Railroads: Rates and RegulationsRipley, William Zebina
History
Railroads: Rates and Regulations
Ripley, William Zebina
Railroads -- Freight -- Rates -- United States; Railroads and state -- United States
The elevation cases concerning the legitimacy of a special payment
for unloading grain in private elevators, have been under dispute for
years. Their validity has recently been affirmed by the Supreme Court
in an important decision in 1911.[194] This litigation illustrates
the difficulty of defining rebates as an expression of personal
favoritism. In 1899, the Union Pacific Railroad made a contract
with Peavey & Company at Council Bluffs to erect an elevator and to
transfer grain for a charge of one and one-quarter cents a hundred
pounds. This arrangement was objected to by competing railroads on
the ground that it gave compensation to a private concern, engaged
in general grain business for the handling of its own property. The
Union Pacific insisted that the expedient was necessary and proper
as a means for promptly unloading its cars at Omaha. The Commission,
after investigation, sanctioned the contract. In 1907, the matter again
came before the Commission upon complaint of other railroads competing
with the Union Pacific along the Missouri river. It was alleged that
the continuance of the elevator allowance by the Union Pacific would
virtually compel all other roads to make similar allowances. Still the
Commission adhered to its former conclusion that undue discrimination
did not result. The practice, however, gradually spread until all the
roads at Missouri river points put in an allowance of three-fourths of
one cent as an elevator charge. This brought forth a complaint from the
lines at St. Louis that traffic was being diverted from that point as
a result; and the Commission, once more considering the matter, held
that the practice was prejudicial to public interest. Conditions, in
fact, had changed, mainly through the increase of through shipments
to the East without transfer at the Missouri river. The Commission,
therefore, held that when such transfer took place, it was for the
accommodation of local grain merchants, who ought to pay for the
service rendered. At this stage of the proceedings, the matter went
to the Supreme Court of the United States upon appeal. The decision
finally upheld the Commission, in holding that the payment of an
elevation allowance was not unlawful, but that if paid to one elevator,
it must be paid to all. The bearing of this case upon the larger issue,
of payments by railroads for special services rendered by, shippers
cannot fail to be of great importance in the future.
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