Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-04-10
ARRANGING REBATES
U. S. Government Engaged
in So Doing.
KEEN CORRESPONDENCE
BETWEEN CONTROLLER AND IN
TERROR DEPARTMENT.
The Former Questions Authority for
Action and Suggests Reference
to Attorney General.
KEEN CORRESPONDENCE

| the United States government has been
| engaged in arranging rebates of freight
rates with the Southern Pacific road and
| other western roads that II might save
| some money in contracts on its irriga-
| ton and reclamation projects in the west.
| r. j. Tracewell, the controller of the
| treasury. is after Secretary Hitchcock
| and the director of the geological survey
| for accepting rebates from railroads on
the freight of contractors engaged In do
| ing work under the irrigation and rec
| lamation fund. He practically says that
| In his opinion they are violating both the
| letter and spirit of the interstate COM
| merce act. making it a misdemeanor and
| violation of federal law to accept rebates.
| In a communication on March 20 the
Secretary of the Interior brought to the
| attention of the controller certain facts
| in connection with the rebates. Secretary
| Hitchcock submitted a communication
| from the acting director of the geological
survey, in which that official stated the
case as follows:
| "On October I3. 1904, the department
| approved a contract with the Southern
| Pacific company providing for certain
| concessions to contractors under the rec
| lamation act in the freight rates upon
| their plant and materials shipped to aud
| from the work on the projects. Other con-
| tracts of similar character have since
| been negotiated with the principal roads.
These concessions in rates are brought to
/ the attention of all bidders on the work
| of the reclamation service. in order that
| they may make due allowance for such
| concessions in their bids. Paragraph III
| of the general conditions attached to the
| specifications inviting bids calls attention
| to these concessions and notifies bidders
| that they are expected to make allowance
| for these concessions.
| The attention of this Office has been
| called to request of Sherer Co, con-
| tractors on the Salt river project, who de-
| sire to be advised whether they can OBJ
| tain the benefit of concessions on some
shipments soon to be made by them in
connection with their work upon this
project.
! These contractors made their bids before
any concessions had been arranged with
the Southern Pacific company, so that their
| bids do not provide for any benefit TO the
| United States, and, accordingly, this on1ce
! has decided that the contractor is not en-
| titled to such benefits, and the engineer
has been instructed not to certify the COM
pany's bills of ladng in the matter required
| for it to obtain such benefit.
| The communication goes on to state thar
| the railroad company, however, Is WILING
| TO make the concessions to help along the
work on the project much as possible
whether the benefits of the concession OK
| rates on these shipments may be taken by
| the government and credited to the project.
The controller is asked the best method
| of dealing with question of this kind.
Saws There is No Authority for It.
Controller Tracewell tells how the matter
could be arranged so TO comply with
the auditing rules of the treasury, but,
after doing this he frankly lets loose
broadside that has not been accepted by
| the Interior Department in the manner in
| which 1t was intended. The controller
says
press al opinion as to the legality OF such
| transactions when considered in relation to
sections 2 and % of the interstate COM
merce acts of February 4, 1887 and 1889
doubtful
either can be maintained. BY what au-
| thority can the government contract win
| a railroad that contractors plant shall
receive a rebate in freights not applicable
| to other shippers is beyond my compre-
| hension. If this right exists 1t might as
well extend to flour. hay and other CONF
| modities, and the vehicles used by a con-
| tractor i'm making delivery to the govern-
ment. But, granting such right exists,
when covered by contract, and such rebate
taken into consideration when the contract
is made, by what stretch of authority can
the government step in where the contract
between ii and the contractor has been en-
tered into and the amount to be paid Tor
the work or for the work and the materials.
fixed and liquidated, and receive or take
from a railroad rebate from the regular
and fixed price of carriage, ON the carriage
of the contractors plant, one-half Thereon,
is beyond my comprehension.
THE government, above all others. should
not be a party to violation of either the
letter or spirit of the interstate commerce
act as regards the question of rebates. 1t
should not engage in questionable transac-
tions in order that saving of few dol
lars may be had, especially when this saw
ing results in the tearing down of law
which experience proves very difficult, IL
not absolutely impossible, to enforce"
Came Back at the Controller.
This letter of the controller did not suit
the Interior Department and the officials
made answer, arguing as to the correct
ness of their view, and pointing to a decis-
ion of Assistant Attorney General Camp
bell of the department, upholding the view.
The controller today makes answer 10 this
as follows:
II am in receipt of your communication
of the 7th instant inclosng duplicate or
letter addressed to you by the director OF
the geological survey. under GATE OF April
4, relative to the legality OF certain pro-
posed contracts with certain railroads pro-
viding that the government receive certain
rebates on the plants and materials used
by contractors in constructing certain ir-
rigation works under the reclamation serv-
ice. You forward this matter to me for
further consideration.
ION the Sd instant l rendered decision
directed to you on the method of accom-
plshing refunds to the reclamation fund,
established under act of June IL, 1902 In
that decision expressly declined to render
any decision to the legality of the pro-
posed rebates for the reason therein re-
cited but did, as a matter of precaution,
therein express my individual doubts as to
the legality of a contract with a railroad
to secure a rebate the freight of a
contractor therein proposed / enclose
copy of said decision.
II have read with care the letter trans
mitted from the director of the geological
survey, and agree that 1t is convincing
from the point that If 1t is legal for tho
government to secure the rebate in ques-
ton it will amount to million dollars IN
the next seven years. The Standard Oil
Company could make an equally convincing
argument as to its alleged reception of re-
bates. The amount of these rebates being
large is a cogent reason why the govern
ment should make no mistake by being
party or a beneficiary of the violation OF
the law prohibiting the giving of discrimt-
mating rebates
sThe carriage storing or handling OF
property free or at reduced rates for the
United States 10 allowable under section n