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The Mind's Eye of Reform: The ICC's Bureau of Statistics and Accounts and a Vision of Regulation, 1887–1940

Published online by Cambridge University Press:  13 December 2011

Paul J. Miranti Jr
Paul J. Miranti Jr
Affiliation:
Paul J. Miranti, Jr., is assistant professor of accounting at the School of Business, Rutgers University.
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Abstract

By examining the relationship between measurement and regulation at the Interstate Commerce Commission between 1887 and 1940, the following article sheds light on a little-studied component of the commission's work. It argues that the nature of the accounting and statistical tools used by the ICC had an impact on the regulatory process, specifically that the difficulties encountered in the development of accurate and relevant railroad statistics often undermined the agency's ability to achieve its regulatory goals. At the same time, a changing economic, political, and social environment affected the regulators' perception of the type of data necessary to gain control of the industry's structure.

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Articles
Information
Business History Review , Volume 63 , Issue 3 , Autumn 1989 , pp. 469 - 509
Copyright
Copyright © The President and Fellows of Harvard College 1989

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References

1 Brief, Richard, “The Evolution of Asset Accounting,” Business History review 40 (Spring 1966): 1–23CrossRefGoogle Scholar; Brief, Richard, “Nineteenth Century Accounting Error,” Journal of Accounting Research 3 (Spring 1966): 1–30Google Scholar; Richard Dusenberry, “The Effect of ICC Regulation on the Accounting Practices of Railroads since 1887,” Academy of Accounting Historians (1965), Working Paper No. 62; Solomons, David, “The Historical Development of Costing,” in Studies in Cost Analysis, ed. Solomons, David (Homewood, Ill., 1968), 3–49Google Scholar; and Richard Vangermeersch, “Comments on Disclosures in the Baltimore and Ohio Annual Reports from 1828 through 1850,” Academy of Accounting Historians (1979) Working Paper No. 62.

2 See, for example, Benson, Lee, Merchants, Farmers and Railroads: Railroad Regulation and New York Politics, 1850–1887 (Cambridge, Mass., 1955)CrossRefGoogle Scholar; Bernstein, Marver, Regulating Business by Independent Commission (Princeton, N.J., 1955), chap. 3CrossRefGoogle Scholar; Carson, Robert B., “Railroads and Regulation Revisited: A Note on the Problems of Historiography and Ideology,” The Historian 34 (May 1972): 437–46CrossRefGoogle Scholar; Cushman, Robert, The Independent Regulatory Commission (London, 1947)Google Scholar, chap. 1; Fellmeth, Robert C., The Interstate Commerce Commission: The Public Interestand the ICC (New York, 1970)Google Scholar; Galambos, Louis and Pratt, Joseph, The Rise of the Corporate Commonwealth: United States Business and Public Policy in the 20th Century (New York, 1988), 43–53Google Scholar; Harbeson, Robert W., “Railroads and Regulation, 1887–1916: Conspiracy or Public Interest?” Journal of Economic History 27 (June 1967): 218–39CrossRefGoogle Scholar; Hilton, George W., “The Consistency of the Interstate Commerce Act” Journal of Law and Economics 19 (Oct. 1966): 87–113CrossRefGoogle Scholar; Hoogenboom, Ari and Hoogenboom, Olive, A History of the ICC: From Panacea to Palliative (New York, 1976)Google Scholar; Huntington, Samuel P., “The Marasmus of the ICC: The Commission, the Railroads and the Public Interest,” yale Law Review 61 (April 1952): 467–509CrossRefGoogle Scholar; Kerr, K. Austin, American Railroad Politics, 1914–1920: Rates, Wages, and Efficiency (Pittsburgh, Pa., 1968)Google Scholar; Kolko, Gabriel, Railroads and Regulation, 1877–1916 (New York, 1965)CrossRefGoogle Scholar; MacAvoy, Paul W., The Economic Effects of Regulation: The Trunk Line Carriers and the Interstate Commerce Commission before 1900 (Cambridge, Mass., 1965)Google Scholar; McFarland, Carl, Judicial Control of the Federal Trade Commission and the Interstate Commerce Commission, 1920–1930 (Cambridge, Mass., 1933)CrossRefGoogle Scholar; Martin, Albro, Enterprise Denied: Orgins of the Decline of the American Railroads (New York, 1971)Google Scholar; Martin, Albro, “The Troubled Subject of Railroad Regulation in the Gilded Age—A Reappraisal,” Journal of American History 61 (Sept. 1974): 339–71CrossRefGoogle Scholar; Miller, George, Railroads and the Granger Laws (Madison, Wis., 1971)Google Scholar; Nash, Gerald D., “Origins of the Interstate Commerce Act of 1887,” Pennsylvania History 24 (July 1957): 181–90Google Scholar; Nash, , “The Reformer Reformed: John H. Reagan and Railroad Regulation,” Business History Review 29 (June 1955): 189–96CrossRefGoogle Scholar; Purcell, Edward Jr, “Ideas and Interests: Business and the Interstate Commerce Act,” Journal of American History 54 (Dec. 1967): 54–78CrossRefGoogle Scholar; Sharfman, I. L., The Interstate Commerce Commission: A Study in Administrative Law and Procedure, 4 vols. (New York, 1931–1937)Google Scholar; and Vietor, Richard H. K., “Businessmen and the Political Economy: The Railroad Rate Controversy of 1905,” Journal of American History 64 (June 1977): 47–66.CrossRefGoogle Scholar

3 Adams addressed these problems in probity in several articles, including “The Erie Row,” American Law Review 3 (Oct. 1868): 41–86; “Railroad Inflation,” North American Review 109 (Jan. 1869): 130–64; and “A Chapter of Erie,” ibid. (July 1868): 30–106. See also the excellent study by McCraw, Thomas K., Prophets of Regulation: Charles Francis Adams, Louis D. Brandeis, James M. Landis and Alfred E. Kahn (Cambridge, Mass., 1984), 17–25.Google Scholar Other useful studies include Kirkland, Edward C., Charles Francis Adams, Jr.: A Patrician at Bay (Cambridge, Mass., 1965)CrossRefGoogle Scholar; and Upson, Helena Rena, “Order and System: Charles Francis Adams, Jr., and the Railroad Problem” (Ph.D. diss., University of Iowa, 1969).Google Scholar See Barnes, Irston R., Public Utility Control in Massachusetts: A Study in the Commission Regulation of Security Issues and Rates (New Haven, Conn., 1930), 1–13Google Scholar; and Cushman, Independent Regulatory Commission, 20–25.

4 See Hadley, Arthur T., Railroad Transportation: Its History and Its Laws (New York, 1885), 47–62Google Scholar; and Ripley, William Z., Railroads: Finance and Organization (New York, 1915), chaps. 2, 3, 7, and 8.Google Scholar

5 For earnings power, see Eaton, J. Shirley, Railroad Operations: How to Know Them from a Study of Accounts and Statistics (New York, 1900), chap. 1, esp. 5–8Google Scholar; and Jas. H. Oliphant & Co., The Earnings Power of Railroads, ed. Mundy, J. H. (New York, 1905–1947).Google Scholar For system building, see Campbell, Edward G., The Reorganization of the American Railroad System, 1893–1900 (New York, 1938)Google Scholar; Chandler, Alfred D. Jr, The Visible Hand: The Managerial Revolution in American Business (Cambridge, Mass., 1977)Google Scholar, chap. 5; and ICC, Intercorporate Relationships of Railways in the United States as of June 30, 1906 (Washington, D.C., 1908).Google Scholar

6 For state regulation see Barnes, Public Utility Control in Massachusetts, 9–13; Cushman, Independent Regulatory Commission, 20–25; Hadley, Railroad Transportation, chap. 9; Hoogenboom and Hoogenboom, ICC, 6; ICC, Statistics of Railways of the United States, 1888 (Washington, D.C., 1888), 4–5Google Scholar; and ICC, Third Annual Report of the Interstate Commerce Commission (Washington, D.C., 1889), 38–42Google Scholar; Ripley, Railroads: Finance and Organization chap. 9; Smykay, Edward K., “The National Association of Railroad and Utility Commissioners as the Originators and Promoters of Public Policy for Public Utilities” (Ph.D. diss., University of Wisconsin, 1955), 66–90.Google Scholar See also Chandler, Alfred D. Jr, Henry Varnum Poor: Business Editor, Analyst and Reformer (Cambridge, Mass., 1956).CrossRefGoogle Scholar

7 See Hadley, Railroad Transportation, 20–21 and chap. 6; and Ripley, William Z., Railroads: Rates and Regulation (New York, 1912), chap. 2 and 71–77, 185–89.Google Scholar

8 Chandler, The Visible Hand, chaps. 4 and 5.

9 See Benson, Merchants, Farmers and Railroads; Cushman, Independent Regulatory Commission, 22–27; Hoogenboom and Hoogenboom,. ICC, 6–8; Miller, Railroads and the Granger Laws, chaps. 1–3; and for Standard Oil, see Nevins, Allan, Study in Power: John D. Rockefeller, Industrialist and Philanthropist, 2 vols. (New York, 1953–1955), 1: 60–70 and 86–94.Google Scholar

10 Hadley, Railroad Transportation, 134–40; and Miller, Railroads and the Granger Laws, chaps. 4, 5, and 7.

11 Wabash Ry. Co. v. Illinois, 118 US 557 (1886). See also Hoogenboom and Hoogenboom, ICC, 7–8; and Sharfman, ICC, 1: 16 and 19.

12 Statutes at Large 379: 1 Supp. to Rev. Stat. US 529.

13 For Adams's background and development, see Bigelow, S. Lawrence, et al. , “Henry Carter Adams, 1851–1921,” Journal of Political Economy 30 (April 1922): 201–11CrossRefGoogle Scholar; Coats, A. W., “Henry Carter Adams: A Case Study in the Emergence of the Social Sciences in the United States, 1850–1900,” Journal of American Studies 2 (Oct. 1968): 170–97CrossRefGoogle Scholar; Furner, Mary O., Advocacy and Objectivity: A Crisis in the Professionalization of American Social Science, 1865–1905 (Lexington, Ky., 1968), 49–52Google Scholar; Rosenberry, Mavin B., “Henry Carter Adams,” in Michigan and the Cleveland Era, ed. Babst, Earl D. and Velde, Lewis Vander (Ann Arbor, Mich., 1948)Google Scholar; and Volin, Tazar, “Henry Carter Adams, A Critic of Laissez Faire,” Journal of Social Philosophy 33 (April 1938): 235–56.Google Scholar See also Dictionary of American Biography (DAB), s.v. “Henry Carter Adams“; and for connection to Engel see Two Essays by Henry Carter Adams, ed. Dorfman, Joseph (New York, 1954), 11.Google Scholar

14 For background and outlook of Cooley see “Thomas M. Cooley,” in Michigan and the Cleveland Era, 77–108, and DAB, s.v. “Thomas McIntyre Cooley.” See also Jones, Alan, “Thomas M. Cooley and the Interstate Commerce Commission: Continuity and Change in the Doctrine of Equal Rights,” Political Science Quarterly 81 (Dec. 1966): 602–27CrossRefGoogle Scholar; and Jones, , “Thomas M. Cooley and ‘Laissez Faire’ Constitutionalism: A Reconsideration,” Journal of American History 53 (March 1967): 751–71CrossRefGoogle Scholar; and Weeks, O. Douglas, “Some Political Ideas of Thomas Mclntyre Cooley,” Southwestern Political Science Quarterly 6 (June 1925): 30–39.Google Scholar See also the excellent dissertation by Churchman, John H., “Federal Regulation of Railroad Rates, 1880–1898” (Ph.D. diss., University of Wisconsin, 1976)Google Scholar, chaps. 3–4 for an extensive discussion of Cooley's impact on the early activities at the ICC; and Hoog-enboom and Hoogenboom, ICC, 17–20 and 25–31. For Adams see Dorfman, Two Essays by Henry Carter Adams, 43–44; Adams, Henry Carter, “A Bureau of Railway Statistics and Accounts,” Independent 44 (Oct. 1892): 1384–85Google Scholar; and Adams, Henry Carter, “A Decade of Federal Railway Regulation,” Atlantic Monthly 81 (1898): 437–38.Google Scholar

15 See the affectionate dedication to the AARAO in Adams, H. C., American Railway Accounting: A Commentary (New York, 1918)Google Scholar; and Smykay, “National Association,” 1–8.

16 See Herring, A. Pendleton, federal Commissioners: A Study of Their Careers and Qualifications (Cambridge, Mass., 1936), 45–48 and 124–25.CrossRefGoogle Scholar

17 See, for example, the continuing efforts to standardize federal and state accounting in National Association of Railroad Commissioners, Proceedings of a National Convention, 1894 (Washington, D.C., 1894), 51–57Google Scholar, and Proceedings 1907, 159–87. For examples of memorials to Congress in 1897 and in 1907, see Proceedings 1907, 84–86.

