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reports and to issue protests. But it has been shorn, by judicial interpretation, of authority to do anything of an effective character. It is denied many of the powers which, in my judgment, were intended to be conferred upon it. Besides, the acts of Congress are now so construed as to place communities on the lines of interstate commerce at the mercy of competing railroad companies engaged in such commerce.
We quote this because, proceeding from that source, it will command attention. It is a statement of the exact situation. The Interstate Commerce Commission can conduct investigations and make reports. It can, perhaps, correct in a halting fashion some forms of discrimination. It collects and publishes statistical information which would be of value if, under the law, it could be obtained and published within a reasonable time. It performs a valuable service in adjusting differences between the carrier and the shipper which never reach the stage of a formal complaint. But, by virtue of judicial decision, it has ceased to be a body for the regulation of interstate carriers. It is proper that Congress should understand this. The people should no longer look to this Commission for a protection which it is powerless to extend.
INVESTIGATION, DEMORALIZATION OF GRAIN RATES, AND
APPORTIONMENT OF TRAFFIC TO THE SEABOARD.
In the spring of this year charges were repeatedly made in the newspapers of Chicago that the published tariffs on grain and its products to the Atlantic Seaboard were not adhered to by the railroads, and that in respect of rates on such traffic general demoralization prevailed. In addition to the published statements referred to a number of grain merchants of that city made representations to members of the Commission that their trade, which had been established for years, was drifting away from them and becoming concentrated in the hands of a small number of large concerns in Chicago, although the former averred that they purchased their grain in the same open markets and at as favorable prices as their larger competitors, who, nevertheless, could and did undersell them at the eastern seaboard, From these and other circumstances they were led to believe that the dealers in whose hands the grain trade seemed to be centered were enjoying preferences in the cost of transportation of their grain shipments which were not secured by dealers generally.
Acting on the reports that thus reached it, the Commission proceeded, under the authority conferred by section 12 of the act, to inquire into the practices of and the rates charged by the railroads in the transportation of grain and its products to the Atlantic Seaboard. At the hearings which followed a large number of witnesses were examined and much testimony was taken at Chicago and elsewhere. The witnesses, almost without exception, testified that no rebates were paid, and that no preferences in transportation or in facilities incidental thereto were enjoyed by any shippers in respect of the traffic mentioned, either directly or indirectly. The examination of the witnesses, who had been represented to the Commission as possessing information which would disclose the manipulation of rates or devices by which preferences were granted, was exhaustive in its details; yet, as a means of establishing particular instances of the general charges made, it failed to accomplish all that had been expected.
The inquiry did, however, disclose some practices which deserve the consideration of Congress and of the share owners in railroad properties. Among other things may be mentioned the increasing number of and the important functions exercised by the so-called “belt lines” in the large cities of the West. The testimony taken by the Commission regarding the service performed by this class of carriers was confined to those at Chicago. There are now three belt lines in operation that intersect all, or nearly all, of the railroads which enter that city, namely: The Chicago and Western Indiana, the Elgin, Joliet and Eastern, and the Chicago, Hammond and Western Railroad. The latter line has been in operation something over a year. It was recently taken over by what is understood to be the Union Stock Yards concern of Chicago, and is now operated under the name of the Chicago and Indiana State Line Railroad. In addition to those named, there are other so-called belt lines that appear to be relatively unimportant in length, connections, and equipment, but which are considerable factors in the transportation under review.
As originally designed and used the belt lines were mere switching roads. The chief purpose they served was to transfer cars from an Eastern to a Western road, or vice versa, where those roads had no physical connection with each other's rails. For this purpose a switching charge of $1 per car and upward was made, the amount varying according to the extent of the work performed.
But the switching of traffic by the belt lines from one railroad to another has afforded a means, and has been so employed, of manipulating rates to induce traffic to pursue certain routes that it would not otherwise take. The switching charge graduated to the service performed has been generally abandoned, and in its place has been substituted an arbitrary charge per car, which is taken from the earnings of the carriers west of Chicago, and on traffic going east of Chicago there is collected from the Eastern roads 8 per cent and upward of their share of the through rate to the Atlantic Seaboard. This in railroad traffic circles is called the “ double cross.” It was evolved by some ingenious person who perceived its opportunities for diverting traffic in ways that it would be difficult to trace.
