899 there appears upon the ledger of Armour & Co., or rather the Fruit Growers’ Express, an item of $47,000, a credit. Do you know where that came from?

“Mr. Watson. I do not know anything about the books of Armour & Co.

“Mr. Marchand. Do you remember having received from C. & A. as on the books of Armour & Co., on the 10th of October, 1899, the sum of $45,219?

“Mr. Watson. I do not. I guess if you look it up you will find it is ‘credits and allowances.’

“Mr. Marchand. ‘C. & A.’ stands for ‘credits and allowances’? What does ‘U. P.’ stand for?

“Mr. Watson. I do not know.

“Mr. Marchand. Does that stand for ‘Union Pacific’?

“Mr. Watson. I do not know whether it does or not.”

Mr. Robbins, vice-president and manager of the Armour Car-Lines, was also afflicted with loss of memory, which was specially unfortunate in view of the fact that the Trust had destroyed the accounts some time before the Hearing.

“Mr. Marchand. Can you explain the item of $14,000 paid to the Union Pacific?

“Mr. Robbins. No, sir; I can not.

“Mr. Marchand. Is there anybody in your employ that can?

“Mr. Robbins. I do not think so.

“Mr. Marchand. You say you have destroyed your records.

“Mr. Robbins. Yes, sir.”

289. I. C. C. Hearing on Private Cars, 1904, pp. 147–149. Mr. Brown, counsel for the Santa Fe, said to the Senate Committee, 1905, that he wished to put on record a sweeping denial that the A. T. & S. F. Co. has made any discriminatory rates or paid any rebates. The next moment, in answer to a question about the reduction of $25 a car below the published tariff, to which Mr. Leeds testified as given by the Santa Fe car-line, Mr. Brown said: “It was a rebate given to every one.” (Rep. Sen. Com. on Interstate Commerce, May, 1905, p. 3140.) He first said the road did not give any rebates, and then admitted it did give rebates, but said it gave the same rebate to every one that shipped. The coal mines that paid the Santa Fe $4 against $2.90 paid by the Colorado Fuel Co. would hardly agree to that statement. But Mr. Brown had in mind the car-line case in which they said the same rebate was given to every shipper. Mr. Leeds said it was a secret rate, and that he went to California and solicited business from various shippers. Under such circumstances, the fact that every one who shipped got the rebate does not eliminate discrimination but accentuates it. The discrimination is against the man who does not ship, the man who is not informed of the secret rebate. The Santa Fe car-line informed such dealers as it chose. No others could afford to ship on the Santa Fe. The instructed dealers could easily hold the market at prices that would prevent the uninstructed from thinking about shipping such goods.

290. Rep. 1904, p. 13.

291. Mr. Streychmans has been accused of stealing this code book and also certain letters and papers, but in fact he took no original papers, but only carbon copies of letters and statements he wrote for the company, and the code book was put into his possession for use in his work by the secretary of Armour’s general manager. If any charge of stealing or any other criminal charge could be made, Streychmans would long ago have been prosecuted by the Beef Trust people. When he began giving publicity to the facts in his possession the general manager tried to buy him off. He was shamefully treated by some of the Armour officers, and partly in revenge, probably, and partly in gratitude to the editor of the San Francisco Examiner for helping him out of California and the Armour grip, he gave the editor copies of letters, etc., the publication of which led to his examination by the Commission.

292. Testimony of J. W. Midgley, for over 20 years commissioner, chairman and arbitrator for various Western railroads. I. C. C. Hearing, April, 1904, p. 8. The reader who is specially interested in the Beef Trust and its doings should send for a copy of this Hearing, and those of 1901–1902. The report of the Bureau of Commerce Mar. 3, 1905, and Mr. Baker’s articles in McClure’s for Jan. 1906 and following months, are also of the deepest interest.

293. Sen. Com. 1905, p. 311. The organizations represented by Mr. Ferguson are the Western Fruit Jobbers’ Association; the National Retail Grocers’ Association; the Minnesota Jobbers’ Association; Wisconsin Retail and General Merchandise Association; Wisconsin Master Butchers’ Association; Minnesota State Retail Grocers’ Association, Superior, Wis.; Lake Superior Butchers’ Association, Duluth, Minn.; Duluth Commercial Club; Duluth Produce and Fruit Exchange, and the Iowa Fruit Jobbers’ Association.

