The Arena. Volume 4, No. 21, August, 1891. Various
the federal law making it a criminal offence to make or benefit by discriminating rates. Counselman had been given rates on corn, some five cents less per hundred pounds than others, from Kansas and Nebraska points to Chicago.
The outrageous character of this discrimination will appear when we reflect that five cents per one hundred pounds is an enormous profit on corn that the grower has sold at from eighteen to twenty-two cents per one hundred pounds, and that such a margin would tend to drive every one but the railway officials and their secret partners out of the trade, as has practically been the case on many western roads. Doubtless such rates are sometimes made in order to take the commodity over a certain line, and there is no divide with the officials; but the effect upon the competitors of the favored shipper and the public is none the less injurious, and such practices would not obtain under national ownership, when railway users would be treated with honesty and impartiality, which the experience of half a century shows to be impossible with corporate ownership.
Referring to the rate question in their last report, the Interstate Commerce Commission says: “If we go no farther than the railroad managers themselves for information, we shall not find that it is claimed that railroad service, as a whole, is conducted without unjust discriminations.”
“If rates are secretly cut, or if rebates are given to large shippers, the fact of itself shows the rates which are charged to the general public are unreasonable, for they are necessarily made higher than they ought to be in order to provide for the cut or to pay the rebate.”
“If the carrier habitually carries a great number of people free, its regular rates are made the higher to cover the cost; if heavy commissions are paid for obtaining business, the rates are made the higher that the net revenues may not suffer in consequence; if scalpers are directly or indirectly supported by the railroad companies, the general public refunds to the companies what the support costs.”
The Commission quotes a Chicago railway manager as saying: “Rates are absolutely demoralized and neither shippers, passengers, railways, or the public in general make anything by this state of affairs. Take passenger rates for instance; they are very low; but who benefits by the reduction? No one but the scalpers…. In freight matters the case is just the same. Certain shippers are allowed heavy rebates, while others are made to pay full rates…. The management is dishonest on all sides, and there is not a road in the country that can be accused of living up to the interstate law. Of course when some poor devil comes along and wants a pass to save him from starvation, he has several clauses of the interstate act read to him; but when a rich shipper wants a pass, why he gets it at once.”
From years of ineffectual efforts on the part of State and national legislatures and commissions to regulate the rate business, it would appear that the only remedy is national ownership, which would place the rate-making power in one body with no inducement to act otherwise than fairly and impartially, and this would simplify the whole business and relegate an army of traffic managers, general freight agents, soliciting agents, brokers, scalpers, and hordes of traffic association officials to more useful callings while relieving the honest user of the railway of intolerable burthens.
Under corporate control, railways and their officials have taken possession of the majority of the mines which furnish the fuel so necessary to domestic and industrial life, and there are but few coalfields where they do not fix the price at which so essential an article shall be sold, and the whole nation is thus forced to pay undue tribute.
Controlling rates and the distribution of cars, railway officials have driven nearly all the mine owners who have not railways or railway officials for partners, to the wall. For instance, in Eastern Kansas, on the line of the St. Louis & San Francisco Railway Company, were two coal companies, whose plants were of about equal capacity, and several individual shippers. The railway company and its officials became interested in one of the coal companies, and such company was, by the rebate and other processes, given rates which averaged but forty per cent. of the rates charged other shippers, the result being that all the other shippers were driven out of the business, a part of them being hopelessly ruined before giving up the struggle. In addition to gross discriminations in rates this railway company practised worse discriminations in the distribution of cars; for instance, during one period of five hundred and sixty-four days, as was proven in court, they delivered to the Pittsburg Coal Company, 2,371 empty cars to be loaded with coal, although such company had sale for, and capacity to produce and load, during the same period, more than 15,000 cars. During the same time this railway company delivered to the Rogers Coal Company, in which the railway company and C. W. Rogers, its vice-president and general manager, were interested, no less than 15,483 coal cars, while four hundred and fifty-six were delivered to individual shippers. In other words, the coal company owned in large part by the railway and its officials was given eighty-two per cent. of all the facilities to get coal to market, although the other shippers had much greater combined capacity than had the Rogers Coal Company.
During the last four months of the period named, and when the Pittsburg Coal Company had the plant, force, and capacity to load thirty cars per day, they received an average of one and a fourth cars per day, resulting, as was intended, in the utter ruin of a prosperous business and the involuntary sale of the property, while the railway coal company, the railway officials, and the accommodating friends who operated the Rogers Coal Company, made vast sums of money; and when all other shippers had thus been driven off the line the price of coal was advanced to the consumer.
On another railway, traversing the same coal-field, the railway or its officials became interested in the Keith & Perry Coal Company—the largest coal company doing business on the line—and here the plan seems to have been, in addition to the manipulation of rates, to starve other mine operators out, and force them to sell their coal to the Keith & Perry Company, by failing to furnish the needed cars to those who did not sell their coal to the Keith & Perry Company at a very low price.
When the Keith & Perry Company had a great demand for coal, such parties as sold the product of their mines to that company were furnished with cars, but for the other operators cars were not to be had, such cars as were brought to the field being assigned to such parties as were loading to the Keith & Perry Company, because that company furnished the coal consumed by the locomotives of the railway.
One operator, after being for years forced in this way to sell his product to the Keith & Perry Company, or see his several plants stand idle, has, in recent months, been obliged to build some seven miles of railway in order to reach four different roads, and thus have a fighting chance for cars, although all these railways are provided with coal mines owned by the corporations or their officials.
In Arkansas, Jay Gould, or his railway company, own coal mines and the coal is transported to the neighboring town at low rates, and there is an ample supply of cars for such mines; but the owners of an adjoining mine are forced to haul their coal some eighteen miles to the same town in wagons, as the rates charged them over Mr. Gould’s railway are so high as to absorb the value of the coal at destination.
Not only are individuals thus oppressed, but for reasons which only the initiated can fathom there are seemingly purposeless discriminations against localities, as shown in the following extract from the Coal Trade Journal of March 25, 1891.
“Capt. Thomas H. Bates, before the railroad committee of the Colorado Senate, said: The Grand River Coal & Coke Company mine their coal in Garfield County, about fifty miles west of Leadville, and all they sell in Denver, Colorado Springs, and Pueblo, has to be hauled through Leadville. At Leadville the individual consumer has to pay $7.00 per ton for this coal, while in Denver, with an additional haul of 150 miles, the coal from the same mines is delivered to the individual consumer for $5.50 per ton. The Colorado Coal & Iron Company produce all the anthracite coal sold in Colorado. It is mined at Crested Butte, which is 150 miles nearer Leadville than Denver, yet this coal is sold in Leadville for $9.00 to the individual consumer, while the same coal is hauled 150 miles farther, and sold to the individual consumer for an advance of twenty-five cents per ton over the Leadville price, and is sold in Denver for $7.10 per ton in carload lots.”
With the government operating the railways, discriminations would cease, as would individual and local oppression; and we may be sure that an instant and absolute divorce would be decreed between railways