THE CHAIRMAN. It was a general departure from the so-called published rates of more than 50 per cent? MR. LUCE. Oh, yes.[373] Concrete Instances The practice of quoting a lower rate to one person than to another in order to secure a specific shipment, or in consideration of an agreement for exclusive patronage of the railroad which granted the rebate, was clearly a case of personal discrimination. A concrete case which is illustrative of the general policy with which we are concerned was brought to public notice in California in the year 1886, when the Central Pacific was charged with rebating large sums to two favored shippers named Friedlander and Reed. It appeared in fact that the railroad had paid $6,000 at one time to Friedlander for rent of a wharf at Vallejo, and 25 cents a ton on a shipment to a certain Mr. Reed at Knight’s, on business destined to Vallejo. These payments were explained by the company as follows: The Friedlander wharf vouchers were explained by showing that, in consideration of the rental of said wharf, Friedlander agreed to, and did, send the whole of his immense grain purchases on the Sacramento River, and at other competing points on the California Pacific, by rail instead of by steamer and sail; and when one remembers the enormous quantities of wheat and barley purchased by him, the “grain king of California,” there is no doubt that the contract was a source of much profit to the company. The Reed voucher for 25 cents per ton for loading wheat from his warehouse at Knight’s Landing, was fully explained by Reed himself. He had a warehouse at that point on the bank of the river, and water craft would take his grain at the same rate charged by the railroad company, loading and unloading the same at their own expense, while the railroad company required the shipper to do the loading. When asked to patronize the railroad, Reed told Mr. Towne, general manager, that he could have the grain carried by water at the same price that the Southern Pacific demanded, and that the steamers and schooners would do the loading without charge. In order to secure the business, Mr. Towne told Reed that if he would ship by rail, the company would allow him 25 cents per ton for loading, thus securing business for the road that would have been otherwise lost. “Special” Contract System In all probability the Reed and Friedlander cases were but two of a great many instances of similar favors granted to large shippers, and to shippers strategically placed on water lines in California. This is certainly implied in the testimony of Mr. Stubbs before the United States Pacific Railway Commission. Moreover, there is good independent evidence to the same effect in the available data concerning the “seasonal” or “special” contract system which became notorious in California in the late seventies and early eighties. The outlines of this last-named arrangement were as follows: