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The Outlook


Vol. 88
No. 1

Published by the Outlook Company, 287 Fourth Ave., New York, Chicago Office, Marquette Building.
Lawrence F. Abbott, President. William B. Howland, Treasurer. Karl V. S. Howland, Secretary.
Lyman Abbott, Editor-in-Chief. H. W. Mabie, Associate Editor. R.D. Townsend, Managing Editor.

$3 a year 10c. a copy

When the Stand- had no motive for shipping over the The Commissioner of ard Oil Company Alton at an illegal rate. Corporations and the

of Indiana was Standard Oil Company

4. Other products were carried be

fined twenty-nine tween the same points during the same million dollars for the violation of the period at rates ranging from five to ten Elkins Law, its officials appealed to pub- cents a hundred pounds. Therefore the lic opinion against the justice of the con- six-cent rate was a reasonable one. viction. The principal appeal was made 5. The Standard was advised by the in a statement by Mr. James A. Moffett, rate clerk of the Alton that the six-cent the President of the Indiana Company, rate had been filed with the Inter-State which was reported in The Outlook Commerce Commission, and it therefore shortly after its appearance. The Com- had no reason to suppose that the rate missioner of Corporations, whose Bureau was illegal. collected the material on which the indictment was based, has now issued a

Commissioner Smith

The Commissioner's statemeri in reply to the allegations of

replies to these argu

Reply Mr. Moffett. It will be remembered

ments in a statement that the charge on which the Standard which may be summarized as follows: was convicted was that of having ac- 1. Mr. Moffett's contention seems to cepted from the Chicago and Alton Rail- be that there was no rebate because the way a rate of six cents a hundred pounds Standard did not actually pay the higher on oil shipped from Whiting, Indiana, to rate and have the difference of twelve East St. Louis, Illinois, when the only cents a hundred pounds actually rerate openly published and filed with the turned to it in money. This is merely Inter-State Commerce Commission, and an evasion ; the rate constituted a rebate therefore the only legal rate, was eight- in essence, if not in form. He seems to een cents. The allegations of the Stand- hold that there was no discrimination ard may be briefly summarized as fol- because no one else is known to have lows:

paid the eighteen-cent rate. On the con1. There was no question of rebate or trary, this very situation proves that not discrimination in the case ; it was merely only was there discrimination, but that a question whether the six-cent rate was this discrimination had worked out its legal.

logical result by producing a complete 2. Six cents was an open, legal rate on state of monopoly in the vicinity of oil from Chicago to East St. Louis, and Chicago. an “application sheet" extending this 2. The application sheet merely stated rate to Whiting had actually been filed that the rates from Chicago should apply with the Inter-State Commerce Com- also from Whiting, enumerated the tariffs mission.

to which it referred, and named specific3. During the two years covered by ally the tariff containing the eighteenthe indictment the Chicago and Eastern cent rate ; but it made no mention of the Illinois Railroad had a lawful published unfiled " Special Billing Order "containand filed rate between Whiting and East ing the six-cent rate. " Of course this St. Louis of six and a quarter cents, and sort of thing was absolutely no notice to the Standard shipped over two thousand any one of the unpublished six-cent rate, cars of oil a year over that road at that nor was it intended to be.” rate. Therefore the Standard could have 3, The Chicago and Eastern Illinois


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rate was not only no justification for the method of collecting freight charges, Alton shipments, but it was an additional through the local agent, was not followed wrong in itself. It was quite as secret in these cases; all the collections were as the Alton rate. It was contained in

made through the general offices. The a single mimeograph sheet filed with the Standard knew that this method of Inter-State Commerce Commission, give collecting freight charges was entirely ing a rate on oil from Dolton, Illinois, exceptional; it knew that its shipments to East St. Louis of six and one-quarter were being “false billed” and “blind cents; a note indicated that the rate billed.” “Moreover, the only possible might also be used from Whiting. There motive for that secrecy which the railis no evidence that this sheet was ever roads admit that they maintained regarddistributed to any shipper except the ing this rate was to conceal it from Standard. Dolton is a town of insignifi- competitors of the Standard, and it is cant size just outside Chicago. “Its inconceivable that the Standard should only claim to note is that it has been for not have known of the practices which many years the point of origin for this inured solely to iis advantage." Bearing and similar secret rates.” This obscure on this professed ignorance is the fact rate was still further concealed by the that memoranda found in the files of the filing of the same eighteen-cent tariff Chicago and Eastern Illinois Railroad which the Alton had; and this rate was show, in the case of another illegal rate the only one which could ever come to from Whiting, that the traffic manager the notice of the ordinary shipper. of the Standard initiated it, dictated it

