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applied without working not only injury to the transportation companies but great detriment to the public.
I beg leave to illustrate this by a quotation from the speech of Mr. Stahlman, above referred to, as he has put the case clearly and intelligently, so as to show the hardships which must arise to the conimunity and the transportation companies if an unbending rule, forbidding rebates, should become the law of the land. In illustrating this he takes a very cheap, yet a very important commodity, produced largely in this country, and needed for use in foreign countries, and often shipped there. He illustrates his meaning by the cost of the transportation on staves shipped from the timber regions of the West to the Eastern seacoast and part of them shipped abroad, and on coal shipped from Indiana and Illinois to the States north west of Chicago.
On page 28 of his argument Mr. Stahlman discusses this question, and I must ask the Clerk to read that portion of it, as I think it very important.
The Secretary read as follows: The facts with reference to the rebate on staves are about these: Much the largest percentage of the staves shipped in this country find a market at the Eastern seaboard. These staves pay a rate, say, of $70 per car to New York. The shipper of the staves in the West is satisfied with this rate; he does not ask for any concession; the purchasers in the East are content, but the markets of the East are not quite sufficient to consume the quantity the Western shipper produces. He, therefore, looks beyond to see if he may not find a market elsewhere. He finds that he may send staves to England, but can not afford to do so based on a rate of $70 per car to New York. Staves are very low-class traffic; they will not bear shipment by regular steamers to Europe, consequently po through bill of lading can be given from the original point of shipment in the West to Europe. The stave producer must look to sailing vessels or schooners for cheap transportation.
The railroad says to the shipper, “We are willing to make you a concession of $10 per car on shipments to England in competition with staves from Norway. We are perfectly willing to make the concession you or any other shipper who may desire to avail himself of this rate; but inasmuch as no through bills of lading can be given, and the reshipment from New York is made through some New York parties or agency, we are not in a position to know whether the shipment goes through or not. While we are willing to aid you, we can hardly afford to reduce our rates $10 per car on 90 percent. of our business in order to gain 10 per cent, more on your shipments to England. Therefore, pay us the full rate on all shipments to New York or Boston,
and upon presentation of ship's bills of lading showing certain quantities shipped to England we will refund you $10 per car on the quantities thus shipped."**
This arrangement is not designed to give one shipper an advantage over another. It is, as I understand it, open to everybody; it is simply designed to prevent a general reduction on 90 per cent of the business which does not require the concession, and to assure the company that only such shipments as require the concession receive the benefit of them.
The impression that rebates are given to build up one shipper to the injury of another is an entirely erroneous one. The rebates, when given at all, are largely due to just such transactions as I have explained, and frequently to a desire of one railroad company to secure shipments against a competing line. I know that there are institutions which have been favored with rebates, but the committee will find all fair-minded railway managers opposed to such abominable practices; and while on that point I desire to emphatically declare myself for the interest I represent, and railway interests generally, in favor of the most rigid and exacting law, which will prevent rebates for the purpose of unjust discrimination, or to prevent discrimination or extortion in any form whatever. No matter how rigid or exacting the law may be, I am more than satisfied that the railway managers of this country, who are as a rule fair-minded and inclined to do what is right, will most heartily approve of the enactment of such a measure. But there are conditions which necessitate rebates, and when such rebates or drawbacks are given they should be open to all shippers under like circumstances. While the company which I represent is not largely given to such practices, certainly in no case for the purpose of discriminating in favor of one shipper as against another, or for the purpose of robbing a rival line of its legitimate share of business, it does give some rebates, the nature of which I desire briefly to explain.
Take a pointon the line of our road, say Franklin, Tenn., for example. A gentleman comes to us and says, “I want to build a grain elevator." The railway company's financial condition does not warrant the railroad in building the elevator, although many Western railroads have done so largely at their
own ex. pense. Elevators are nothing more nor less than increased station facilities. We say to the gentleman: "We can not build this elevator, but we will do what we can to aid you. We have the timber on the line of our road required for that purpose. We will carry it for you at the actual cost of transportation. We will not bill it at an open raie, because to do so would open the door to every shipper, no matter for what purpose he might desire to use the lumber, to avail himself of it. But you buy the lumber, ship it, erect the elevator, and send us your freight bills with a certificate showing that it was put into the elevator, and we will refund you the difference between the amount charged and the actual cost of transportation."