18 See, for example, letters to C. I. Sturgis, 2 Sept. 1892, in ICC Letterbook, 1891–1893, 264–66, and 1 Nov. 1904, in ICC Letterbook, 1904–1905, 277–78; letter to J. W. Renner, 14 June 1904, in ICC Letterbook, 1903–1904, 412–14; letter to John Riebenbach, 12 March 1902, in ICC Letterbook, 1901–1903, 106; letter to J. Carstensen, 28 March 1893, in ICC Letterbook, 1891–1894, 495–96; and letter to R. A. White, 12 March 1903, in ICC Letterbook, 1901–1903, 446–47, all in H. C. Adams Papers, University of Michigan Library, Ann Arbor, Mich.; see ICC, Statistics of Railways, 1896, 111–20; and Statistics of Railways, 1898, 121–24.

19 See also, for example, letters of H. C. Adams to Stephen Little, 2 and 4 Dec. 1889, in ICC Letterbook, 1889–1892, 84–87 and 95–97, respectively; and letter of H. C Adams to the ICC, 7 Dec. 1889, ibid., 102–8; letter of H. C Adams to Wheelock G. Veazey, 22 May 1893, in ICC Letterbook, 1892–1893, 490–91; letter from H. C. Adams to Walter F. Wilcox, 25 March 1903, in ICC Letterbook, 1903–1904, 52–54. See also ICC, Statistics 1888, 2–5; Statistics 1889, 41–42; and Statistics 1892, 81–86.

20 See letter to W. G. Veazey, 23 March 1893, 403, in ICC Letterbook 1891–1893.

21 Ibid., 404–5. See also the synopsis of the position of such German contributors as Gustav Cohn about rates as a form of taxation in Ely, Owen, Railway Rates and Cost of Service (Boston, 1924), 54–55.Google Scholar

22 See ICC, Statistics of Railways, 1893, 83 for discontinuation of freight-passenger cost allocations; Kipley, Railroads: Rates and Regulations, 67–70 for a problem of joint cost allocations, and 166–84 for a discussion of the relative merits of cost of service and value of service pricing in railroad regulation.

23 See Friedlaender, Ann, The Dilemma of Freight Transport Regulation (Washington, D.C., 1969), 8–16Google Scholar. See also ICC, Value of Service in Rate-Making, Statement No. 5912 (Washing on, D.C., 1959), 10–12; and Rates and Charges on Food Products, 3 ICR 93 (1890); and Excessive Freight Rates on Food Products, 4 ICR 48 (1890).

24 For culmination of studies of interline connections see ICC, Intercorporate Relation ship of Railways. For other reporting see, for example, Statistics of Railways, 1895: classification of railways, 15–21 and 145–275; earnings and expenses, 55–75 and 352–538; capitalization and valuation, 41–52 and 541–76; balance sheet, 77–82 and 577–644; equipment, 27–34; employment, 34–40; and accidents, 82–98.

25 For general discussion of these problems see Sharfman, ICC, 3B: discriminatory rates, 359–413; the influence of distance on rate evaluation, 538–42; the effects of terminal and special handling charges on rates, 493–519; evaluations of long-haul/short-haul discriminations, 542–72; and the influence of competition at terminal points on rates, 572–625.

26 Ibid.: the use of value of service and cost of service in rate evaluations, 425–63; the effects of commodity values on rate evaluation, 477–93; the influence of established rate, 463–76; the influence of special costs on rates, 493–518; and the influence of railroad finances on rate evaluation, 449–52.

27 Ibid.: discussion of zone of reasonableness, 417–63; influence of socially important goods on rates, 518–21; and influence of out-of-pocket expenses in rate evaluation, 444–49 and 472–73.

28 See objections to cost data introduced in Cattle Raisers Association v. Missouri K. & T. R. Co., 11 ICR 296, 334–35 (1905), and in the subsequent Cattle Raisers Association of Texas v. Missouri K. & T. Ry. Co., 13 ICC 418, 426–27 (1908). A similar position was also applied in later cases such as Mountain Ice Co. v. D. L. & W. RR. Co., 15 ICC 305, 318–19 (1909), and Phoenix Iron & Steel Co. v. G. H. & H. RR. Co., 36 ICC 175, 177 (1915). See also discussion of the problems of relating costs and rates in Clark, J. M., Studies in the Economics of Overhead Costs (New York, 1923), chap. 14Google Scholar; and Sharfman, ICC, 3B: 452–59.

