Gilpin observer., 1906-04-05
RAILROAD RATE QUESTION and
THE PRESIDENTS POSITION

velt in his endeavor to have the Inter-
state Commerce Commission given
power to specify maximum railroad
rates and to prevent determinations
What is the railroad rate contro-
versy about?
The fight is over the Presidents
plans for remedying certain evils in
the railroad situation.
What are these evils?
OF the several varieties Of which
shippers complain, two classes are of
most Importance: Those involving dis
ordinations in freight rates between
individuals or places; those resulting
from excessive charges for carrying
freight. Passenger rates do not en-
ter prominently into the controversy.
What sorts of discrimination are
made between individuals?
By law, railroads are compelled to
charge all comers alike for any given
service. When for some reason a road
secretly gives some favored person or
firm lower rate on shipments than
others get, it is guilty OF discrimina-
ton. Thus, the rate on wheat from
Kansas City to Chicago is 12 cents per
hundred pounds. If certain COM
mission house is allowed to ship at
10 cents, it clearly will have an enor-
nous advantage over its competitors
in selling wheat in Chicago. On 100,-
900 bushels this would amount to
about $1,000. In fact, if shipper can
get sufficiently good concession from
, railroad he may make fortune
while his rivals may barely make
living. The foundation of the success
of the Standard Oil Company was its
ability to get a lower rate on its oil
shipments than its competitors could
secure. Railroad discrimination has
contributed powerfully toward foster
ing monopolies.
Are the railroads alone to blame for
this discrimination evil?
No; the shippers are partly reSpon-
sible. The railroad grants low rate,
not because 1t wants to, but usually
because it thinks the cut necessary
TO get the business for which 1t is
competing with other lines.
But II rate-cutting is prohibited by
law, how do the railroad traffic man
ayers avoid being founo out?
Various devices are used, including
the rebate, the private switch, the
private car line, non-collection of bills.
under weighing of freight, manipula-
ton of elevator charges, and the like.
What is the rebate?
II Kansas City shipper gets rate
of 10 cents hundred on shipment
of 100000 pounds of wheat to Chicago
when the regular traiff rate was II
cents, the road might collect $12O from
. him at the 12-cent rate and then return
the extra $50 to him secretly. The
$40 returned would be a rebate. But
rebating is so strictly forbidden by law
now that 1t is becoming obsolete.
rnathndG nf ayauinP the
statutes have been found.
What, for instance?
Last simmer a Kansas City firm was
shipping wheat to Chicago evidently on
better terms than other concerns could
get. It was found that the wheat was
OILED to Minneapolis via Chicago at
the regular Minneapolis rate of II
cents, but that it was stopped at Chi
cago ard sold. Presumably of the
through rate, 6 cents was charged for
the haul from Kansas City to Chicago
and more from Chicago to Minneap-
oils. So the firm was probably getting
a 6-cent rate TO Chicago by this device.
while its competitors who had no fav-
ors were paying II cents. Another fav-
orite device is to collect every month
only part of favored shippers ac
count, SO that the books will show him
more and more heavily in debt to the
railroad. Still another device is to per-
NIT a big shipper to Build a switch to
the railroad line from his factory and
then to pay him an eXorbitant prices
for its privileges. Still another Is to
permit the shipper to own his cars and
then to pay him heavily for their use.
The Standard Oil Company for in
stance, is generally understood to get
it's rebates in the shape Of heavy pay
ment by the railroads for the use OF
its tank cars.
How common are these various
forms of Illegal discrimination?
Naturally no complete information is
} available. But in Wisconsin careful
investigation secured by Governor La
Toilette was able to trace more than
$6,O00.000 of Illegal payments to ship
pers from 1897 to 1903. One Wisconsin
grain firm alone was found to have re-
ceived $151 900 from the railroads in
five years-enough to have given 1t a
, handsome profit, even II 1t had merely
broken even on its grain business. 1t
is safe to assume that very large pro-
portion Of big shippers get illegal re-
ductions of freight rates.
What is meant by discrimination be-
tween localities?
The railroads give certain towns bet
ter rates than others In order to de-
velop markets or to build up their own
resources In various ways. For In
stance, a paint dealer In Spokane,
Washington, must pay $93 more freight
on a carload of supplies from Chicago
than the Seattle dealer pays, though
Spokane is $50 miles nearer Chicago.
A rate on rope from San Francisco to
Kansas City was recently quoted at GO
cents per hundred pounds. while the
rate to Hutchinson. Kansas. 220 miles
shorter haul, was $1.01.
How does this locality dlscrimina-
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