4. The question is not one of the rea- to the railways, and arranged for its sonableness of the six-cent rate. “The secrecy by frequent consultations with question is whether this rate constituted the highest officers of the road. The a discrimination as against other ship report of the Commissioner of Corporapers of oil. Oil refiners in Chicago and tions on the transportation of petroleum, elsewhere were not vitally concerned in issued in May, 1906, showed that similar the rates on popcorn.” Mr. Moffett also rates especially favoring the Standard claimed in his statement that “thousands were in existence covering a large part of tons of freight have been shipped of the United States. It is significant from these points during the last fifteen that every such rate criticised by the years under the same circumstances as Bureau as illegal was canceled by the the Standard shipments.” He was there- railways within three months. The upon summoned before the Grand Jury, offense on which the Standard and was unable to substantiate this convicted was, therefore, as Judge Landis statement by definite information as to a remarked in imposing the fine, by no single pound of freight shipped, except means its first offense; it was merely by the Standard, at a rate less than the one of a great system of discriminatory lawful rate. “This remarkable admis- rates practically covering the country. sion of Mr. Moffett shows the general When a case is still before the courts, value of his defense."

as this case still is, on appeal, it ought 5. Every way-bill for oil shipped over not to be tried before any other tribunal, the Alton was “ falsely billed," showing either of the press or of public opinion. on its face a rate of eighteen cents, al- But the Standard has appealed from a though the actual rate collected from question of strict legality to a question the Standard was six cents. On the of equity and good faith ; and such an Chicago and Eastern Illinois the way- appeal makes it not improper for the bills were “blind billed,” no rate appear- Commissioner of Corporations, whose ing on them until they reached the gen- Bureau was responsible for the indicteral offices of the railway. Both schemes ment, to meet the charges which it emeffectually concealed the actual rate bodies. Whether he has done so to the from the local freight agent and any one

satisfaction of the public, the public must else outside the general offices; and both determine. It should be remembered schemes were used only with shipments that one jury of presumably impartial by the Standard. Furthermore, the usual citizens has already recorded its opinion

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on the Standard's defense. But the altered if public opinion insists upon it at courts will finally determine whether the

Other constructive defects named Standard's conviction and sentence were are that the battle-ships are so low that in just.

some of them one-third of the guns would

be useless in a seaway in which foreign Hardly had the Ameri- battle-ships with their high bows could fire The Defects

can battle-ship fleet fairly their forward turret guns with ease, while of Our Navy

started on its voyage to the same handicap exists still more with the Pacific when a discussion that bids the armored cruisers; that our battlefair to amount to a controversy broke out ships alone in the practice of the world over the needs and defects of our navy. have open vertical shafts from turret to Indeed, there are two such discussions magazine, and that to this fact have been now under way-one growing out of Mr. due some of the terribly fatal explosions Henry Reuterdahl's article in McClure's we have had in time of peace, while Magazine, the other out of the resigna- the danger in actual battle would be tion of Admiral Brownson. Mr. Reuter- extreme; that our gun-ports show too dahl, well known as a painter of modern much aperture, and might easily be war-ships and naval battle scenes, is also entered by enemy's shells; that the gunan associate member of the United States crews are not well protected from hostile Naval Institute and the American editor fire; and that there is a lack of torof a periodical dealing with naval topics. pedoes in the ships and of torpedo-boat He has studied the subject closely for destroyers. It would seem that these years, has spent much time on war-ships assertions are easily capable of proof or at sea and in port, and few if any lay- disproof, and if the good of the service men can speak with fuller knowledge. and the country permit, an authoritative His article is not a heated argument, but statement would certainly be welcomed a a calm, straightforward marshaling of by the public. The non-official replies, statements said by him to represent facts so far as we have noticed, consist of known to all trained observers in our rather indefinite assertions of exaggeranavy and also to the naval authorities of tion. It must be remembered, howother countries. Thus no national secrets ever, that the science of naval construcare told to foreigners, and in America the tion is not fixed and unchangeable; revelation is to the general public rather new ideas are constantly coming up, than to the expert. Mr. Reuterdahl and it is inevitable that our older ships asserts plainly that our navy is unpre

should be inferior to the new ones.
pared for war. To show this he first
points out constructive defects. The
worst fault of this kind, he says, is that

Turning to the subject of

Naval the shell-proof belt of armor, which

the personnel of the navy,

Administration should guard that vital part, the water

Mr. Reuterdahl declares line, in our battle-ships does not show six that in enthusiasm and intelligence the inches above water, when the ships are men and officers are unsurpassed. But fully equipped for sea; it should show he adds that the higher officers, owing to more than double this; the English a system of promotion which exists only Dreadnought has a main armor-belt eight in the United States, are too old, when feet below the water and five above; they reach high rank, to be at their best. the French ships have always had a Our admirals average sixty-one, the high, continuous belt from five to eight captains fifty-eight, and, as the retiring feet above the water-line. “No other age is sixty-two, those who should be our nation has made this fundamental mis- ablest naval commanders have little extake, except in the case of a few isolated perience in fleet maneuvers and broad ships.” Even in our five battle-ships now leadership before they must give way to building at a total cost of forty-five mill- others. Here again foreign naval deion dollars the same terrible blunder has partments are superior, in that they have been made ; three are too far advanced a method of selection not solely, or to make change possible, while two can be practically solely, dependent on length

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