A man at Columbia, Tenn., comes to us. He says. “I want to build a flouring mill and warehouse on the line of your road. What can you do to aid me?" The railroad people appreciate the fact that the erection of a mill and warehouse will make an increased demand for grain, resulting in increased production of grain, and consequent increase of business at that point. In addition to all of this, the mill and warehouse on the tracks increase its facilities for doing business. We say to this man, as in the case of the man at Franklin, Tenn., ** Build your mill, and send us your freight bills, and we will refund you the dif ference between the amount charged and the actual cost of transportation."
Later on this man approaches us and says, “I have been running my mill for five months on the wheat produced in this section. The wheat is exhausted. I have a good trade in the South which I desire to keep up. If I let it go, it will require hard work to recover it when the next crop comes in. I must keep going even though I work at bare cost. I can buy wheat in Kentucky, Indiana, or Illinois, bring it here and continue to grind, but I can not do this and pay local rates into Columbia and then pay the rate on the product out." The Louisville and Nashville Railroad Company realizes the force of the miller's claim, and says to him, “Go ahead, buy your wheat in Kentucky, Indiana, Illinois, or elsewhere, bring it to Columbia, grind it up and ship the four to supply your customers; at the end of each month send us a statement of the wheat shipped in and the flour shipped out, and we will give you a rebate on the wheat so that the total rates on the wheat and flour combined shall equal the rates from the original point of shipment of the wheat to the point of destination of the flour."
I submit if this is calculated to injure any one. This arrangement is open to the millers on the line of the Louisville and Nashville Railroad from one end to the other. The millers all understand it, and they are satisfied with it. It brings business to the roads, it keeps the mills going, it feeds people employed by the millers, builds up a business at the different towns, and enables the miller to hold his customers.
For the information of the committee I will say, that quite extensive milling interests have been developed and fostered in this way at all points on the line of the Louisville and Nashville road, and the general public understands that any one who wants to engage in the milling business may do so on the same terms.
There is another large interest on the line of the Louisville and Nashville Railroad, particularly in Kentucky, which has been fostered in a like mannerthat of the manufacture of whisky. The grain is hauled into the distilleries at the current rates; the railroad people know how much whisky a bushel of grain will make, and concessions in the way of rebates on grain are made upon presentation of certificates showing the proper proportion of whisky shipped out. I am illustrating the rebate system particularly so far as it applies to the Louisville and Nashville road, and what I say of the Louisville and Nashville will apply to all of the Southern railroads, for all are endeavoring to build up local industries on the line of their roads.
At Nashville we have a large number of lumber-yards, planing-mills, sash, door, and blind factories, which buy their pine lumber hundreds of miles distant from Nashville. It is brought there in the rough. We say to these people, **Dress your lumber or manufacture it into sash, doors, or blinds, reship it, and in proportion to the amount reshipped we wlll make concession in the way of rebate on the lumber shipped in." This hurts nobody, and tends to help build up an industry which engages the labor of a large number of worthy people, and helps to make the city prosperous.
I will carry these illustrations to Judge Byxum's district, and I speak now from experience, because I was at one time connected with the management of a railroad in Indiana.
The Louisville, New Albany and Chicago Railway Company, when it finished its Chicago line into Indianapolis, about three years ago, had no terminal facilities. All of the manufacturing institutions were located on the side tracks of other railroads. A gentleman came to me and said, “I want to establish a stave and barrel factory at Indianapolis; you have the raw material on the line of your road; I wish you would aid me in bringing lumber from some point on Lake Michigan to Indianapolis to build my factory." I said to him, “Certainly; it is an industry which railroads ought to encourage. Your staves are made in the rough on the line of our road; I will undertake to carry the lumber to build your factory at the cost of transportation. It will be billed to you at full rates; pay the freight bills, and when your factory is done, send me your freight bills and I will give you a rebate between the amount charged and the actual cost of transportation."
Another Indianapolis gentleman comes and says, “I want to establish a sash, door, and blind factory at Indianapolis. There is quite a demand for sash, doors, and blinds on the line of your road. What can you do toward helping me to bring in the lumber to build my factory." I said to him, as I did to the stave-and-barrel man, “Ship your lumber, build your factory, send in your freight bills, and I will give you a rebate so that the rate of transportation shall not exceed the actual cost of the service."