294. Rep. U. S. Industrial Commission, iv, p. 53.

295. The Standard has the tanks and private sidings all over the New Haven’s territory while few are owned by the independents. Persons without these facilities must pay 2d-class rates, while the Standard Oil pays 5th class. The 5th class rate between Boston and New Haven is 10 cents per hundred, while the 2d class is 20 cents, the difference probably representing several times the profit in handling one hundred lbs. of kerosene. (Commissioner Prouty, in Annals of American Academy of Political and Social Science, January, 1900.)

296. Ind. Com. iv, p. 53.

297. Sen. Com., 1905, pp. 2740, 2742.

298. See The Outlook, July 1, 1905, p. 578.

299. See Miss Tarbell’s vigorous description of what the Standard did to Kansas in McClure’s for September, 1905.

300. Ind. Com. vi, pp. 663–665. The seaboard pipe line was completed in 1884.

301. Sen. Com. 1905, p. 2322, Professor Ripley.

302. Ibid., p. 48. A member of the Florida State Commission says the roads also show favoritism in the supply of cars and by giving rebates to large shippers. (Ibid., p. 47, R. H. Burr.)

303. Sen. Com. 1905, pp. 3339, 3340, Commissioner Fifer.

304. Ibid., pp. 1816–1820, 3439, 3440.

305. 10 I. C. C. Decis. 342, June 25, 1904.

306. Sen. Com. 1905, p. 3441. Other witnesses agreed as to the oppressive freight rates, and said the town had subsidized two roads, both of which are now controlled by the Southern Railway, but they did not think town values had decreased or that population had diminished (pp. 2006, 2018).

307. Ibid., pp. 1761, 1762.

308. Ibid., p. 3294.

309. Ibid., p. 1878.

310. Sen. Com. 1905, p. 2040.

311. Sen. Com. 1905, p. 34.

312. Ibid. See 10 I. C. C. Decis. 650, and Rep. 1905, p. 36.

313. Complaint of Denver Chamber of Commerce, Sen. Com. 1905, p. 3257.

314. Sen. Com. 1905, p. 3336.

315. Question of Mr. Fifer of Interstate Commission to Sen. Com. 1905, p. 3337.

316. Sen. Com. 1905, pp. 2930, 2940.

317. Ibid., p. 2914.

318. See statements of Chamber of Commerce of Spokane and testimony of its representative, Brooks Adams, Sen. Com. 1905, pp. 2917, 2928.

319. Sen. Com. 1905, pp. 2527–2529.

320. Senator Dolliver, Sen. Com. 1905, p. 2094.

321. Sen. Com. 1905, p. 1870.

322. 10 I. C. C. Decis. 456, Jan. 13, 1905.

323. See the series of broadsides on these subjects in the Philadelphia North American during August, 1903, and the early part of 1904. An excursion ticket from Washington to New York and return allowed 10 days in New York. Formerly a southern buyer going north on such a ticket could stop over in Philadelphia. But in 1903 this stop-over privilege was revoked, and if the buyer stopped in Philadelphia and then bought an excursion to New York he could only stay five days in New York. The result was that southern buyers began to leave Philadelphia out in the cold and merchants found that “the present tariff arrangements are working incalculable injury to wholesale houses in Philadelphia,” and some of them had to open houses in New York.

324. Ind. Com. ix, p. 133.

325. 4 I. C. C. Decis. 593. The order was made May 29, 1894, on petition of the Freight Bureau of the Cincinnati Chamber of Commerce v. 23 railway companies, and the Chicago Freight Bureau v. 31 railways and 5 steamship companies. The companies refused to comply and the Circuit Court dismissed the bill for an enforcement, October, 1896, 62 Fed. Rep. 690; 76 Fed. Rep. 183.

326. I. C. C. v. Railway, 167 U. S. 479, May, 1897, reaffirming 162 U. S. 184 and citing 145 U. S. 263, 267. Justice Harlan dissented.

327. “Railroad Transportation,” p. 114.

