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subject to its provisions and promoted in a substantial degree the ends which it was designed to secure. Nevertheless, its inadequacy as a remedial measure was long ago discovered, and further trial has illustrated the various respects in which it is insufficient. While its purposes are clearly beneficent, and while the principles which it embodies are more and more seen to be correct and salutary, the means devised for giving practical effect to its mandates are concededly imperfect. That this imperfection is curable is equally conceded. The fullest power of correction is vested in the Congress, and the exercise of that power is demanded by the highest considerations of public welfare.

Were it deemed possible to add weight to previous recommendations or to emphasize the need for their prompt adoption, this portion of our report might be greatly extended. It is not believed, however, that this subject can be more forcibly presented or the situation more clearly explained than has been done in former reports. If the representations already made do not induce favorable action it is certainly not the fault of the Commission. A sense of the wrongs.and injustice which can not be prevented in the present state of the law, as well as the duty enjoined by the act itself, impels the Commission to reaffirm its recommendations for the reasons so often and so fully set forth in previous reports and before the Congressional committees. Moreover, in view of the rapid disappearance of railway competition and the maintenance of rates established by combination, attended as they are by substantial advances in the charges on many articles of household necessity, the Commission regards this matter as increasingly grave and desires to emphasize its conviction that the safeguards required for the protection of the public will not be provided until the regulating statute is thoroughly revised.


Investigations undertaken by the Commission in December, 1901, and January, 1902, showed that rates upon grain and grain products and packing-house products were in a most demoralized condition. These investigations were touched upon in our last annual report, and the details need not be repeated here. While the Commission had previously understood that these rates were not maintained and had made frequent attempts to obtain positive information upon the subject, it had until then met with little success.

The evidence secured in the course of these investigations prove! beyond doubt the general fact that the traffic in question had habitu ally been carried at less than published rates, and disclosed as well the methods by which the lower and unlawful rates were accorded. It did not, however, disclose the facts in this regard relating to any particular shipment. This was partly because the purpose of the Commission was primarily to develop the general features of the situation, and for the further reason that more detailed proof could not be obtained without calling numerous witnesses implicated in the illegal transactions, all of whom would have been granted immunity from prosecution by requiring them to testify. This provision of the law, based upon a constitutional right, must always be taken into account, since the result of compelling testimony from those who have participated in committing misdemeanors-of which ordinarily no innocent person has knowledge-may be to relieve from all liability the very persons whose guilty conduct is most deserving of punishment. Since the Commission can do no more in applying the criminal remedies provided by the act than to aid the officials charged with that duty, it feels under some constraint to avoid enforcing disclosures which would furnish immunity to those who ought to be prosecuted.

Nevertheless, as the giving of secret rates is a criminal offense, and as it is the duty of the Commission to submit evidence of such misconduct to the proper prosecuting officers, a copy of the testimony taken in these investigations was transmitted to the Attorney-General and to the United States attorneys of the several judicial districts wherein the wrongful acts appeared to have been committed with a request to them to institute and prosecute suitable proceedings under the direction of the Attorney-General; and an attorney familiar with the matters involved was employed by the Commission to assist the Department of Justice.

The best and most prudent course to pursue was sufficiently doubtful to require consideration. The criminal sections of the act are seriously defective and inadequate, as the Commission has repeatedly pointed out in previous reports to the Congress. For this reason it was at least questionable whether criminal prosecutions were appropriate or likely to accomplish a useful purpose under the circumstances disclosed by this inquiry. Believing that little or no relief could be hoped for from criminal proceedings, in which opinion the Department of Justice concurred, the Commission considered whether it might not be practicable to attain the desired end by another method; and accordingly, after consultation with the Attorney-General, a plan of action was decided upon which will be briefly outlined in the following paragraph.

Some years ago a suit had been commenced at the request of the Commission, in the name of the United States, to restrain a carrier from violating the provisions of the act against discriminations in published rates, and it seemed possible that the same remedy might be applied to compel the observance of published rates. Although that suit was commenced in 1893 and prosecuted with reasonable diligence, no decision from the Supreme Court of the United States had been obtained. The right contended for had, however, been sustained by the lower courts, and it was thought advisable, in view of the extensive and unquestioned violations of law which the investigations disclosed, to proceed without waiting for a final determination of that case. Application was accordingly made to the Federal courts at Kansas City and Chicago, asking that the railways implicated be compelled by mandatory process to observe their published schedules, the following railways being made parties to these proceedings: Atchison, Topeka and Santa Fe; Chicago, Rock Island and Pacific; Chicago, Milwaukee and St. Paul; Chicago, Burlington and Quincy; Missouri Pacific; Chicago and Alton; Chicago & Great Western; Michigan Central; Lake Shore and Michigan Southern; Pennsylvania Company; Pittsburg, Cincinnati, Chicago and St. Louis; Chicago and Northwestern; and Illinois Central. Á restraining order or preliminary injunction was granted against all these carriers in March, 1902, and has since continued in effect. The case is set for argument before the circuit court on the 15th of this month.

The proceedings thus instituted are suits in equity, brought in the name of the United States, to restrain by injunction the several carriers mentioned from granting or applying any other rates than those announced in their published tariffs, though each of them remains free to change its published tariffs at any time in the manner and upon the notice provided by the act. These suits have been vigorously and ably conducted by the proper district attorneys, under the immediate direction of the Attorney-General, and with the aid of the counsel employed by the Commission as above stated. This explains why no convictions have been obtained or indictments found on account of the disclosures in question, and emphasizes what we have so often said heretofore, that, in the absence of suitable amendment, the criminal features of the present law are practically a dead letter.