29 Rates and Charges on Food Products, 3 ICR 92 (1890), and Coal and Oil Investigation, 31 ICC 193 (1914).

30 For a recounting of Adams's frustrations in persuading his colleagues of the importance of statistical data, see his letters to Walter F. Wilcox of Cornell, who was serving as an advisor to the Census Bureau in their efforts to take charge of railroad reporting, 25 and 27 May 1903, in ICC Letterbook, 1903–1904, 50–59 and 60–64, as well as letter to commissioner Martin A. Knapp about this matter, 1 June 1903, in ICC Letterbook, 1903–1904, 74–80, all in Adams Papers; see Churchman, “Federal Regulation of Railroad Rates,” 128–35. For tensions between Adams and McCain, see letter from T. M. Cooky to H. C Adams, 8 Oct. 1888, in box 2; and letter of H. C Adams to C. C. McCain, 21 March 1892, in ICC Letterbook, 1891–1893, 124–25, all in Adams Papers.

31 197 US 536. See also Ripley, Railroads: Rates and Regulation, 515–16. For a discussion of contemporary capital asset accounting, see the two articles by Brief, “The Evolution of Asset Accounting,” and “Nineteenth Century Accounting Error.” See also the follow ing correspondence of H. C. Adams: letter to the ICC, 15 April 1890, in ICC Letterbook, 1889–1892, 297–302; letter to T. M. Cooley, 25 Oct. 1890, ibid., 346–47; and letter to W. F. Wilcox 25 May 1903, in ICC Letterbook, 1904–1904, 53, all in Adams Papers; ICC, Statistics of Railways, 1889, 42–43.

32 One of the most controversial reorganizations was that of the Chicago and Alton Railroad by E. H. Harriman in 1898. The revaluation of assets to reestablish a positive net worth was sharply criticized by W. Z. Ripley in Railroads: Finance and Organization, 259–67. See also the differing opinions of Kennan, George in E. H. Harriman: A Biography, 2 vols. (Cambridge, Mass., 1922), chaps. 27–28Google Scholar; and Bonbright, James C., Railroad Capitalization: A Study in the Principles of Regulation of Railroad Securities (New York, 1920), 169–85.Google Scholar

33 ICC, Annual Reports: 1902, 80–82; 1903, 22–26; 1904, 10–19 and 19–23; 1905, 10–11 and 11–12; 1895, 109–11; 1896, 115–16; 1897, 62–71; 1899, 12–20; and 1900, 14–21.

34 For a general discussion of the role of the Court in defining the scope of authority of the ICC, see McFarland, Judicial Control of the … Interstate Commerce Commission, chaps. 1 and 4. For the problem of evidence in early cases, see Churchman, “Federal Regulation of Railroad Rates,” 251–77, 294–302; and Ripley, Railroads: Rates and Regulation, 457–58, 461–62.

35 ICC v. Baltimore and Ohio Railroad Company, 145 US 263 (1892); and Churchman, “Federal Regulation of Railroad Rates,” 304–8; Social Circle Case, 162 US 184 (1896); ICC v. Alabama Midland Case, 168 US 144 (1898); and Maximum Freight Rate Case, 167 US 479 (1897). For a discussion of these cases, see: Ripley, “Railroads: Rates and Regulation, 461–79; and Sharfman, ICC, 1: 26 (Social Circle); 1: 30–31 (Alabama Midland); and 1: 26–28 (Maximum Freight). See also Churchman, “Federal Regulation of Railroad Rates,” 324–40 for a discussion of the Social Circle Case; US v. Trans-Missouri Freight Association, 166 US 290 (1897); and US v. Joint Traffic Association, 171 US 505 (1898). See also Hoogenboom and Hoogenboom, ICC, 35–36; and Sharfman, ICC, 1:34 and 80.

36 Smyth v. Ames, 169 US 466 (1898). See also Sharfman, ICC, 1: 16, 74–77, and 3B: 7; and Smykay, “National Association,” 92–96; 169 US 466, 546–47 (1898).

