The sun. [volume] (New York [N.Y.]) 1833-1916, 1905-04-11
UNCLE SAM ACCEPTS REBATES
GOVERNMENT VIOLATES TIE
INTERSTATE COMMERCE ACT.

the Geological Survey Approve !
Contract for Rebates 70 Contrae
tors for transportation Of Freight
WASHINGTON, April iO.-A legal opinion
rendered by the Comptroller Of the Treasury
IN passing upon certain disputed account,
n the Interior Department, makes II ap.
pear that the Government has for some
time been accepting rebates from railroads
for the transportation Of freight. The case
before the Comptroller arose in connection
with the freight Of contraction engaged in
work on irrigation projects In the West
Comptroller Tracewell virtually declares
that the Secretary Of the Interior and the
Director Of the Geological Survey have vio-
lated both the spirit and the letter Of the
Interstate Commerce act, which makes II a
misdemeanor 20 accept rebates In a letter
70 the Comptroller, dated March 20, the Sec
rotary submitted a communication from
Director Wolcott, in which that official
said
"On Oct. 10, 1904. the Department APP
proved a contract with the Southern Pa
oifc Company providing for certain con-
cessions TO contractors under the Reclarra-
tion act in the freight rates upon their plant
and materials shipped 10 and from the work
on the projects. Other contracts OF similar
character have since been negotiated with
the principal roads. The concessions IN
rates are brought to the attention Of all bid
ders on the work OF the reclamation service
IN order that they may make due allowance
for such concess ions in their bids. Para
graph II. Of the general conditions attached
TO the specifications inviting bids calls
attention TO these concessions and notifies
bidders that they are expected to make
allowances for these concessions.
The letter adds that Sherer & Co., con-
tractors on the Salt River project, desire
TO be advised whether they can obtain the
benefit Of concessions. but as their bids
we're made before any concessions had
been arranged with the Southern Pacific
Company, and do not provide for any
benefit to the United States. It had been
decided that the contractor Is not entitled
TO such benefits. But, as the railroad com
pany il willing TO make the concession In
order TO help along the work on the pro-
Jet as much as possible, the Comptroller
Il asked as to the best method Of dealing
with a question Of this kind.
Mr. Tracewell in his reply tells how the
auditing rules Of the Treasury could be
complied with, but adds
III. however, | may be permitted to ex-
press an opinion as to the legality Of such
transactions when considered in relation
20 sections and p Of the Interstate Com
merce Acts Of Feb. 4, 1887 and 1889 i would
cay that il Is extremely doubtful II either
can he maintained. By what authority
the Government can contract with a rail-
road that a contractors plant shall receive
a rebate in freights not applicable TO other
shippers ia beyond my comprehension.
II this right exists It might as well extend
60 -four hay and other commodities and
b. the vehicles used by contractor Ia max
ing delivery TO the Government
-Bui, granting such right exists when
covered by contract, and such rebate taken
into consideration when the contract Ia
made, by what stretch Of authority the
Government can step in where the contract
between il and the contractor has been
entered into and the amount 10 be paid
for the work OF for the work and the ma
tsrials 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 thereof, is beyond my comprehension.
The Government, above all others. should
not be a party 20 a violation Of either the
letter or spirit Of the Interstate Commerce
Act a. regards the question OF rebates.
II should not engage In questionable trans
actions in order that a saving OF a few dol
laTs may be had especially when this saw
ing results in the tearing down Of law
which experience proves very difficult II
not absolutely impossible 10 enforce"
This did not satisfy The Interior Depart
nent, and an answer was sent, citing a
decision Of Assistant Acknowledgement
Campbell. To this the Comptroller replied
In part.
Il have read with care the letter trans
mitted from the Director OF the Geological
Survey, and agree that Il Is convincing
from the point that II il II legal for the
Government TO secure the rebate in ques-
ton IL will amount to a million dollars IN
the next seven years. The Standard Oil
G. npany could make an equally con vincinR
argument NJ TO is alleged reception OF re-
bates, The amount Of these rebates being
large is a Cogent reason why the Govern
nent should make no mistake by being a
party or a beneficiary Of the violation Of the
law prohibiting the giving - discrimina-
tiHg rebates.
IN you will pardon the suggestion, I
advise that, before you take rebates from
railroads on the carriage OF property be-
longing TO the Government contractors,
shir ped by appointment and paid by them
a. the regular rates, you lay all the
facts before the Attorney General and pro-
cure his opinion as to the legality Of such
transaction. Let me repeat: ! attach no
special significance TO the willingness Of
the railroads TO grant the rebates in ques-
ton