The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-12-10
RAILROADS AIDED OIL TRUST.
COMMISSIONER GARFIELDS RE-
PORT on SECRET RATES.
oil snipDers Now Say They Are GetIing an
Equal show for the First Time in Wears
Secret Rates Abolished Greater Pub
IIcIty In Corporate cement Urged.

statements concerning the Federal investi-
cation of corporations are contained in
the annual report OF James Rudolph Gar
field, Commissioner of Corporations, to the
Secretary Of Commerce and Labor. In
v~estigation showed that through a system
of railway rate discrimination the STANDARD
Oil Company had an overwhelming adj
vantage in transportation all over the
country. As "A result of the investigation
illegal and improper determinations have
been abolished and oil shippers have in
formed the bureau of corporations that
for the first time in years they are getting
equal treatment from the railroads.
Commissioner Garfield puts stress on the
efficiency of publicity in dealing with cor
porations. The adoption of a Federal
license law fixing individual responsibility
is urged by the Commissioner, who says it
would have great effect in preventing dis
honest and corrupt corporate management.
The legal work Of the bureau during the
year was devoted to an Interpretation Of
the statutes relating TO transportation.
the consideration of proposed legislation
and laws relating to railway discrimina-
tions. 1t is pointed out that the Commits
sioner's report on the transportation OF
petroleum, which dealt almost entirely
with railway determinations in favor OF
the Standard Oil Company and was sub
mitted TO Congress, has resulted in the
Department Of Justice taking action in
criminal cases. The report says
During the course OF the investigation
Of the oil industry il was discovered that a
very widespread system of railway dis
ordinations existed in favor of the Stand
ard Oil Company, affecting a very large
proportion of the country and resulting
substantially in giving to the Standard Oil
Company an overwhelming advantage in
transportation in almost all sections of the
country; that his system had been in
existence for a number of years, and hat
largely by virtue of it the Standard had
been able TO restrict or eliminate COMPETE
ton throughout many parts of the country
and thereaft er rear he benefits Of monopoly.
These railway determinations too various
forms, often very ingenious in their nature,
and so skilfully concealed that their exist
ence was very rarely suspected even by the
active competitors OF Standard, alt though
such competitors knew that in general they
were doing business at "A disadvantage.
This system of discrimination was discov-
cred by the agents Of the bureau when exam
lining the oil shipping records and accounts
of the various railroads
As a result Of this investigation indict-
ments containing 1913 counts were re-
turned by various grand juries. The Com
missioner adds:
1t is claimed that the various devices
nv which these determinations were OBJ
tanned are permissible under the law, but
this contention seems unit enable The pur-
pose Of the law is TO provide equality of
opportunity and treatment TO all shippers.
The law deals with the result not the device
by which the result Is accomplished. The
more clever the device the more fragrant
is the violation Of the Jaw, for wilful intent
to evade il shown. II this he not the true
int Interpretation Of the law it becomes worse
than useless, because il offers false security
and opens he door to aud
A most striking and important result
followed the Investigation. the report says.
The railroads cancelled substantially all the
secret rates, illegal and improper discrimina-
ions and in many cases the determinations
in open rates. The report says.
Thus q widespread system Of railway
discrimination was wiped out Of existence
because Of the discovery Ivy the agents
of the bureau and before any prosecutions
we're brought thereon. The shippers OF
oil advise the bureau that Tor the trEt
time in many years they are now rapidly
obtaining equality OF treatment from the
transportation companies.
The power of efficient publicity for the
correction of corporate abuses was con-
vincinply illustrated in the Standard Oil
investigation. In most cases as soon as
the officers Of a railroad learned that an
agent for the bureau had discovered a
discrimination the improper rate was can
Ctilt1. Inns tildIlRt III NHt FgT'Ehi ="
brought about by mere exposure, the Com
missioner says, adding ,
This action on the part Of the railroad
officers was all the more striking inasmuch
as il could hardly have been taken with a
view 10 escape from criminal liability,
because that criminal liability, II existing
at all, had already been incurred and could
not he mitigated or evaded by cancellation
of the discriminatory rate or regulation;
and further, the fact Of the voluntary
| nnetAn xvn1 a CONVINCING nhmiEElnn Of The
u~nfairness of the rate or regulation. In
short, the experience of the bureau indi-
Gates that enforced publicity OF facts il a
most efficient means of putting an end
10 such determinations.
A great advance toward publicity was
the new law increasing the powers OF the
Interstate Commerce Commission. Now
all books and records If railroad companies
are open 20 agents of the commission, and
the Government will no longer be ham
pered by being limited 10 search for a single
item, but can scrutiniZe every record ana
every entry. The meat inspection ana
pure % laws are recent examples oil the
extension Of the principle Of publicity.
The Investigations by the bureau, the
effect of the interstate commerce laws, the
result Of the prosecutions under the anti
trust law and the reasons that compelled
the enactment of the meat inspection and
pure food laws all lead the Commissioner
10 suggest the supervision of greater in
49, y - W lcN .
and foreign commerce, as he outlined in his
license plan in his 1904 and 1905 reports.
! The COMMISSIONS says;
1T the license scherrel will not interfere
with the power and authority of the States
over the corporations created under State
laws. IL will be the exercise of direct
Affirmative by the Federal Government
over the actions Of corporations when
engaged in interstate and foreign Gu M
merce, which canno be dealt with by
State authority. IL will give a simple and
effective method Of dealing with such cor
porations in a jurisdiction c~oextensive
with their field Of operation.
Such inspection is not an INVASION OF
private rights. A corporation should not
be treated as an individual; IL has great
powers and enjoys public rights which an
Individual Cannot exercise; II IL given
| some Of the attributes Of sovereignty, !. p,
! perpetual life, and in some instances the
right Of eminent domain: the unrestricted
exercise Of its powers may hermit u to
grow strong enough to unduiy influence
and in measure control the political life Of
the State which created il. Such a result
would he intolerahle. Hence, for reasons
Of public safety and self-preservation a
Government must retain and exercise
proper regulation Of and control over cor
porations. Such regulation and control
cannot he wisely exercised unless the Gov
eminent has full and accurate knowledge