The railroads against which these restraining orders were granted are among the most important in the sections in which they operate. The injunction applies not only to grain and packing-house products, but to all commodities. Since a single railway can not maintain the rate unless its competitor does, and since these lines compete for traffic in substantially all parts of the country, it follows that a maintenance of rates upon the lines under injunction must of necessity tend to a general maintenance of rates throughout the entire United States. It is asserted, and the Commission believes, that these railways have obeyed the injunctions, in the main if not altogether; that published rates have been exacted upon their lines, and very generally by other lines in competition with them. It can hardly be doubted that a very much better condition has existed for the last nine months in this respect than for any corresponding period in the last twelve years at least.

Whether a continuance of the injunctions would work a continuance of this condition is not entirely certain. We are inclined to think it would, to a considerable extent at least, not only because departure from the published rate can be more easily and summarily dealt with in injunction proceedings than by criminal indictment, even under the most perfect law, but also because of concentration in the control of railway properties and the lesson which past experience bas taught railway managers. The right to proceed in this manner to restrain violations of the act is evidently of great value, but attention is called to the fact that the right to so proceed is disputed and resisted. While railroad managers, as a rule, are believed to have welcomed these injunctions as applied to the maintenance of rates, the principle involved is stoutly contested in the case now pending before the United States Supreme Court. Congress has the undoubted power to invest Federal courts with this authority, and it would relieve the present uncertainty if an enactment to that effect could be had at the present session.

It is natural to inquire what has been the effect of these injunctions upon all parties interested--the carrier, the shipper, and the public. It was asserted that secret preferences in favor of particular individuals enabled those individuals to control the traffic and necessarily drove out other competitors, the general effect being to force small dealers out of business. Whether small dealers have been able to resume business, or what the effect of the injunctions may be upon the manner in which business is transacted, the Commission has at present no information; nor has sufficient time probably yet elapsed for any definite answer to that question.

The effect of these restraining orders upon actual rates can be spoken of more intelligently and with greater confidence. In our former report to the Congress these rates were, for convenience, divided into three sections—those from Chicago to the seaboard, from Kansas City to Chicago, and from Kansas City to the Gulf. Following this division we find these changes in the rates mentioned:

On January 1, 1901, both the domestic and the export rate on flour and other grain products from Chicago to New York was 174 cents per 100 pounds. The domestic rate on grain was the same, 174 cents, while the export rate was 16 cents. On June 1, 1901, these rates were reduced from 177 cents to 15 cents and from 16 to 13} cents, respectively, so that during the summer of 1901 rates upon grain products, both domestic and export, were 15 cents, while upon grain they were 15 cents domestic and 137 cents export. October 21, 1901, these rates were advanced to the same figure at which they stood on January 1. It must be remembered, however, that while these were the published rates, the testimony before us showed that there was a concession of approximately 3 cents per 100 pounds from these rates; that this concession was known to most shippers and was practically applied to all transportation.

After October 21, 1901, the rate continued 177 cents, both domestic and export, upon grain products, except that in carloads exceeding 35,000 pounds an export rate of 15 cents was applied. The rate of October 21 also continued in effect with respect to grain, save that on May 21 an export rate of 13t cents was published, applicable to shipments when consigned through to foreign ports. These published rates since the granting of the injunction have been observed. It will be seen, therefore, that since the issuing of the restraining orders the published rate as applied to most grain movements from Chicago to the Atlantic seaboard, for the New York rate determines all these rates, has been substantially 2 cents higher, and the actual rate some 5 cents higher. These rates were further advanced by tariffs effective December 8, 1902, another 24 cents per 100 pounds.

. The only published rate in effect January 1, 1901, from Kansas City to Chicago was 19 cents upon wheat and flour and 16 cents upon other varieties of grain; but grain and grain products habitually moved, ostensibly upon the balance of the through rate, actually upon whatever rate the shipper could obtain by private contract with the carrier. The testimony before us showed that this rate varied greatly with the stress of competition, having been during the summer of 1901 as low as 5 cents per 100 pounds, the average being, perhaps, 7 cents or thereabouts.

On January 1, 1902, a proportional rate of 12 cents from Kansas City to Chicago was applied to all kinds of grain and grain products. July 1, 1902, this was reduced to 7 cents upon wheat and flour, being retained at 12 cents upon other kinds of grain. August 9, 1902, the rate upon . all kinds of grain and grain products was made 7 cents, which on September 15 was restored to 12 cents upon wheat and flour, and 11 cents upon other grain and grain products; and by tariffs effective December 15 these rates are to be advanced 2 cents. The effect here of the injunctions has been to compel carriers to publish the rate on which this traffic moves, and to render that rate much more stable. It is impossible to say whether the published rates in effect have been more or less than the actual rates charged under the old régime. While they remained at 11 or 12 cents they were undoubtedly higher. On a 7-cent basis they were probably about the same on the average. The new rates of 13 and 14 cents will be a very decided advance.

The so-called proportional rate from Kansas City to the Gulf is the basis upon which all rates from the grain fields to Galveston and New Orleans are made. That rate, with some slight exceptions for short periods, has been since January 1, 1901, 15 cents per 100 pounds. September 15 last the rate upon grains other than wheat was reduced to 14 cents, which it is now, December 10, 1902. The testimony showed that a concession of about 3 cents per 100 was granted particular shippers, who handled, however, practically all the grain. The

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