and of all varieties of service. In this last case the pass system was particularly obnoxious and baneful. A ticket entitling one to free passage by rail was even more effective in enlisting the assistance and support of the holder than its value in money would have been, and in a great many cases it would be received and availed of when the offer of money made to accomplish the same end would have been spurned as a bribe. Much suspicion of public men resulted, and some deterioration of the moral sense of the community traceable to this cause was unavoidable. The parties most frequently and most largely favored were those possessing large means and having large business interests.

"The general fact came to be that in proportion to the distance they were carried those able to pay the most paid the least. One without means had seldom any ground on which to demand free transportation, while one with wealth was likely to have many grounds on which he could make it for the interest of the railroad company to favor him; and he was oftentimes favored with free transportation not only for himself and family, but for his business agents also, and even sometimes for his customers. The demand for free transportation was often in the nature of blackmail, and was yielded to unwillingly and through fear of damaging consequences from a refusal. But the evils were present as much when it was extorted as when it was freely given." 1

The Commission had plenty to do. Complaints of unreasonable rates and unjust discriminations between shippers, commodities, and places poured in upon it, and vigorous decisions against favoritism and excessive rates poured out upon the railroads. During 1887 and 1888 the Commission dealt with cases of passes issued in contravention of law,2 preferential fares for drum1 I. C. C., First Report, 1887.

2 Passes (annual in this case) to persons not in the regular service of the

3

6

mers, commissions on the sale of tickets, discounts on freight rates to large shippers,5 discrimination by combination rates, by preference of tank shipments of oil, by unfair distribution of cars,8 by underbilling, false classifications,10 commissions to soliciting agents,11 etc. Underbilling, false classification, false weighing, and commissions to soliciting agents were investigated by the Commission in 1888 at New York, Buffalo, Detroit, Chicago, Omaha, Lincoln, and Washington. 12 All these methods of discrimination were found widely prevalent, and new legislation was asked for imposing a penalty on shippers who fraudulently obtained reduced rates.

When Congress met for the session of 1889 it was be

carrier held unlawful. State v. Northern Pacific, p. 359, vol. 2, Decisions, 1888.

8 Sale of 1000-mile tickets to commercial travellers at $20 while charging others $25 illegal. Chicago & Grand Trunk, p. 147, vol. 1, Decisions, 1887.

Paying commissions; selling tickets through brokers at reduced rates; rate wars, etc. Pennsylvania, New York Central, Wabash, Chicago & Alton, vol. 2, 1888, p. 513.

5 Discounts to shippers receiving more than 30,000 tons a year illegal. Providence and Worcester, vol. 1, 1887, p. 170.

6 In many cases the direct rate between two points, X and Y, was found to be greater than the combination of the rate from X past Y to a competitive point Z and the local rate back from Z to Y. For example, goods could be shipped from the Pacific coast to Kansas City and then back to points west of Kansas City more cheaply than they could be sent direct from the coast to these intermediate points. This enabled a shipper informed of the combination rates to get an advantage over one with less information who relied on the published tariffs stating the rates between his place of business and the points to or from which his shipments were to be sent. The Commission took up this matter in 1887 and the traffic managers of the roads agreed to revise their tariffs so that the direct local rate should in no case exceed the through rate plus the local rate back from the terminus or competitive point. This rule resulted in many material reductions of the rates to intermediate points; for example, the points between Denver and the Missouri River on the lines controlled by the Southern Pacific. See Martin v. Southern Pacific R.R. I. C. C. Decisions, vol. 2, 1888, pp. 1, 4.

