by them, but it is understood that concessions are given and must be given."1 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." 12 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: 13 "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 14 that discriminations between 12 Ibid., pp. 2122, 2123. 14 Ibid., p. 2329. 11 Sen. Com. 1905, pp. 819, 820, 842. 18 Ibid., p. 951. localities and between commodities through classification, etc., are still serious evils. Governor Cummins of Iowa said: 15 "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." 16 The complaints made to the Interstate Commission in the last few years 17 and the facts brought out in the 15 Sen. Com. 1905, p. 2083. 16 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. 17 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 1887more 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 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." 18 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." 19 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 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. 18 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 19 Judge Cler mission, Sen. Com. 1905, p. 3238. 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. CHAPTER XVIII. THE WISCONSIN REVELATIONS. IN 1903, as stated in a previous chapter, Governor La Follette began an investigation of the railroads in Wisconsin, in relation to illegal deductions from the gross earnings returned by them as a basis for taxation. The investigation covered the period from 1897 to 1903, and it was found that $10,500,000 of illegal tax deductions had been made in that time, about $7,000,000 of which was in the form of unlawful rebates and discriminations. Every railroad of any importance in the State had paid rebates every year in large amounts both on passenger traffic and freight business. Here is a table of the rebates paid in violation of the Interstate Commerce Act and the Elkins Law by the leading railways in Wisconsin, so far as brought to light by the investigation: 1 ILLEGAL REBATES PAID TO SHIPPERS IN WISCONSIN, 1897-1903. 1 See the admirable summary of the investigation by Ray Stannard Baker in McClure's Magazine for December, 1905. |