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When the Standard Oil Company of Indiana was fined twenty-nine million dollars for the violation of the Elkins Law, its officials appealed to public opinion against the justice of the conviction. The principal appeal was made in a statement by Mr. James A. Moffett, the President of the Indiana Company, which was reported in The Outlook shortly after its appearance. The Commissioner of Corporations, whose Bureau collected the material on which the indictment was based, has now issued a statement in reply to the allegations of Mr. Moffett. It will be remembered that the charge on which the Standard was convicted was that of having accepted from the Chicago and Alton Railway a rate of six cents a hundred pounds on oil shipped from Whiting, Indiana, to East St. Louis, Illinois, when the only rate openly published and filed with the Inter-State Commerce Commission, and therefore the only legal rate, was eighteen cents. The allegations of the Standard may be briefly summarized as follows:

The Commissioner of
Corporations and the
Standard Oil Company

1. There was no question of rebate or discrimination in the case; it was merely a question whether the six-cent rate was legal.

2. Six cents was an open, legal rate on oil from Chicago to East St. Louis, and an "application sheet" extending this rate to Whiting had actually been filed with the Inter-State Commerce Commission.

3. During the two years covered by the indictment the Chicago and Eastern Illinois Railroad had a lawful published and filed rate between Whiting and East St. Louis of six and a quarter cents, and the Standard shipped over two thousand cars of oil a year over that road at that rate. Therefore the Standard could have

$3 a year 10c. a copy

had no motive for shipping over the Alton at an illegal rate.

4. Other products were carried between the same points during the same period at rates ranging from five to ten cents a hundred pounds. Therefore the six-cent rate was a reasonable one.

5. The Standard was advised by the rate clerk of the Alton that the six-cent rate had been filed with the Inter-State Commerce Commission, and it therefore had no reason to suppose that the rate was illegal.

The Commissioner's Reply

Commissioner Smith replies to these arguments in a statement which may be summarized as follows:

1. Mr. Moffett's contention seems to be that there was no rebate because the Standard did not actually pay the higher rate and have the difference of twelve cents a hundred pounds actually returned to it in money. This is merely an evasion; the rate constituted a rebate in essence, if not in form. He seems to hold that there was no discrimination because no one else is known to have paid the eighteen-cent rate. On the contrary, this very situation proves that not only was there discrimination, but that this discrimination had worked out its logical result by producing a complete state of monopoly in the vicinity of Chicago.

2. The application sheet merely stated that the rates from Chicago should apply also from Whiting, enumerated the tariffs to which it referred, and named specifically the tariff containing the eighteencent rate; but it made no mention of the unfiled "Special Billing Order" containing the six-cent rate. "Of course this sort of thing was absolutely no notice to any one of the unpublished six-cent rate, nor was it intended to be."

3. The Chicago and Eastern Illinois

rate was not only no justification for the Alton shipments, but it was an additional wrong in itself. It was quite as secret as the Alton rate. It was contained in a single mimeograph sheet filed with the Inter-State Commerce Commission, giving a rate on oil from Dolton, Illinois, to East St. Louis of six and one-quarter cents; a note indicated that the rate might also be used from Whiting. There is no evidence that this sheet was ever distributed to any shipper except the Standard. Dolton is a town of insignificant size just outside Chicago. "Its only claim to note is that it has been for many years the point of origin for this and similar secret rates." This obscure rate was still further concealed by the filing of the same eighteen-cent tariff which the Alton had; and this rate was the only one which could ever come to the notice of the ordinary shipper.

4. The question is not one of the reasonableness of the six-cent rate. "The question is whether this rate constituted a discrimination as against other shippers of oil. Oil refiners in Chicago and elsewhere were not vitally concerned in the rates on popcorn." Mr. Moffett also claimed in his statement that "thousands of tons of freight have been shipped from these points during the last fifteen years under the same circumstances as the Standard shipments." He was thereupon summoned before the Grand Jury, and was unable to substantiate this statement by definite information as to a single pound of freight shipped, except by the Standard, at a rate less than the lawful rate. "This remarkable admission of Mr. Moffett shows the general value of his defense."