328. Sen. Com. 1905, p. 844.

329. Atlantic Monthly, vol. 73, p. 803, June, 1894.

330. E. P. Alexander in “Railway Practice,” p. 8.

331. Ind. Com. iv, p. 194.

332. 10 I. C. C. Decis. 1904, p. 58.

333. Sen. Com., 1905, p. 19, Bacon.

334. Ibid., p. 19.

335. J. C. Wallace of the American Shipbuilding Co., June 28, 1904, to the Congressional Merchant Marine.

336. See Wright’s letter printed in the speech of Senator Bacon of Georgia, Congressional Record, April 25, 1904.

337. Testimony of James J. Hill before the Marine Commission.

338. 10 I. C. C. Decis. 1904, p. 81.

339. Sen. Com. 1905, p. 919.

340. Ibid., p. 20. Glass, for example, costs 53 cents a hundred from Boston to Chicago, while it will go all the way from Antwerp to Chicago for 40 cents, and the railroads get only a fraction of the through charge.

341. Ind. Com. iv, p. 194.

342. I. C. C. Beef Hearing, Dec. 1901, pp. 106–107; see also pp. 87, 88.

343. Sen. Com. 1905, p. 1462.

344. See evidence adduced in Chapter II. The words of the Industrial Commission are still true: “There seems to be a general agreement that the issue of free passes is carried to a degree which makes it a serious evil.... Passes are still frequently granted to the members of State and national legislatures and to public officers of many classes.... And stress is often laid on the opinion that the issue of passes to public officers and legislators involves an element of bribery.” (Vol. iv, p. 18.)

345. Salaries are paid to favored persons; stock is given to influential people; and tips on the market are given to congressmen and others whose favor may be of advantage. And the railroads act against those they dislike as vigorously as they act in favor of their friends. A curious illustration of the extent to which railways will sometimes go in their breaches of neutrality occurred in connection with the recent trip of Thomas W. Lawson in the West. During the Chatauqua exercises at Ottawa, Kansas, the Santa Fe advertised specials to run every day. The day that Lawson was to speak, however, no specials ran, and thousands of people were unable to go, as they had expected, to hear the man who was attacking Standard Oil and its allies. The specials ran as advertised every day up to “Lawson Day,” and began running again the day after. The Santa Fe may not approve of Mr. Lawson’s statements and in common with all other citizens it has the right to oppose him with disproof, but isn’t it a little strange in this land of liberty, free speech, and equal rights, for one of the best railroads in the country to boycott a Chatauqua day because a man it does not approve of is to speak?

Similar experiences with the railroad service are reported from the Chatauqua at Fairbury, Neb., when Lawson spoke there.

346. Mr. Appleton Morgan, writing in the Popular Science Monthly for March, 1887, said (p. 588): “Rebates and discriminations are neither peculiar to railways nor dangerous to the ‘republic.’ They are as necessary and as harmless to the former as is the chromo which the seamstress or the shopgirl gets with her quarter-pound of tea from the small tea-merchant, and no more dangerous to the latter than are the aforesaid chromos to the small recipients.”

General Manager Van Etten of the B. & A. says discrimination is the American principle. You find it everywhere. You buy goods at wholesale much cheaper than you can get them at retail. It is the same with gas and water and electric light.

A number of railroad men take the view that “railroad service” is a commodity to be sold like any other sort of private property at whatever price the owner can get or chooses to take.

The trouble with these statements (aside from the quantity plea which may be allowed within reasonable limits) is that the differences between railway service and ordinary mercantile service are not taken into account.

If people found they were unfairly treated by the bakeries or groceries or shoe stores of a town, it would be easy to establish a new store co-operatively or otherwise, that would be fair and reasonable, and that possibility keeps the store fair as a rule even where there is no direct competition. But when the railways do not deal justly with the people of a town they cannot build a new road to Chicago or San Francisco. It is the monopoly element, together with the vital and all-pervading influence of transportation, that differentiates the railroad service from any ordinary sort of commerce. If bread stores or shoe stores combined, and, by means of control of raw material or transportation facilities, erected a practical monopoly or group of monopolies, and favoritism were shown in the sale of goods by means of which those who were favored by the monopolists got all the chromos and low rates, and grew prosperous and fat, while those who were not favored went chromoless and grew thin in body and emaciated in purse, it is not improbable that the President would write a message on the bread question and the leather question, and a Senate committee would be considering legislation to alleviate the worst evils of the bread and shoe monopolies without stopping the game entirely.

347. In their established tariffs our railroads do apply the same rates per hundred whether the goods moved in carloads or train loads. The Commission has held that the law requires this, and Commissioner Prouty says that the open adoption of any different rule would create an insurrection that Congress would hear from from all parts of the country; but he thinks that in certain cases, live-stock and perishable fruit for example, the railroads should have a right to make lower rates by the train-load than by the carload. In reference to cost of service there is ground for such a difference, but on grounds of public policy is it not a mistake to favor the giant shipper in this way and so help the building of trusts and monopolies?

348. Sixth Annual Report, Interstate Commerce Commission, p. 7.

349. Outlook, July 1, 1905, p. 577.

350. We have seen earlier in this chapter that a number of railroad men and others told the Senate Committee that they believed rebates and discriminations to have ceased. In his excellent book, “The Strategy of Great Railroads,” Mr. Spearman says: “Alexander J. Cassatt has made unjust discrimination in railroad traffic a thing of the past.” Sometimes we are assured: “There can be no doubt but that, on the whole, the freight rates of the country have been adjusted in very nearly the best way possible for the upbuilding of the country’s commerce.” (See “Freight Rates that were made by the Railroads,” W. D. Taylor, Review of Reviews, July, 1905, p. 73.) For one who has in mind the facts brought out in this book, comment on these statements is hardly necessary. There is no doubt that President Cassatt is a railroad commander of exceptional power, but he has not vanquished the smokeless rebate, nor driven the hosts of unjust discrimination from the railroads of the United States.

351. Ind. Com. Q. & Ans. iv, p. 596.

352. Sen. Com. 1905, p. 1474.

353. Sen. Com. 1905, p. 1521. The Texas Railway Commission says: “It is plain that, if a railway company is permitted to become interested in any kind of business competitive with business in the carrying on of which for others it is engaged, the business in which it is interested can be made to prosper at the expense of the business in which it has no interest. The temptation to unfair discrimination in such a case is so powerful that it ought to be removed.” (Report, 1896, p. 29.)

354. Sen. Com. 1905, p. 17.

355. I. C. C. Rep. 1898, p. 6.

356. I. C. C. Rep. 1898, p. 8.

357. On pages 65 and 66 of the last Report, Dec. 1905, the Commission discusses a decision of the Circuit Court for the Southern District of New York, in June last, to the effect that a subpœna duces tecum, commanding the secretary and treasurer of a corporation supposed to have violated the law to testify before the grand jury, and bring numerous agreements, letters, telegrams, etc.,—practically all the correspondence and documents of the company originating since the date of its origin,—to enable the district attorney to ascertain whether evidence of the alleged breach of law exists, constitutes an unreasonable search and seizure of papers prohibited by the Fourth Amendment to the Constitution.

358. Sen. Com. 1905, pp. 2899–2901, 2911.

359. Sen. Com. 1905, p. 829.

360. I. C. C. Beef Hearing, Dec. 1901, pp. 100, 101.

361. I. C. C. Beef Hearing, Dec. 1901, pp. 114–115.

362. Ibid., p. 126.

363. Report of Oregon Railway Commission, 1889, p. 32.

364. See above, p. 237.

365. See above, p. 113.

366. “There is ample law to-day” to stop rebates and unjust discriminations, says President Tuttle of the Boston and Maine (Sen. Com. 1905, p. 951), and he backs up his statement with vigorous reasons for believing that the Government has never earnestly enforced existing laws. President Ramsey of the Wabash also says that the present law is ample to cover every unjust charge, and no further legislation is needed to stop discrimination (Same, p. 1959).

George R. Peck, general counsel for the Chicago, Milwaukee & St. Paul, testified that “existing law is entirely adequate” (Same, p. 1301).

Mr. Robbins, manager of the Armour Car-Lines and director in Armour & Co., declares that the “Elkins Law is ample” (Same, p. 2387). See also p. 2117, James J. Hill; pp. 2179, 2181, Carle; p. 2228, Grinnell; p. 3068, Faxon; pp. 3274, 3276, 3285, 3290, Elliott; p. 2360, Woodworth; p. 2829, Smith.