The Railway Rate Bill

Amendments

As we go to press it is unofficially reported that the Republican Senators have agreed upon the following amendment to the Hepburn Railway Rate Regulation Bill:

The venue of suits brought in any of the circuit courts of the United States against the Inter-State Commerce Commission to enjoin, set aside, annul, or suspend any order or requirement of the Commission shall be in the district where the carrier against whom such order or requirement may have been made has its principal operating office, and jurisdiction to hear and determine such suit is hereby vested in such courts.

It can hardly be necessary to say to the thoughtful reader that this amendment makes no real change in the Hepburn Bill. The Federal courts have jurisdiction already to prevent any injustice from being perpetrated by or in the name of any administrative department of the Government upon any citizen of the United States. This jurisdiction is continually exercised in hearing appeals by citizens against what they regard as unjust decisions by the Patent Office, the Land Office, the Collector of Customs, and other administrative departments. It is true that Congress has the powerthis at least is our judgment-to limit this jurisdiction of the courts, and certain amendments proposed to the Hepburn Bill would have the effect to impose such limitation the Circuit Courts. Such was the amendment proposed by Senator Bailey, prohibiting them from issuing injunctions against the immediate enforcement of the decisions of the InterState Commerce Commission. But in the absence of such amendment the jurisdiction to issue such injunctions is indubitable. The amendment as proposed simply declares powers which are already unquestionably possessed. Why, then,

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any such amendment? The reason for it was probably political. It was clear that the hard fight in the Senate against the Hepburn Bill in its original form by certain Republicans who represented, or thought they represented, corporate interests, would be defeated by a union of Democratic and Republican votes for the bill, and that no amendment having the effect to limit or delay the powers of the Commission could be carried against the combined Democratic and Republican support. The Republican advocates of the bill, by consenting to this declarative amendment, have made it possible for the Republican opponents of the bill to vote for it without self-stultification, and thus have secured before the people for the Republican party credit for the bill which otherwise might, with some justice, have been claimed in the next political campaign by the Democrats as a Democratic victory over Republican opposition. The bill is not, however, at this writing, passed, and there is still a possibility, perhaps a probability, that

some of the amendments offered for the purpose of limiting dilatory proceedings in the courts may yet be attached to the bill by a majority composed of combined Democratic and Republican votes. The President's Message on the Standard Oil investigation gave such an impetus to the Lodge amendment, bringing the pipe lines under the regulative powers of the Inter-State Commerce Commission, that it passed the Senate unanimously.

sioner of the Bureau of Corporations, on the oil industry of the country. The investigation conducted by Mr. Garfield, of which his report and the President's Message are the first fruits, was undertaken in accordance with a resolution of Congress passed February 15, 1905. The Garfield report "is of capital importance," says the President, in view of the effort now being made to regulate railway rates. The President asserts that the Standard Oil Company "has benefited enormously up almost to the present moment by secret rates, many of these secret rates being clearly unlawful." He points out the significance of the fact that the railroads corrected many of these secret rates as soon as they were discovered by the Commissioner of Corporations. "This immediate correction, partial or complete, of the evil of secret rates is, of course, on the one hand, an acknowledgment that they were wrong, and yet were persevered in until exposed; and, on the other hand, a proof of the efficiency of the work that has been done by the Bureau of Corporations." The President promises that the Government will immediately consider the question of instituting prosecutions against the offenders disclosed by the investigation. He calls attention to the fact that the Standard Oil Company is not the only great corporation which has benefited, and is at this moment benefiting, in a wholly improper fashion, by an elaborate series of rate discriminations." The Sugar Trust and the New York Central Railroad are corporations which are specifically named in the Message as offenders. For the unjust and pernicious industrial and commercial conditions disclosed by the investigation the President proposes these remedies: First, confer upon the Inter-State Commerce Commission the power to take quick and effective action in regulating railroad rates. Second, permit the railroads to combine, under conditions prescribed by Congress, in order to protect themselves, their stockholders, and the public against the favors and discriminations demanded and sometimes extorted by the trusts. Third, empower the Government by its agents to examine into the conduct and

affairs of the railways as thoroughly and specifically as the bank examiners now examine into the affairs of National banks. Fourth, where a great industrial monopoly "by unfair or unlawful methods has crushed out home competition," revive that competition by some such law "as that which has already passed the House putting alcohol used in the arts and manufactures in the free list." Fifth, provide that all coal and oil land now held by the Government as public domain or as Indian territory shall not be sold, but shall be permanently retained by the Government; this land "should be leased only on such terms and for such periods as will enable the Government to keep entire control thereof." The Outlook has long stood for the economic and industrial principles upon. which these specific legislative remedies are based, and regards their public and official espousal by the President as of profound importance to the country. We discuss the Message, its genesis and its industrial, economic, and political effect, more fully in another column.

