The San Francisco call., 1908-03-11
So. admits REBATES
WERE GIVEN MANY
General Freight Agent Makes
Plausible Explanation of
Cut in Tariffs
Discrimination as Shown by the
Evidence Stoutly Denied -
by G. w. Luce

G. w Luce, general freight agent of
the Southern Pacific, freely admitted
under oath yesterday that the railroad
company had maintained a system of
special rates, but added that new
policy had been inaugurated recently,
under which all tariffs were made pub
lie Luce was the only witness called
yeterday at the hearing before the
state board of railroad commissioners.
He was on the stand from 10 o'clock
in the morning until noon. when ad-
journment was taken until today.
Twenty-Five persons gathered in the
rooms of the chamber of commerce in
the Merchants Exchange building to
attend the investigation. Attorney
General L. S. Webb and his assista mt.
Raymond Benjamin, appeared for the
state; Peter F. Dunno and c. w. Dur
brow represented the Southern Pacific.
The California traffic association inter-
vened in the proceedings through its
attorney, Q. X. Cushing. The associa-
ton was also represented by S. W.
Backus, Frank Hill and Isidor Jacobs
of San Francisco and ]. H. Horton of
Visalia. A few big shippers from the
interior were present and the following
officials of the Southern Pacific, who
were under subpoena: c. B. Seger, J. N.
Bostwick. J. NJ. Brewer and ]. C.
Stubbs.
Commissioner Alexander Irwin pre-
sided, f1anked on either side by Com
missioners H. D. Loveland and Theo-
dore Summerland. Formal oaths were
required of the attaches as well as the
witnesses. and the hearing in every
particular was carried through with
court formality. 1t is within the pow
er of the commission. If it decides that
-
fine against the Southern Pacific.
LUCE GIVEN IMMUNITY
Immunity from personal prosecution
was granted automatically to Luce as
soon as he appeared as a voluntary
witness and took the oath. The ques-
tions were propounded by Webb, with
occasional Interruptions from Dunno
and Cushing. 1t was made apparent
early in the proceedings that the
Southern Pacific would set up the claim
that while there has been special rates
there had been no discrimination. The
entire defense was tersely phrased by
Luce when he said:
These were special commodity rates,
made to fit peculiar conditions, such as
steam and water competition. Some
times they Were of long duration, but
sometimes in existence for only short
period. They were open to all indi-
viduals under similar circumstances
engaged in the same line of business" "
The two hours examination of Luce
was devoted by Webb to an endeavor
to show that the Southern Pacific dis
eliminated even among the shippers to
whom IL gave rebates. Luce. however,
was ready with an explanation for
every rate and although some of his
statements gave rise to the impression
that the tariffs were fixed by process
! of bargaining not unlike that of the
second hand clothing store, he clung
to his declaration that there had been
no discrimination.
FOUR RATES ON SAND
The rates on sand shipments from
Lake Majella near Monterey to San
Francisco offered a case in point. The
regular published rate was s2.65 a ton.
The Pacific Coast glass works was Civ
en- a special rate of s1.65 q ton. Luce
explained that this special tariff was
granted TO meet the competition on
sand brought as ballast from Belgium.
The Henry Cowell company was given
rate of 50 a ton. The special rate,
explained Luce. was made in order to
meet the water competition from
Monterey.
The Pacific Improvement company
was given a rate of s1.65 a ton. This
rate, according to Luce, was made be-
cause the Improvement company owned
the sand and sold it for man ufacturing g
! purposes. The Illinois Pacific glass
works was given special rate of s140
a ton. which was reduced later to s125
a ton. This rate was arranged for the
Illi9pis company, said Luce, because
| the concern had a deposit of sand In
Marysville and it was intended to meet
the Marysville competition. Here were
four different rates on identical ship
ments and Luce had an explanation
for each.
The same process was repeated in
| the case OF the dried fruit rates. An
agreement with the California fruit
Gamers association provided that 4,
should receive half rates on all ship
ments. with the exception Of those to
San Francisco. This, according to Luce
was "an unfinished product rate" II
was later shown that Chaddock & Co
had a special rate of 65 cents on dried
fruit from Fowler to Fresno. This
rate, although higher than that fixed
| for the California fruit Gamers asso-
citation, was justified by Luce on the
ground that it covered territory where
the California fruit canneries' company
made no shipments.
LUCE. EXPLAINS METHOD
In explaining the method of arrang-
ing the special rates, Luce said:
| FarIes call on me ana state Wfa1
conditions they believe entitle them te
a special rate. Then an investigation
is made and If we believe that the con-
| ditfons warrant 1t, we grant the rate
I'VE are to understand, them asked
Webb. that the controlling considera-
ton in granting or refusing a specia
rate is in the interest of the company?'
81 object to the question" said Dunno
quickly.
objection sustained" ruled Irwin.
Webb, however, carried his point b5
putting his question in different form
"Of course, many things are taker
into consideration" said Luce, "ant
among them the interest of the com.
pany."
i Luce added that the full rates wer.
charged, memorandum record made
of the special rate and voucher 70,
the difference sent to the shipper HI
stated that the special rate was no