5. Every way-bill for oil shipped over the Alton was "falsely billed," showing on its face a rate of eighteen cents, although the actual rate collected from the Standard was six cents. On the Chicago and Eastern Illinois the waybills were "blind billed," no rate appearing on them until they reached the general offices of the railway. Both schemes effectually concealed the actual rate from the local freight agent and any one else outside the general offices; and both schemes were used only with shipments by the Standard. Furthermore, the usual

method of collecting freight charges, through the local agent, was not followed in these cases; all the collections were made through the general offices. The Standard knew that this method of collecting freight charges was entirely exceptional; it knew that its shipments were being "false billed" and "blind billed." "Moreover, the only possible motive for that secrecy which the railroads admit that they maintained regarding this rate was to conceal it from competitors of the Standard, and it is inconceivable that the Standard should not have known of the practices which inured solely to its advantage." Bearing on this professed ignorance is the fact that memoranda found in the files of the Chicago and Eastern Illinois Railroad show, in the case of another illegal rate from Whiting, that the traffic manager of the Standard initiated it, dictated it to the railways, and arranged for its secrecy by frequent consultations with. the highest officers of the road. The report of the Commissioner of Corporations on the transportation of petroleum, issued in May, 1906, showed that similar rates especially favoring the Standard were in existence covering a large part of the United States. It is significant that every such rate criticised by the Bureau as illegal was canceled by the railways within three months. The offense on which the Standard was convicted was, therefore, as Judge Landis remarked in imposing the fine, by no means its first offense; it was merely one of a great system of discriminatory rates practically covering the country.

When a case is still before the courts, as this case still is, on appeal, it ought not to be tried before any other tribunal, either of the press or of public opinion. But the Standard has appealed from a question of strict legality to a question of equity and good faith; and such an appeal makes it not improper for the Commissioner of Corporations, whose Bureau was responsible for the indictment, to meet the charges which it embodies. Whether he has done so to the satisfaction of the public, the public must determine. It should be remembered that one jury of presumably impartial citizens has already recorded its opinion

on the Standard's defense. But the courts will finally determine whether the Standard's conviction and sentence were just.

Hardly had the AmeriThe Defects can battle-ship fleet fairly of Our Navy started on its voyage to the Pacific when a discussion that bids fair to amount to a controversy broke out over the needs and defects of our navy. Indeed, there are two such discussions now under way-one growing out of Mr. Henry Reuterdahl's article in McClure's Magazine, the other out of the resignation of Admiral Brownson. Mr. Reuterdahl, well known as a painter of modern war-ships and naval battle scenes, is also an associate member of the United States Naval Institute and the American editor of a periodical dealing with naval topics. He has studied the subject closely for years, has spent much time on war-ships at sea and in port, and few if any laymen can speak with fuller knowledge. His article is not a heated argument, but a calm, straightforward marshaling of statements said by him to represent facts known to all trained observers in our navy and also to the naval authorities of other countries. Thus no national secrets are told to foreigners, and in America the revelation is to the general public rather than to the expert. Mr. Reuterdahl asserts plainly that our navy is unprepared for war. To show this he first points out constructive defects. The worst fault of this kind, he says, is that the shell-proof belt of armor, which should guard that vital part, the waterline, in our battle-ships does not show six inches above water when the ships are fully equipped for sea; it should show more than double this; the English Dreadnought has a main armor-belt eight feet below the water and five above; the French ships have always had a high, continuous belt from five to eight feet above the water-line. "No other nation has made this fundamental mistake, except in the case of a few isolated ships." Even in our five battle-ships now building at a total cost of forty-five million dollars the same terrible blunder has been made; three are too far advanced to make change possible, while two can be

altered if public opinion insists upon it at once. Other constructive defects named are that the battle-ships are so low that in some of them one-third of the guns would be useless in a seaway in which foreign battle-ships with their high bows could fire their forward turret guns with ease, while the same handicap exists still more with the armored cruisers; that our battleships alone in the practice of the world have open vertical shafts from turret to magazine, and that to this fact have been due some of the terribly fatal explosions we have had in time of peace, while the danger in actual battle would be extreme; that our gun-ports show too much aperture, and might easily be entered by enemy's shells; that the guncrews are not well protected from hostile fire; and that there is a lack of torpedoes in the ships and of torpedo-boat destroyers. It would seem that these assertions are easily capable of proof or disproof, and if the good of the service and the country permit, an authoritative statement would certainly be welcomed by the public. The non-official replies, so far as we have noticed, consist of rather indefinite assertions of exaggeration. It must be remembered, however, that the science of naval construction is not fixed and unchangeable; new ideas are constantly coming up, and it is inevitable that our older ships should be inferior to the new ones.