In 1904 there had been The Garfield special discontent with Report the conditions controlling the distribution and transportation of oil in and beyond Kansas, and the Congressional resolution to which reference has been made directed particular attention to that State. While this has been taken account of in the investigation carried on by the Bureau of Corporations, its report is not exclusively upon any special field; such a report would be unfair because purely local conditions do not determine the price of crude oil or of its products or afford a proper basis for understanding the conditions of that industry. Therefore the scope of the Garfield investigation included the crude oil production of the United States, its relation to the world's supply, the prices and methods of purchase; the use, development, and control of pipe lines; the refining of oil; the organization, ownership, and relation of the companies engaged in the production, manufacture, and distribution of oil. Special interest was developed from the in

facts regarding distribution, obtained by the examination of thousands of entries in railway records. Upon this particular subject of distribution a Summary of Mr. Garfield's report, together with his letter of submittal to the President, was published last week, to be followed later by publication of the general report. About nine-tenths of the manufacture of refined oil is controlled by the Standard Oil Company. Its largest refineries are located at the great centers of distribution, which are connected by pipe lines with the crude oil fields. The independent refineries are generally located at the oil fields, a disadvantage which has been, says Mr. Garfield, greatly increased by secret discrimination in railway freight rates, inter-State and State, favoring the Standard Oil Company, thus giving to it monopolistic control in the greater portion of the country. Among the railway companies implicated in the report are the Pennsylvania, New York Central, New York, New Haven, and Hartford, Illinois Central, Southern, Chicago, and Alton, Chicago and Eastern Illinois, and Chicago, Burlington, and Quincy. The limitation of the competitive area by this railway discrimination has so greatly increased the Standard's control that, after deducting the freight rate, the prices of ordinary illuminating oil are, it is claimed, usually from two to five cents a gallon higher in the non-competitive than in the competitive fields. The report declares that through secret rates the Standard saved, during 1904, about three-quarters of a million dollars-a sum representing the difference between published and secret rates. This practically unassailable control of the oil market, however, is due not only to secret but to open arrangement of rates, says the report, especially because of the absence of prorating arrangements in New England; to unjust classifications and rules of shipment, and finally to discriminations in the treatment of private tank cars. Through its pipe lines and fleets of oilcarrying vessels the Standard is an active and powerful competitor of the railways themselves; indeed, except in the Texas and California fields, it has already taken the transportation of crude oil almost entirely away from the rail

carriers. Hence it might have been expected that the railways would seek to build up the development of independent oil enterprises, which, necessarily relying on rail transportation only, would have furnished traffic. Instead, however, the natural disadvantages of the independent producers and shippers have been enormously increased by the action of the railways in granting discriminations, forced by a greater power than any railway corporation-the Standard Oil Company. The Summary of the Garfield report now made public and outlined above indicates that the full report will contain detailed charges supported by evidence which cannot be satisfactorily answered by mere general denials.

The Standard Oil Company's Defense

An official reply, how

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ever, was at once made by the Standard Oil Company to the Garfield Summary. In its nature it is in part a general denial of the charges, in part a refusal to admit jurisdiction. The report, says the reply, is "absolutely unfair and unjust;" moreover, the common charge that the Company's business "has been built up by railroad favoritism is ridiculous and false." This investigation grew out of the Kansas oil field dispute, yet the assertion is made that Mr. Garfield refused to include and make public the facts about Kansas, although importuned to do so by the Company, which declares that its conduct in Kansas was lawful and just and was held so to be by the courts. Coming to the charges of discrimination, the reply points out that many of the cases cited by Mr. Garfield relate to rate-making within State territory, and that neither the Bureau of Commerce and Labor nor the Inter-State Commerce Commission has" any control whatever over rates unless they relate to inter-State commerce. With regard to such charges as that the Standard Oil Company has had a monopoly in the New England territory because the railways there have refused to prorate, it is said that if this is so the railways and not the Company would seem to be blamable, and that in point of fact the railroads are obliged to

contend with freight-carrying over Long Island Sound. In short, "the New England roads believe they can make more money by a refusal to prorate, and if in so doing they are violating the proprieties, clearly they and not the Standard Oil Company should be made the object of attack." Denial is made flatly and in the broadest terms that secret or unlawful rates are obtained by the Standard Oil Company from the railways. Mr. Garfield, it is said, admits that no rebates in the technical sense on inter-State business were discovered after an exhaustive examination. The secret rates alleged by Mr. Garfield to exist are declared not to have been secret at all and not to involve unlawful discrimination, while the Company's attorneys comment caustically on Mr. Garfield's phrase, “Of course there may be other secret rates which the Commission has not discovered," as being "hardly fair or manly." An extended argument is made on the question of pipe lines to the effect that the Company, having constructed these pipe lines at great cost, is entitled to the advantage given to it by the existence of the lines-an advantage which, the Company seems to imply, Mr. Garfield and the President would deny it. The Company says: "Are we to have no advantage because we constructed these pipe lines? Is the amount invested and the interest on that investment to count for nothing?" The point is illustrated by an analogy as follows: "Take two men going to Boston; one uses an eight-thousand-dollar automobile to go to New London, and there takes the train. Is he to have no advantage in rate over the man who leaves New York and travels all the way by rail?" The pipe lines, instead of being built by the Company by special agreement with the railway companies, as alleged by Mr. Garfield, were, it is said, made in the face of violent opposition by the railways. It is claimed that the so-called secret rates have been filed with the Inter-State Commerce Commission as the law requires, and that this is shown by Mr. Garfield's own report. As to the use of private cars, it is said that in the oil business the movement is so slow that private tank-car owners do not make excessive profits. In answer to

