Los Angeles herald. [microfilm reel] (Los Angeles [Calif.]) 1900-1911, 1908-02-16
u. S. ORDERS
PROSECUTION
OF REBA 7ERS
GOVERNMENT TO INDICT S. P.
OFFICIALS
LANES REPORT ON VIOLATIONS
OF LAW RECEIVED
Attorney General to Proceed Against
Traffic Agents Who Granted and
Shippers Who Received
Refunds
By Associated Frers.

WASdlNGION, FEB. 10. - PrOSecu-
tions are to be instituted by the gov
ernment against the Southern Pacific
and against certain officials of that
company on allegation that they paid
rebates to shippers.
Information which is to be a basis
for these prosecutions were obtained by
Franklin K. Lane of the Interstate COM
merce commission last autumn in the
course Of an extensive inquiry made by
him into the affairs of the Southern
Pacific company.
BY direction of the Interstate COM
merce commission, Lane visited the
Pacific coast and for several weeks
conducted his inquiries into the alleged
charges of rebating which had reached
the commission
Commissioner Lanes report of his in
vestigation, including a transcript of
the testimony taken by him In formal
hearing as an interstate commerce COM
missioner, was made public today.
Ready for Prosecutions
The report has been approved by the
commission and transcript of the re-
port and the evidence adduced at the
hearing has been transmitted to the de-
partment of justice for such prosecu-
tions under the law as may be war
ranted."
Collateral with the proposed action
by the government the railroad COM
mission of California has been fur
nished, at its own request, with
transcript of the evidence and has in
dicated to the interstate commerce COM
mission its purpose to prosecute alleged
violations of the California law that
may be shown by the report.
The testimony taken by Lane was
voluminous and the course OF the re-
port extensive. References to the YER
a hAG1S
for the several paragraphs OF the re-
port. .,.
one of the particularly interesting
features of the transcript of the evil
dence was developed just at the con-
clusion of the formal hearing, Wneh
Commissioner Lane reiuseu " pna1u pirl,,a,.ai o,i
the witness stand G.. w. Luce generai
freight agent for the Southern Paclne,
as a witness under oath.
The request that Luce give sworn
testimony in the case was made by Z.
F. Dunno, counsel for the southern
company, and Lane oecilnea 70 aui,ita1 s1a ta7
ister the oath to Luce because he stated
he did not wish to accord Mr.. Luce,
NV administering an oath to him and
taking his testimony, immunity from
nrosecution for violation of the law.
Tn the course of his report Commis-
sioner Lane says his inquiry was con-
ducted in San Francisco on the second,
and from the evidence adduced he mas
"the existence Of an extensive system
of preferential rates granted certain
ebinners on interstate business py 'hS
Southern Pacific company oa
"The record discloses a list OF ioo
firms. corporations and individuals VINO
enioy what are known as 'speclal ~
side rates. less than the rales pupo
1isbed TO the general public, on tne
movement of certain designated trafIlc
between nojnts within the state OF call
fornia.
"That such shippers paid the Iuil rdle
nublished in the first instance ana were
allowed the refund on claims Whicn
went through the auditing department.
under Instructors from the tranlc oe-
nartment that such special rates snouid
annIv ,1pon Interstate shipments With
out tariff authority. J.,
'.'That such refunds amounted III va Va
,ioue months of the years 1906 and 1871
10 from $40 900 to $4,000 per month";.
.arhat such refunds given to one hrm
an,o,nted to the sum of $23,994 during
the period of April, 1906, the date OF
tbe San Francisco fire. When an pre-
yious records were destroyed TO sep
tember. %. 1907 and such retunds TO
other SINNERS ranged in amount from
$13690 to $22,25l. r..
ssrIat such refunds or discounts from
+be regular rates have been continued
for a long period and up to the cate
of the hearing in October, l9O'.
"rrhat many of such state shippers
to whom such refunds were allowed
were large interstate shippers.
"That one of the shippers admttea
at the hearing that the granting VI
such inside rate on the stated move
ment Influenced the routing of subse-
ouent Interstate shipment of such traf-
fic over the rails of the Southern Pa
cific company.
s"rhat in one instance the general
freight agent of the Southern PaclIie
company provided by voucher dateo
July 81, 1906, for the payment TO an m
terstate shipper of one-half of the local
rate which such shipper had paid TO
another railroad for the movement
%von1 noint Of origin to a Southern Pa
cifjc terminal where the tranlc pegan
us Interstate Journey over the Southern
Pacific lines.
"That there existed for years an un-
derstanding between, the Southern Pa
cific company and the Santa Fe COM
many and certain shippers of dried
fr,,ifs that the traffic which moved
into noints of connection for transcon-
tinental shipment could be entitled at
the end of the shipping season to a re-
fund of one-half of the local state rate
charged at the time of the original
movement.
"rhat the voucher books containing
tho so-called refunds on state ship
ments also contained records of re-
funds given upon interstate shipments.
Paid on Written Orders
"rhat some of such refunds upon IN
terstate business were pald ny tne spe-
cial written decision of freight officials
after the claims had been denied by
the auditing department
'The justification offered by the OIL
eials and representatives of the South
ern Pacific for practices revealed was
that In general they were made neces-