37 See, for example, Chase, Harvey S., “A Brief History of the Movement Towards Uniform Municipal Reports and Accounts in the United States,” The Accountant, 15 Oct. 1904, 375Google Scholar; Hartwell, Edward M., “The Financial Reports of Municipalities with Special Reference to the Requirement of Uniformity,” Proceedings of the National Municipal League (Philadelphia, Pa., 1900), 124–25Google Scholar; and “Report of the Committee on Uniform Municipal Accounting and Statistics,” ibid. (1903), 249. See Merrill, Horace S. and Merrill, Norma G., The Republican Command (Lexington, Ky., 1971)Google Scholar for competition between Roosevelt and Robert M. LaFollette to consolidate leadership in the West. See also Mowry, George, The Era of Theodore Roosevelt, 1900–1912 (New York, 1958), 49–50Google Scholar; and Pringle, Henry, Theodore Roosevelt: A Biography (New York, 1956), 384–85.Google Scholar

38 See DAB and National Cyclopedia of ‘American Biography (NCAB), s.v. “Chauncey Mitchell Depew,” and s.v. “Thomas Collier Platt.” For conflicts between Roosevelt and these leaders, see Mowry, Era of Theodore Roosevelt, 106–9; and Pringle, Theodore Roosevelt, 316–20.

39 Ripley, Railroads: Rates and Regulation, chap. 15; Sharfman, ICC, 1: 35–40; and Skowronek, Stephen, Building a New American State: The Expansion of National Administrative Capacities, 1877–1920 (1982; rpt. Cambridge, England, 1984), 249–51.Google Scholar

40 Blum, John, The Republican Roosevelt (Cambridge, Mass., 1954), 92–105Google Scholar; Hoogenboom and Hoogenboom, ICC, 48–59; Kolko, Railroads and Regulation, 129–44; Mowry, Era of Theodore Roosevelt, 203–6; Ripley, Railroads: Rates and Regulation, chap. 16; Sharfman, ICC, 1: 40–52; and Skowronek, Building a New American State, 251–59.

41 See Hoogenboom and Hoogenboom, ICC, 50–52; Kolko, Railroads and Regulation, 112–15; Mowry, Era of Theodore Roosevelt, 200–203; Pringle, Theodore Roosevelt, 294–96; and Skowronek, Building a New American State, 251–59. Adams had earlier outlined his objectives for accounting in “A Bureau of Railway Statistics and Accounts,” 1384–85.

42 NCAB, s.v. “Harry Turner Newcomb.” See Regulation of Railroad Rates: Hearings Before the Committee on Interstate Commerce… December 16, 1904 to May 23, 1905, 59th Cong., 1st Sess., 1905, S. Doc. 243, 5 vols. See the following letters to H. C Adams: from H. T. Newcomb, 16 March, 14 April, 25 May, and 9 Aug. 1905; from Stephen B. Elkins, 30 Sept. 1905; and from Martin A. Knapp, 14 March 1906, all in box 8, Adams Papers. See also letters from H. C. Adams to Stephen B. Elkins, 17 June 1905, in Personal Letter-book, 1903–1906, 798–801; 11 and 15 Nov. 1905 in ICC Letterbook, 1904–1905,446–47 and 450–53; and to Balthasar H. Meyer, 30 Jan. 1906, in Personal Letterbook, 1906, 92–94, all in Adams Papers. For legislative background also see Axelrod, Bernard, “Railroad Regulation in Transition, 1897–1905: Walker D. Hines of the Railroads v. Charles A. Prouty of the ICC” (Ph.D. diss., Washington University, 1975)Google Scholar, chap. 6; and Blum, John M., “Roosevelt and the Hepburn Act,” in Letters of Theodore Roosevelt, ed. Morison, Elting E., et al. , 8 vols. (Cambridge, Mass., 1951–1954), 6:1558–71.Google Scholar

43 See Adams, H. C., “Administrative Supervision of the Railways under the Twentieth Section of the Act to Regulate Commerce,” Quarterly Journal of Economics 22 (May 1908): 364–83CrossRefGoogle Scholar; ICC, Annual Report, 1907, 139–44; and ICC, Statistics of Railways, 1907, 9–24.

44 Martin, Enterprise Denied, 183–93; Kolko, Railroads and Regulation, 188–95; Ripley, Railroads: Rates and Regulation, chap. 17; Sharfman, ICC, 1: 52–70; and Skowronek, Building a New American State, 261–66.

45 See letters of H. C. Adams to Rep. Charles E. Townsend, 27 and 31 Aug. 1909, in ICC Letterbook, 1909–1910, 71–75 and 116–26. See ako Dorfman, Two Essays by Henry Carter Adams, 50.

