1915: Beer, Whisky & Brandeis

CapdomeTopicsWashIn 1915, two years before the U.S. entered the First World War, the brewing industry and railroads “battled” over the freight classification for beer. A change in classification would affect the rates pegged to that class. The Brandeis mentioned in this Traffic World article, chosen mostly for its subject matter and style, I’ll admit, is none other than future U.S. Supreme Court Justice Louis Dembitz Brandeis, whose progressive stance on social issues and fight against industrial monopolies, including railroads, apparently didn’t endear him to the editors of The Traffic World (see note below).

The Traffic World, July 3, 1915.

Beer and the Brandeis Theories. — “The Charge of the Teutonic Allies Against the Brandeis Salient of the Official Classification Labyrinth” is the unofficial title of the case made by the brewing interests the early part of this week against the proposed change of beer rating from fifth to fourth class, led by Luther M. Walter, with Warren Burkhart, Richard Muehlbuerg, William Pister, Louis Feickert, Charles Bertachy and “Cupid” Zielke as lieutenants. It was one of the best-natured fights imaginable. E.S. Ballard, in charge for the railroads, only occasionally put a frown on his face and “went after” a witness. It was a happy family, because all the men concerned have met around the table at classification meetings and fought out similar questions without the aid of the Commission. Mr. Ballard’s amiability was attributed, in large measure, to the mass of facts brought forward by the traffic managers of the breweries tending to show that the Brandeis suggestion that beer does not pay its share of the cost of the service performed by the railroads is a conclusion drawn from shipments that were not typical. They showed car-mile and ton-mile earnings of 8 cents and 5.4 mills on 112 cars, three of which were oysters. The fact, however, taken from more than 32,000 shipments, is that the car-mile earnings are 15.2 cents and the per ton per mile 9.4, both of which are way above the average. The severity of the attack upon the honesty of the so-called Brandeis list of “unremunerative” commodities thus far made (it is not yet complete) tends to strengthen the query as to how much the Brandeis service for the Commission was really worth. The result thus far shown is a large accumulation of suspicion, on the part of shippers, as to the fairness of exhibits prepared for the Commission under the direction of such a man as Brandeis.*

“If the charge of 35 cents is allowed to become effective, whisky in bottles sent in small quantities will probably bear the highest transportation rate to be found in the world.”

Whisky in the Next Room. — While the hearing with regard to the proper rating of beer was going on in the small ballroom of the New Willard, the query as to whether it was proper to make a minimum charge of 35 cents on a bottle of whisky, expressed into dry territory, was going on in a small room adjoining. But the brewers were not interested in the troubles of the mail order liquor houses. Nor were the latter losing a single wink of sleep on account of the proposal of the railroads to hoist the rating on beer in carloads from fifth to fourth class. It was possible to induce the brewers to listen to objections to rating skunks at one and a half times first class, but they did not care a continental about the minimum on the hard liquor. If the charge of 35 cents is allowed to become effective, whisky in bottles sent in small quantities will probably bear the highest transportation rate to be found in the world. There is nothing to compare with the rate on a single bottle of whisky. But the charge is not imposed with any idea that any great amount of revenue will come from it. The express people are not caring for the business, because it gets them into too much trouble with local authorities. Their lawyers believe that many of the state laws are unconstitutional, but they do not care to test the question, for the simple reason that if they should do so the “drys” would charge them with being in partnership with the “liquor interests.” They believe that charge would be made, in the event they fought, even if they could show that the revenue resulting from the “partnership” amounted to a small fraction of one per cent of the total.

— 30 —

* As special counsel to the Interstate Commerce Commission, Louis D. Brandeis argued against a general rate increase sought by U.S. railroads in 1914. The future U.S. Supreme Court justice advocated “scientific management” by railroads to better understand the cost of shipping various commodities.  “Railroads which make and sell a most varied transportation service do not know the cost of any of the services which they furnish,” he wrote. “Without knowledge of the cost of a particular service it is impossible for railroad officials to protect the company’s revenues against unremunerative rates.” [pp. 47-48 of “The Passenger Train in the Motor Age: California’s Rail and Bus Industries” by Gregory Lee Thompson, Ohio University Press, 1993.] Not knowing true shipping costs is still an problem today, if not for railroads, for many trucking companies.

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