Naval Administration

Turning to the subject of the personnel of the navy, Mr. Reuterdahl declares that in enthusiasm and intelligence the men and officers are unsurpassed. But he adds that the higher officers, owing to a system of promotion which exists only in the United States, are too old, when they reach high rank, to be at their best. Our admirals average sixty-one. the captains fifty-eight, and, as the retiring age is sixty-two, those who should be our ablest naval commanders have little experience in fleet maneuvers and broad leadership before they must give way to others. Here again foreign naval departments are superior, in that they have a method of selection not solely, or practically solely, dependent on length

of service. The President has urged a new personnel bill on Congress, but in vain. In reply to the questions, How can all these things be possible? How can such blunders be perpetuated? Mr. Reuterdahl declares, "No human being is responsible. It is done by a system an organization so constituted that its very nature compels it to perpetuate mistakes." In other words, the present naval bureau system is impervious to demands for reform, because it first originates all plans and then sits in judg-ment on those plans. There should be behind the Secretary of the Navy an expert board of advisers quite apart from the executive operation of the naval service. As the army has a general staff, so the navy must have an advisory board. Such is the briefest outline of an article which deserves the most careful attention. It is all but certain that it will evoke a thorough discussion of the subject in Congress and before the country. All men agree that, whatever be the size of our navy, it should be to the last point efficient. If radical changes in methods of administration are really needed, they cannot begin too soon. If they are not needed, the country has the right to be convinced by authoritative testimony that Mr. Reuterdahl's apparently temperate and certainly circumstantial assertions are incorrect or unimportant.

The resignation of Rear-Admiral a Hospital Ship? Brownson, Chief of the Bureau of Navigation, is due to the fact that he has been overruled by the Department in his contention that a hospital ship should be under the command of an officer belonging to the line as distinguished from the staff of the navy. Apart from the merits of this controversy, the first thing that strikes a layman is that the question is not one for controversy at all; it should be settled (and, so far as we can judge, has been settled) by the highest authority in the United States navy. In point of fact, Mr. Bonaparte, when Secretary of the Navy, officially indorsed a report of a joint board of medical officers relating to

Who Should Command

this and other matters, and his indorsement contained this positive declaration:

The Department holds that such a ship [a hospital ship], when in commission, should be treated as a floating hospital, and as such placed under the command of a medical competent sailing master. In war time the officer, her navigation being controlled by a entire crew should be, so far as possible, specially enlisted from civilians as men of hospital corps, and for such time only as their services will probably be needed. In time of peace the crew, except such as are engaged in hospital duties, could be organized substantially as is that of a naval auxiliary, but subject to the provision above set forth as to the command.

It has been said that this declaration was not officially distributed to the whole service as a similar declaration was in the army, but it is admitted that it was placed before all the bureau chiefs for their guidance. Admiral Brownson's letter of resignation has not been made public at this writing, but it is intimated that he holds that his position is sustained by the law. Nothing but very clear evidence that the law forbids the placing of medical officers in command of hospital ships can be advanced as a legitimate argument against the authority and discipline of the service. All this dispute is the outcome of a long and regrettable controversy about the relations of staff and line in the navy. Even Senator Hale, the Chairman of the Naval Affairs Committee, although he inclines to agree with Admiral Brownson in this particular case, admits that staff officers should receive positive rank and complete recog nition by title, in the navy as in the army. The case presented by SurgeonGeneral Rixey, who, by the way, has also the rank of rear-admiral, is a strong one. Dr. Rixey arouses not only sympathy but indignation when he points out that one result of the present dispute is that our battle-ship fleet has gone off on its Pacific cruise without a hospital ship, and that the Relief, which should be in commission now as a hospital ship, cannot join the fleet for three months, so that the fleet's fifteen thousand men for that time will be without other medical succor than is afforded by the surgeons and sick-bays of the individual ships. Dr. Rixey points out that, as a rule, in the past hospital ships have been commanded