Los Angeles herald., 1906-12-11
RAILROAD MEN
MUST PAY FINES
COMMISSIONER LANE EXPOSES
MISUSE OF POWER
In Hearing at Chicago It Is Shown
That Stockholders Money Was
Used illegally and Charged
to Freight Earnings
Special to The Herald.

Special to The Herald.
CHICAGO, Dec. 10.-Railroad officials
found guilty of violations of interstate
commerce laws will have to pay their
own fines. according to the attitude of
the interstate commerce commission
which held a session here.
The subject under investigation by
Commissioner Franklin X. Lane, II
prominent Californian, who represented
the rate board, was the payment of the
fines of Darius Miller, first vice presi-
dent of the Chicago. Burlington &
Quincy railroad and of Claude c.
Burnham, foreign freight traffic agent,
who were fined $4,000 each last spring
Charles 1. Sturgis. general auditor of
the comany, the only witness examined
testified that the fires of Vice Presi-
dent Miller and Freight Agent Burn
ham, together with the $4,000 tax inn
posed upon the company itself, were
paid by check and that the amounts
were charged against freight earnings.
Leaves Question to Stockholders
After the hearing Commissioner Lane
said the rate board has no power to
bring action against the company, but
that it had done it's part in revealing
the true state of affairs, and that the
stockholders, whose money had been
used to pay fines of individual officials,
whose duty it was to obey the laws,
might take such action as they saw fit.
Mr.. Lane declared that this is the first
time the commission has obtained evil
dence that stockholders money is being
used to pay fines of individuals, and
that he thought directors were stretch
ing their authority to make such ap-
preparations.
Speaking of the facts brought out at
the hearing, Commissioner Lane said
This is the first time that it has
been accurately discovered that a rail-
road company paid the fines of it's Of
ficials out Of the money of it's stock
holders.
The railroad corporation was fined
$4,000 and two officials directly con-
nected with the payment of the rebates
were fined $4,000. The total amount,
$6O00O was paid on a single voucher,
out of the treasury of the corporation,
and was charged to corrected freight
earnings on the company's books. This
must therefore, be regarded as a frank
Endorsement by the company of the
acts of it's officers They were not to
be allowed to suffer for acts done in
the interest of the company, even ifI
these acts were illegal, and, under the
law, constituted crime"
When asked if proceedings, criminal
or civil, would be brought against the
directors of the Chicago, Burlington &
Quincy Railway company for using
funds of stockholders to pay these fines,
Mr. Lane said:
That is not a matter with which
the commission can deal. 1t is a mat
ter primarily in which the stockhold-
ers of the road are concerned. They
may take such proceedings as they
deem advisable. Funds of railroad
company are held in trust by it's d.
rectors, who generally have broad pow
ers of disposition.
But l am not aware of any general
power under which such moneys may
be used to pay fines of men convicted
of breaking the laws. There is an
obvious inference to make from facts
developed-that the filming of a con-
victed railroad official is in reality pun
ishing stockholders and indirectly is
imposing a burden on shippers, who,
in the end, pay all obligations of the
road. Each stockholder loses what
ever his proportion of the $4,000 may
be; and the shippers will be charged,
theoretically at least just so much more
for carrying their freight because con-
victed officials were found guilty of do
ing something the law did not permit
Rallroad men have frequently eX-
pressed serious doubt as to the ability
of the interstate commerce commission
to take all the money factors into con-
sideration which go to make up a rea-
sonable rate. Without considering the
mystery of rate making, 1 think this is
quite true, that the commission, when.
ever 1T comes to fix maximum rate,
will not take into consideration any
fines paid by railroads for their con-
victed officials"
Thinks Stockholders Sanction 1t
Persons who heard Mr. Lanes re-
marks drew the inference that he
meant that failure on the part of the
stockholders to take action on the facts
disclosed would mean that the stock
holders as individuals sanctioned the
attempts of railway officials to thwart
efforts of the government to abolish the
rebate evil.
Commissioner Franklin K. Lane left
Chicago for Washington, d. c., and
New York in connection with a matter
in which the Standard Oil company is
involved.