46 Ripley, Railroads: Rates and Regulation, 594–96; and Sharfman, ICC, 3B:1–32 for discussion of factors involved in evaluating rate level adjustments; Advance in Rates—Eastern Case, 20 ICC 243 (1911); and Advance in Rates-Western Case, 20 ICC 307 (1911). See also Ripley, Railroads: Rates and Regulation, 594–600; and Sharfman, ICC, 3B: 33–43.

47 Martin, Enterprise Denied, 194–230; and Sharfman, ICC, 3B: 43–48.

48 For state valuations, see Ripley, Railroads: Finance and Organization, chap. 9. See reports on the progress of the Michigan study in letters of H. C. Adams to Rep. Charles R. E. Townsend, 11 Sept. 1903, in Personal Letterbook, 1903–1906, 39–44 and 52–59, in Adams Papers. For Census Bureau study see letters to H. C. Adams from W. J. Meyer of the Census Bureau, 3 March, 29 May, 8 June, and 5 Aug. 1905, all in box 8 of Adams Papers.

49 See ICC, Annual Reports: 1903, 26–32; 1907,149–50; and 1908, 83–85. See also Ripley, Railroads: Finance and Organization, chap. 4.

50 Minnesota Rate Cases, 230 US 352 (1913); Shreveport Cases, 234 US 342 (1914). See Hoogenboom and Hoogenboom, ICC, 76–77; Pusey, Merlo J., Charles Evans Hughes, 2 vols. (New York, 1951), 1: 303–9Google Scholar; and Ripley, Raibvads: Bates and Regulation, 627–38.

51 DAB, s.v. “Robert Marion LaFollette“; Hoogenboom and Hoogenboom, ICC, 81; and Sharfman, ICC, 1: 117–32 and 3A: 33–42 and 95–319.

52 Five Per Cent Case, 31 ICC 351 (1914); Western Rate Advance Case, 35 ICC 497 (1915); and Fifteen Per Cent Case, 45 ICC 303 (1917). See also Hoogenboom and Hoogenboom, ICC, 70–79; Martin, Enterprise Denied, 267–349; and Sharfman, ICC, 3B: 33–97.

53 See Ripley, Railroads: Finance and Organization, 313–26; Sharfman, ICC, 3B: 73–74, 456, and 458–60; and Ely, Railway Rates and Cost of Service, 8–10, 108–10. See also note 50 above for Minnesota case. For Meyer's background, see NCAB, s.v. “Balthasar H. Meyer.” For accounting in Wisconsin see Holmes, Fred L., Regulation of Railroads and Public Utilities in Wisconsin (New York, 1915)Google Scholar, chap. 9, esp. 117–19. For reintroduction of cost allocations, see ICC, A Brief History of the Separation of Operating Expenses between Freight and Passenger Services, Statement No. 577 (Washington, D.C., 1957), 1–9Google Scholar, as well as In Re Separation of Operating Expenses, 30 ICC 676 (1914).

54 For Brandeis's attack, see Haber, Samuel, Efficiency and Uplift: Scientific Management in the Progressive Era, 1890–1920 (Chicago, 1964), 51–58Google Scholar; McCraw, Prophets of Regulation, 91–94; Martin, Enterprise Denied, 198–224; and Mason, Alpheus T., Brandeis: A Free Man's Life (New York, 1946), chap. 20.Google Scholar Brandeis was also instrumental in persuading the newly organized Federal Trade Commission in 1916 to promote cost accounting as a mechanism both for the social control of business and for providing a rational basis for management; see Miranti, Paul J. Jr, “Associationalism, Statism, and Professional Regulation: Public Accountants and the Reform of the Financial Markets, 1896–1940,” Business History Review 60 (Autumn 1986): 449–52CrossRefGoogle Scholar; and Miranti, , Accountancy Comes of Age: The Rise of an American Profession, 1886–1940 (Chapel Hill, N.C., 1990), 106–10.Google Scholar

55 For Lane's ideas about the importance of costs in assessing rate reasonableness, see Advances in Rates-Western Case, 20 ICC 47–70 (1911). For Lorenz's background, see NCAB s.v. “Max Otto Lorenz.” For discussion of the Lorenz curve see Wallis, W. A. and Roberts, H. V., Statistics: A New Approach (Glencoe, Ill., 1956), 257, 264.Google Scholar For his early research findings, see Lorenz, M. O., “Constant and Variable Railroad Expenditures and the Distance Tariff,” Quarterly Journal of Economics 21 (Feb. 1907): 283–98CrossRefGoogle Scholar; and Lorenz, “Cost and Value of Service in Railroad Rate-Making,” ibid. 30 (Feb. 1916): 205–32. For an overview of federal costing activities, see Sharfman, ICC, 3B: 316–19, 458–60.