Another said, "I want to build an elevator at Sheridan, on your line. I would be glad if your company would do so, but I know that it is not able. What can you do to help me?" I said to him, "Ship your lumber, build your elevator, send in the freight bills you have paid, and I will make you a rebate between the amount paid and the actual cost of transportation." Others came for the same purpose at other points on the line of the road; all were met with like encouragement.
Now I ask if this is unjust discrimination? Is this building up one shipper or manufacturer to the injury of another?
In connection with this I will return the discussion of the coal question and that portion of it which relates to an effort of the Indiana and Illinois mines to sell bituminous and block coal in the Northwest. The rates from the mines to Chicago, as stated, are perfectly satisfactory to the miner and the Chicago dealer and consumer. The shipments of coal to reach the Northwestern States pass through Chicago. A concession, as stated, of 25, perhaps 50, cents per ton is considered necessary to enable the Indiana and Illinois miner to sell coalfin the States of Minnesota, Wisconsin, Iowa, &c.
Some of the mines of Illinois and Indiana are owned and controlled through Chicago parties. The shipments to the Northwest are largely made through Chicago parties. Therefore to prevent any fraud upon the transportation companies the railroad companies say to the miners and the Chicago dealers, "You ship all of your coal to Chicago locally; we can not tell what goes to the Northwest or what is consumed in the city of Chicago. Therefore we will charge our full rates to Chicago on all of the coal, and if you ship 10,15, or 20 per cent of the coal to the Northwest, upon the presention of the bills of lading of the Northwestern roads at the end of each month we will refund you 25 or 50 cents per ton, as the case may be, on all such shipments."
This will serve as a fair illustration of the system of rebates indulged in by railway companies, and will serve to show also that they are not given for the purpose of discriminating in favor of one shipper to the injury of another, but as a means of increasing traffic, building up the industries on the line of the road, and preventing the practice of frauds upon railway companies.
If the committee were to go to the bottom of the complaints so generally and so sweepingly made of discriminations by means of drawbacks or rebates, I am quite well assured that it would find them largely, if not almost exclusively, confined to shipments made under such circumstances.
Why should such a practice be prohibited? Why not legalize rebates and drawbacks with a proviso that they shall be open to every shipper under like circumstances, and prohibit the practice only in cases where it is designed for the purpose of 'unjust discrimination ?
Mr. BROWN. Now, Mr. President, it seems to me that no reasonable man would object to the rebate paid on the staves in the case above supposed. It simply enables the Western timber-man to find sale for probably one-tenth more staves than he could get market for in the East by shipping them to England or other foreign countries. He could not get them to the foreign market without a reduction of rates from the West to the Eastern cities. If they should give that reduction on all the staves shipped from the Western forests to the Eastern cities it would amount to a reduction of the freights so far as those for home consumption are concerned, which is a reasonable freight, and at which neither the producer por consumer of the staves complains.
The best way of reaching the case properly is to charge all Western staves the same price to the Eastern cities, and then, as stated by Mr. Stahlman, on the production of the ship's bills of lading, showing that a certain quantity of them have been shipped abroad, say one-tenth for instance, to rebate or refund to the owner of those shipped abroad the concession made in the price of transportation to enable him to send them abroad. Bear in mind, Mr. President, there is no unjust dis. crimination in this matter, as the same rate for staves to be used in the Eastern cities is given to every shipper, and the same rebate is given to each shipper who desires to send them abroad.
In the matter of the erection of elevators, mills, factories for manufacturing doors, sash, blinds, &c., nobody will question that the community is interested. The location of one of these establishments in a community increases the production, helps to create a home market, gives wages to labor that might otherwise be unemployed, and gives a daily freight of considerable quantity to the railroad company upon which the establishment is located. Who can doubt, in such case, that it is the interest not only of the railroad, whose regular freight is increased, to make a concession in freights on the building material which it does not make to other consumers, but that it is also the interest of the community, which is greatly benefited by the construction and use of such factories, elevators, &c., which might not otherwise be erected.
Again, who can doubt the wisdom and the benefit not only to the transportation companies but to the community of a concession made by the transportation companies to the coal shipped from Indiana or Illinois west of Chicago, when the Chicago market is not sufficient to take all which can be successfully mined, and when the coal is needed in Wisconsin and Minnesota by consumers who can not afford to use it if it is charged the same rate of freight per mile from the mines to the place of consumption in those extreme Northwestern States which it is now charged from the mines to Chicago? In such case Chicago suffers no injury by the reduction in favor of those three or four or five hundred miles farther west, as the Chicago prices have not increased.