the objection brought against making a through rate by combining two separate State rates, thus violating the spirit of the law though observing its letter, it is said that the Inter-State Commerc: Commission has itself held this practice to be lawful and proper. Finally, the fullest investigation is courted, and the assertion is made that "the statement that the Standard Oil Company has largely by unfair and unlawful methods crushed out home competition' is fully answered by the fact that home competition has always existed, is steadily growing, and that there are now at least 125 competitive refineries in the United States." The very fact that the Standard Oil Company replies officially with such promptness and fullness to these charges shows a marked change of attitude toward the public and the law; and in itself proves the seriousness with which Mr. Garfield's charges are to be taken. Whatever may be said respecting the issues of fact involved in the Standard Oil Company's published defense, that defense emphasizes the justice of the public demand, voiced by the President in his Message, for Governmental examination, Governmental report, and Governmental supervision of the entire conduct and affairs of the great inter-State corporations.

Resumption of Anthracite Mining

An early return to their accustomed employment by the 150,000 anthracite coal mine workers after a suspension of nearly six weeks is forecast at this writing by the action of the Scranton Convention in accepting the proposition of the operators for a continuance of the award of the Anthracite Coal Strike Commission. This Convention of more than five hundred duly elected representatives of the mine employees assembled at Scranton, Pennsylvania, on May 3, and on the third day of its session, after accepting the report of its Scale Committee, adjourned until May 8 to hear a final report as to the success of further negotiations which the Committee was authorized to complete with representatives of the operators, Following a brief account of the pre

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vious negotiations carried on by the mine workers' committee with the operators and their rejection by the latter, the report of the Scale Committee adopted by the Convention provides for a resumption of work by the anthracite employees on the basis of the award of the Coal Strike Commission for such period of time as may be agreed upon mutually between representatives of the employers and employees, but on the condition that those who suspended work on April 1, or since that time, or who have been dismissed because they stated that they would refuse to work if a strike were declared, are reinstated in their former positions and working places. The Scale Committee was authorized to proceed at once to secure an agreement with the coal-mining companies on this basis, the suspension of work to continue until such an agreement had been made and its terms approved by the Convention, for the latter purpose an adjournment being taken to the following Tuesday. This proposition of the operators-that is, to continue the Commission's award of 1903-was chosen in place of the alternative of submitting to at least a majority of the Commission the question whether any changes in the conditions of the anthracite industry have occurred since the award of the Commission in 1903 which require that the award should be modified as to wages of the employees, or the adjustment of complaints through the Conciliation Board or otherwise. The real reason why the operators' arbitration proposition was not regarded favorably by the Convention is to be found in the fact that it made possible a reduction of the earnings of the more important class of mine workers-the contract minerswithout any assurance of an increase for the other groups of employees. Since the strike of 1902 the activity at the mines has given unusually steady employment to the contract miners, and has enabled this group to earn exceptionally high wages. As the contract miners make up the dominant group among the mine employees, any reduction in their wages would have meant disaster to the United Mine Workers of America. Rather than risk this possi

bility, and clearly realizing that conditions generally were not promising for the success of a strike, the Convention accepted the only other course of action open to it-the acceptance of the operators' proposition to continue present conditions as laid down by the award of the Strike Commission. This means, of course, a continuance of the Conciliation Board which has performed such useful service the past three years. This satisfactory outcome to the deliberations of the Mine Workers' Convention is recognized as being largely due to the influence of President Mitchell, the course adopted being the one recommended by him in his speech to the delegates.

Lawlessness in the Mining Regions

A second conflict between idle mine workers and the properly constituted authorities of Pennsylvania since the inauguration of the coal-mining suspension on April 1 occurred at Mount Carmel, in the hardcoal region, on April 30. The first outbreak was on April 16 at Windber, eight miles from Johnstown, in the central soft-coal field, and resulted in the killing of four men and a boy and the wounding of many more as a result of deputy sheriffs firing into a crowd whose members were attempting to rescue from jail twenty men arrested previously in the day for rioting. At Mount Carmel the conflict was between idle mine workers and twenty-two members of the State constabulary who had been called into the county at the request of its Sheriff, who claimed to be unable to maintain peace and order. While the State police were dining at one of the hotels in Mount Carmel a crowd of several thousand people, largely made up of boys and many foreigners, surrounded the place, and later followed the men along the thoroughfare, throwing sticks and stones. After repeated warnings, according to the best evidence obtainable, the police fired into the air to warn the mob to desist, but without effect, and then it was that Lieutenant Smith ordered them to fire into the crowd. Two volleys from the rifles of the police seriously wounded nine men a and dispersed the mob. Half