These opportunities were found in the complex systems of rate making that prevail in the territory between the Missouri River and the Atlantic Seaboard, one feature of which treats certain junction points near Chicago, for rate making purposes, as a part of Chicago. The rates from Western points to these junctions are the same as to Chicago, and the rates from these junctions to the seaboard are the same as
from Chicago to the seaboard. It was shown that in some cases traffic came from the West by a line whose rails intersected those of an Eastern line by which the traffic was to go forward to the seaboard. In such cases it was entirely practicable for the Western line itself to deliver the traffic to the Eastern carrier, and that was apparently the most natural and least expensive way to effect such delivery. But instead of doing this it turned the traffic over to a belt line on the outskirts of Chicago, the latter road receiving for the service $4 per car from the earnings of the Western line. The $4 per car was so paid on the theory that the Belt Line completed the haul to Chicago, which was what the Western line undertook to perform as its part of the service in the through shipment. The $4 paid to the Belt Line was the charge exactel for delivering the car to any junction point on the line of the Belt road; that sum paid for all the service performed by it in respect to the car mentioned.
By arrangement with some of the lines running east of Chicago, the Belt Line received 8 per cent of the division of the through rate for the haul from Chicago to the seaboard on all traffic which the Belt Line delivered to the Eastern carrier. This 8 per cent on grain amounted to about $6 on an average carload. Thus the Belt Line received an average of at least $10 per car for switching from a Western road to its eastern connection. This was more than twice what the service was worth. The $4 per car contributed by the Western lines, and the $6 per car paid by the Eastern lines, where their rails actually joined, were a needless loss of revenue, at least on the surface of the transaction. The volume of traffic which pursues these unnatural and unnecessary routes is so great as to create suspicion concerning the real reasons which induce traffic managers to make such combinations. It is alleged that one of the motives therefor is to provide the Belt Line with a margin for manipulating rates. So far as the testimony taken discloses, such motives were denied; but no satisfactory reasons for the existence
practice appeared. All of the parties to these agreements were not present at the hearings. Some were absent from their usual places of business and could not be found.
Sufficient was shown to raise the belief that either the through rates were too high, by the amount paid to the belt lines in excess of a reasonable switching charge, and to that extent an unjustifiable burden on the traffic, or that the railroad companies needlessly sacrificed a portion of their just earnings.
What appeared to be a preference, on the face of the evidence adduced, was effected through some of the belt lines in the transportation of flour from Minneapolis. The rate on that commodity from Minneapolis to New York was 30 cents per hundred pounds, of which the lines up to Chicago receive 10 cents and those east from Chicago 20 cents. The local rate from Minneapolis to Chicago was 121 cents per hundred pounds. It appeared that during a period of three months
over one thousand cars of flour, billed from Minneapolis to New York and other Eastern points, were brought into Chicago almost wholly by one road and there turned over to a belt line for delivery to Eastern carriers. Those shipments in all cases except. one were so billed as to permit the shipper to change the destination of the traffic while in transit. The exception referred to was limited to the flour that was to go east from Chicago by a certain line only. In all of the shipments by that line the original bills issued at the point of origin, and which accompanied the traffic to Chicago, contained the indorsement "Destination as billed.” This traffic reached its destination by the routes mentioned in the bills..
All of the 1,098 cars mentioned were, in the city of Chicago, turned over to a Belt Line, ostensibly for delivery to the Eastern line to which the traffic was consigned. For this service, out of the 10 cents per hundred pounds which the line up to Chicago was entitled to, the Belt Line took $4 per car for its share in that service. If it had delivered the cars as they were originally billed, it would also have received in addition 8 per cent of the revenue which the lines east from Chicago would earn. But of the 1,098 cars, it delivered to the Eastern lines only 469. What became of the 629 missing cars was not ascertained. Several ineffectual efforts have been made to secure the attendance of those who are believed to be in possession of the facts, but they “were not found.” As it appears that the traffic was not delivered by the Belt Line to any of the Eastern rail lines, and as navigation was closed and remained closed for weeks afterwards, the inference is that it was delivered for sale at Chicago. If so, the billing to eastern points was a device to secure a preference of 21 cents per hundred pounds below the published rate from Minneapolis to Chicago.