7 A higher rate on oil in barrels than in tanks held unjust, vol. 2, p. 365. Report, 1888, p. 128.

8 Report, 1888, p. 112. 10 Ibid.

9 Ibid., p. 114 et seq. 11 Ibid.

12 Ibid.

lieved that the law had greatly reduced the number of passes issued, straightened out a part of the long-haul discriminations, and accomplished a good deal in the way of suppressing rebates, but it was clear that much remained to be done. In one way or another all over the country secret discriminations were still being made for the benefit of favored shippers. Congress therefore in March, 1889, amended the Interstate Commerce Act by adding to the fine a penalty of two years' imprisonment in the penitentiary in case of unlawful discrimination, and pronouncing the same penalties against shippers and their agents who secure advantage by false billing, false classification, etc., or by soliciting or otherwise inducing a railway to discriminate in their favor, or by aiding or abetting any such discriminations. It was also provided that 3 days' notice must be given in case of any reduction of rates, and that homeless and destitute persons, as well as preachers, might be favored with low fares.

The stringent provision for imprisonment did not prove any more effective than the milder law that preceded it, less so apparently, for the following years were flooded with unfair discriminations.13

13 The Commission's reports, 1889 to 891, dealt with numerous discriminations between localities and persons through free transportation, commissions on the sale of tickets, combination rates, rebates, free cartage, payment of yardage charges, excessive car mileage on private cars, discounts for quantity, unfair classification, distribution of cars, special tariffs, advantage or disadvantage to particular commodities or methods of shipment, low rates on goods for export, etc., etc.

CHAPTER VIII.

EFFECTS OF THE INTERSTATE ACT.

AN investigation by the Commission in May, 1889, concerning passes, and covering 27 railroads, showed that passes were issued freely to expressmen, telegraph men, press men, managers of excursions, attorneys, persons contracting with the railroads in consideration of advertising, shippers, members of legislative bodies, United States, State, and municipal officers, officials of steamship and steamboat lines, etc. These passes were chiefly limited to a State, but to some extent were good for interstate journeys. Of State passes the larger numbers were issued to members of legislatures and drovers; "complimentaries" came next, with United States and municipal officers, newspapermen, and shippers, in the order named.

The Commission said: "The Interstate Commerce Act was intended to end all the abuses attending free transportation of persons, and to a considerable extent it has done so. But very largely the carriers, especially the strong systems, where the abuse has been greatest, have tried to avoid the law by falling back on State protection, and issuing passes within the limits of each State. Three of the large railroad systems, when called on by the Commission to make an exhibit of the passes issued by them, declined to do so on the ground that the passes were limited to the bounds of the State, and therefore not within the jurisdiction of the Commission. If the New York Central and Pennsylvania railroads can thus issue passes at discretion it is impracticable to enforce the laws against

their competitors." By issuing to a favored individual a pass good in Pennsylvania, another good in Ohio, another for Indiana, another for Illinois, etc., the Pennsylvania Railroad can give the beneficiary as full freedom of its lines as any interstate pass could give.

Pass making went merrily on all over the country, with a complaint now and then to let in the light, but no effective crusade against the disease. The Boston and Maine, for example, issued passes in Maine, New Hampshire, Vermont, and Massachusetts, to public officers of the States and the United States, members of legislatures, and railroad commissions, agents of ice companies, milk contractors, newspaper men, etc.2 The Commission recorded its protest and declared that the "similar circumstances" of the Interstate Act do not relate to the social or official position of the passenger; 3 but the pestilence is beyond the reach of the national board, and after eighteen years of Federal prohibition our railroad business is still honeycombed with political and commercial passes, as we have already seen in the second chapter of this book.

Ticket scalping, "an obvious evasion of the law," and the payment of commissions on the sale of tickets in addition to salaries, so that the brokers were tempted to cut rates dividing their commissions with their customers, continued in full bloom in spite of the Federal law. The commissions were $1 from New England points to Chicago; $1 from Chicago to the Missouri River; and $1 from the river to Denver. In addition to such definite amounts some roads paid 10 percent on their receipts for the passage, making a total commission of $4 or $5 or more in some cases for the sale of a single ticket.1 "In cases of

1 Report, 1889, p. 10.

2 5 I. C. C. Decis. 69, 1891.

8 Ibid.; see also 5 I. C. C. Decis. 153, 1892. Case against the Louisville and Nashville for granting passes to members of the city council of New Orleans.

4 Investigation of the Commission, 1889.