The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1906-05-05
Transmits a Special Message
10 Congress
REPORT OF COMMISSIONER
The Standard oil Co. Has Benefited
Enormously BY the Secret Freight
Rates-Many of Them
Clearly Unlawful.

Washington, May 4-Foowing is the
message of President Roosevelt sent to
Congress today:
| The Senate and House of Representatives:
| transmit herewith "A report by the
commissioner of the bureau of corpora
tions in the department of commerce and
labor on the subject of transportation and
freight rates in connection with the oil
industry. The investigation, the results OF
part of which summarized In this re-
port, was undertaken in accordance with
House resolution 499. passed February 10,
1906, but for the reasons given in the
report 1t has been more general and ex-
tensive than was called for in the resolu-
tlon Itself.
| call your especial attention to the let
ter of transmittal accompanying and
summarizing the report for the report Is
of capital Importance in view of the ef-
fort now being made to secure such en-
largement of the powers of the interstate
commerce commission as will confer upon
the commission power in some measure
adequately to meet the clearly demon
strated needs of the situation The facts
set forth in this report are for the most
part not disputed. 1t is only the infer
enees from them that are disputed, and
| even In this respect the dispute Is prac-
| tically limited to the question to
i whether the transactions or are not
technically legal. The report shows that
the Standard Oil comniny has benefited
enormously up almost to the present mo-
ment by secret rates many of these Sec
ret rates being clearly unlawful. This
benefit amounts to at least three-quarters
rio Of
a million represents the profit that the
Standard Oil company obtains at the ex-
pense OF the railroads; but of course the
ultimate result is that 1t obtains a much
larger profit at the expense of The pub
lie. A very striking result of the investi-
cation has been that shortly after the
- discovery of these secret rates by the
commissioner of corporations, the major
portion of them were promptly corrected
by the railroads. so that most of iaen
have now been done away with. This ,.l-
mediate correction, partial or complete.
of the evil of the secret rates is OF
course on the one hand acknowledge
ment that they were wrong, and yet
| were persevered In until exposed: and
| on the other hand a proof of the ef-
| ieiency of the work that has been done
by the bureau of corporations. The de-
partment of justice viii take up the ques-
tion of instituting prosecutions In at
least certain of the cases. But 1t is most
desirable to enact into law the bill in
troduoed by Senator Knox to correct the
Interpretation of the immunity provision
rendered In Judge Humphreys decision.
| The hands of the government have been
| greatly strengthened In securing ef-
| fective remedy by the recent decision Of
the supreme court in the case instituted
| by the government against the tobacco
trust. which decision permits the govern
ment to examine the books and records
of any corporation engaged In the inter-
state commerce.: and by the recent con-
| vction and punishment of the Chicago.
| Burlington and Quincy railroad and cer-
| tain of its officers.
Secret Rates.
But in addition to these secret rates the
Standard OIL profits immensely by open
rates, which are so arranged to give
| 1t an overwhelming advantage over Its
| independent competitors. The refusal OF
the railroads in certain cases to prorate
| produces analogous effects. Thus in New
| England the refusal of certain railway
| systems to prorate has resulted in keep
| ing the Standard Oil In absolute mono-
pollstic control of the field enabling II
| to charge from three to four hundred
| thousand dollars year more to the con-
sumers of oil In New England than they
would have had to pay had the price
paid been that obtaining in the competi-
tive fields. This Is a characteristic exam
pie of the numerous evils which are in
eyitable under a system in which the big
shipper and the railroad are left free to
crush out all Individual initiative and all
power of independent actions because OF
the absence of adequate and thorough
going governmental control. Exactly SIM
liar conditions obtain in a large part OF
the west and southwest. This particular
instance exemplihes the fact that the
granting to the government of the power
to substitute proper for an improper
rate is In very many instances the only
effective way In which to prevent i'm
proper determinations in rates.
| 1t is not possible to put into figures the
exact amount by which the Standard
profits through the gross favoritism
shown II by the railroads in connection
with the open rates. The profit of course
| comes not merely by the saving In the
rate itself compared with its COM
petitors, but by the higher prices it Is
able to charge and (even without refer
ence to these higher prices) by the COM
plete control of the market which II
secures. thereby getting the profit on the
| whole consumption. Here again the only
way by which the determinations can he
| cured Is by comforting upon the inter-
state commerce commission the power to
| take quick and effective action In regu-
| lating the rates.
One feature of the report which is cs-
pecially worthy of attention is the show
| ing made as to the way In which the law
is evaded by treating as state commerce
| what is in reality merely part of in
terstate commerce. 1t Is clearly shown for
| instance. that this device Is employed on
the New York Central railroad as well
| as on many other railroads. in such fash
ion as to amount to thwartng the pur-
pose of the law. although the forms of
the law may be compiled with.
Rate Determinations.
| II is unfortunately not true that the
Standard Oil company is the only great
corporation which in the Immediate past
has benefited and Is at this moment
benefiting. In wholly improper fashion by
an elaborate series of rate discrinilna-
tions, which permit 1t to profit both at the
expense of its rivals and of the general
public. The attorney general reports TO
me that the investigation now going on
as to the shipments by the sugar trust
over the trunk lines running out OF New
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