In this investigation it was also ascertained that certain roads, parties to the joint traffic agreement, had at Chicago turned over to competing roads, which were also parties to that agreement, very large quantities of competitive traffic. In one of these instances a line, at that time insolventand in the hands of receivers appointed by Federal courts, gaveaway to a solvent competing road over 7,000 tons of traflic, chiefly grain. The receivers, who by this transaction sacrificed much needed revenue, had ample equipment and facilities for transporting the traffic. They had already incurred considerable expense in loading it in their cars and switching it from storehouses and elevators to the rails of the line operated by them. They then turned the traffic over to a competing line, which carried it forward to a point in eastern Ohio, where it was returned to the system operated by the receivers.
When pressed for the reason for thus diverting the traffic, one witness testified that his road was ahead of the percentage of traffic allotted to it under the award of the arbitrators appointed by the Joint Traffic Association, and that the competing road to which it delivered the traffic had not received the percentage to which it was entitled under that award.
A copy of this award” was-produced in evidence, and is as follows:
ARBITRATORS' AWARD IN THE DIVISION OF EAST-BOUND TRAFFIC FROM CHICAGO AND
CHICAGO JUNCTIONS WHICH COMES UNDER COXTRACT OF JOINT TRAFFIC ASSOCIA
After due consideration of the arguments presented and the statistics of traffic forwarded in the past, the arbitrators' award is that the east-bound shipments of live stock and dressed meats from Chicago and Chicago junctions, included in this reserence, reduced to an equivalent sixth-class tonnage basis, be apportioned between the lines in interest from and after September 1, 1896, as follows:
Per cent. Baltimore and Ohio Railroad......
4.5 Cleveland, Cincinnati, Chicago and St. Louis Railway.
1.1 Chicago and Erie Railroad....
9.4 Chicago and Grand Trunk Railway....
13. 2 Lake Shore and Michigan Southern Railway.
19.8 Michigan Central Railroad....
16.1 New York, Chicago and St. Louis Railroad..
11.3 Pittsburg, Cincinnati, Chicago and St. Louis Railway.
10.7 Pittsburg, Fort Wayne and Chicago Railway...
8.7 Wabash Railroad
And that the east-bound dead freight tonnage from Chicago and Chicago junctions, covered by this reference, reduced to an equivalent sixth-class basis, be apportioned between the lines in interest from and after September 1, 1896, as follows:
Per cent. Baltimore and Ohio Railroad ....
8 Cleveland, Cincinnati, Chicago and St. Louis Railway.
5.8 Chicago and Erie Railroad ..
11.2 Chicago and Grand Trunk Railway.
11 Lake Shore and Michigan Southern Railway.
14.2 Michigan Central ....
13.6 New York, Chicago and St. Louis Railroad
8.2 Pittsburg, Cincinnati, Chicago and St. Louis Railway.
7 Pittsburg, Fort Wayne and Chicago Railway.
14. 2 Wabash Railroad ...
OCTOBER 30, 1896.
appeared that a certain road which thus turned over thousands of tons of traffic to rival carriers had a continuous line of its own from the point where it first received the traffic for transportation to the point on the Atlantic seaboard, which was the destination of the traffic. The official who directed this diversion," when asked the reason for such action, testified, among other things, that the road which he represented had exceeded its percentage, and
bi in order to establish the fact that it was maintaining rates and acting in good faith, and as material evidence of that, turned some of its eastbound traffic over to” the competing road, which had not carried its share under the award.
In another instance the road operated by the receivers above referred to turned over to other rival roads very large quantities of competitive traffic, and thereby lost the revenue the road they operated would have