And as but a limited proportion of the productions of the mines are shipped to the far West, a railroad company could not afford to put down the rates of eight-tenths of its whole production to secure the patronage at the lower rate of two-tenths of it; and yet, as there are periods when the demand is not sufficient at Chicago to take the whole output of the mines, it is the interest of the miners to keep their employés at work and to sell the remnant of the amount produced farther west at a lower price rather than fail to work full time. Consequently all interests are served by the rebate. The miner gets regular employment from the owner of the mine; the owner of the mine makes a small amount of profit on the coal that is sold at the reduced price; the transportation companies realize a small profit on that which goes beyond Chicago. The people of Chicago are no way in danger, because the price of their coal is not increased. They pay just what they would have to pay if the arrangement farther west were not made, and the people farther west secure the coal at a price at which they can afford to use it, and they are benefited. But you may say, why make the rebate? Why not make a lower rate from the mines to the consumer? For the reason that if you should do this all who ship to Chicago would claim that they were going to ship west, and you would have no means of ascertaining whether the coal went west or whether it was consumed in Chicago; but when it is shipped to Chicago at the regular rate and is then reshipped by bill of lading to the far West, the quantity sent west can be readily ascertained by such bills of lading, and freight can then be put at the reduced rate on what is really in good faith shipped west by a rebate, paying the difference in freight which is allowed by the reduction of price for that going farther west. This results in mutual and general benefit, as all shippers engaged in the same business get the same benefit, and it is no injury to anybody. Then why should we make a stringent rule or law prohibitiog it?
Mr. President, it is as difficult to undertake to regulate by inflexible rules of law the transportation of commerce as it is to regulate commerce itself. In other words, it is as difficult to regulate transportation by fixed rules as it is to regulate prices in the daily traffic business of the community. If you should undertake to fix by stubborn rules of law the price of wheat, corn, bacon, lard, butter, and the like in the different cities and communities where a trade and traffic in these articles are conducted, you would find little less embarrassment than you do when you undertake to regulate the transportation of commerce by fixed, inflexible rules of law. It can never be successfully accomplished, and probably the best that can be done if we can get a conservative, intelligent, well-balanced commission is to leave all these delicate and difficult matters in their hands, giving them the power to make the rules governing transportation elastic, as the exigencies may require.
After they have investigated the question thoroughly and looked into it in all its bearings they will usually be able to determine what is necessary or what is the best that can be done for the transportation companies and the communities under the circumstances by which they may be at the time surrounded. But if you bind thein " fast as fate's by unbending rules of law that have no elasticity you will find the machine will not work, the wheels will be screaking in a hundred places, different interests will be suffering, and there will be a general outcry and clamor against laws which operate so unjustly, which cripple commerce, embarrass manufacturing interests, discourage production at points far in the interior, seriously injure, if they do not destroy, important branches of our foreign trade, and prevent that general and free interchange of commodities which is essential to the well-being and prosperity of a great country like the United States. We had better hasten slowly in this matter, doing as little as possible to cripple and as much as possible to build up all the great interests of a great and prosperous people. Let us profit by the experience of other nations who bave thoroughly investigated these questions, and learn wisdom by their example.
The PRESIDENT pro tempore. The question is on the amendment proposed by the Senator from West Virginia (Mr. CAMDEN).
Mr. CULLOM. Before taking a vote on the amendment of the Senator from West Virginia, I wish to ask the Senate to make one or two formal amendments in the reprint of the bill.
In section 2, line 1, after the word “carrier," I move to insert the words “subject to the provisions of this act." Those words were dropped out in the printing.
The PRESIDENT pro tempore. The amendment will be stated.
The CHIEF CLERK. In section 2, line 1, after the word “carrier,' insert the words “subject to the provisions of this act;" so as to read:
That if any commen carrier, subject to the provisions of this act, shall directly or indirectly, &c.
The PRESIDENT pro tempore. The question is on agreeing to the amendment of the Senator from Illinois.
The amendment was agreed to.
Mr. CULLOM. In section 5, line 2, after the word “after,'' I move to strike out the words “ this act shall take effect”' and insert the words
the appointment of the commission hereinafter provided for;” and in line 3, to strike out “the”' and insert “ said” before the word mission."
The reason for this amendment lies in the fact that it may be sixty days or thereabouts after the act shall take effect before the President of the United States could select a commission whose duty it will largely