56 For an analysis of the development of marginal costing at the Southern Pacific and other western roads, see the excellent study by Thompson, Gregory L., “Misused Product Costing in the American Railroad Industry: Southern Pacific Passenger Service between the Wars,” Business History Review 63 (Autumn 1989): 510–54.CrossRefGoogle Scholar See abo Commodity Rates to Pacific Coast Terminals and Intermediate Points, 32 ICC 611–58, esp. 621–27.

57 Hoogenboom and Hoogenboom, ICC, 81; and Sharfman, ICC, 1: 106 and 146–47.

58 Hoogenboom and Hoogenboom, ICC, 86–88; and Sharfman, ICC, 1: 153–58 and 166.

59 Hoogenboom and Hoogenboom, ICC, 94–97; Kerr, American Railroad Politics, 211–12; Norris, William Leonard, Railroad Consolidation under the Transportation Act of 1920 (New York, 1946), chap. 2Google Scholar; and Sharfman, ICC, 1: 177–244, and 3A: 51–55.

60 Texas Midland Railroad, 75 ICC 1 (1918); and San Pedro, Los Angeles & Salt Lake RR, 75 ICC 463 (1923).

61 Norris, Railroad Consolidation, 64–65, 90, and 281–85.

62 Increased Rates, 1920, 58 ICC 220 (1920); and Reduced Rates, 1922, 68 ICC 676 (1922). See also Hoogenboom and Hoogenboom, ICC, 97–102; and Sharfman, ICC, 3B: 102–4.

63 Revisions in Western District, 113 ICC 3 (1926). See also Hoogenboom and Hoog-enboom, ICC, 102–3; and Sharfman, ICC, 1: 227–35 for Hoch-Smith Resolution, and 3B: 134–61, for rate case.

64 For Bauer, John, see “Renewal Costs and Business Profits in to Rising Prices,” Journal of Accountancy 28 (Dec. 1919): 413–19Google Scholar; “Recent Decisions by the Supreme Court of the United States on Valuation in Rate-Making,” American Economic Review 14 (June 1924): 289–300; Effective Regulation of Public Utilities (New York, 1925); “Rate Base for Railroad and Utility Regulation,” Journal of Political Economy 34 (Aug. 1926): 479–500; “Reproduction Cost and Desirable Public Utility Regulation,” Journal of Land and Public Utility Economics 4 (Oct. 1926): 408–26; and “New York Survey of Public Utility Regulation,” American Economic Review 20 (Sept. 1930): 381–99. For Bonbright's ideas, see Railroad Capitalization; “Value of the Property as the Basis of Rate Regulation,” Journal of Land and Public Utility Economics 2 (July 1926): 276–81; “Depreciation and Valuation for Rate Control,” Quarterly Journal of Economics 41 (Feb. 1921): 185–211; “Railroad Valuation with Special Reference to the O'Fallon Decision,” American Economic Review 18 (March 1928): 181–205; and “The Problem of Valuation—The Economic Merits of Original Cost,” Harvard Law Review 41 (March 1928): 593–622. For J. M. Clark, see Social Control of Business (Chicago, 1926), chaps. 21–23. The works of Hale, Robert L. on this topic include: “The Supreme Court's Ambiguous Use of ‘Value’ in Rate Cases,” Columbia Law Review 18 (March 1918): 208–29CrossRefGoogle Scholar; “The ‘Physical Value’ Fallacy in Rate Cases,” Yale Law Journal 30 (May 1921): 710–31; “Comment on Bauer's Recent Decisions on Valuation and Rate-Making,” American Economic Review 14 (June 1924): 264–67; and “Non-Cost Standards in Rate-Making,” Yale law Journal 36 (Nov. 1926): 56–67. See Vanderblue, , Railroad Valuation (Boston, 1917)Google Scholar; Railroad Valuation by the Interstate Commerce Commission (Cambridge, Mass., 1920); and, with Burgess, K. F., Railroads-Rates, Service, and Management (New York, 1923).Google Scholar

65 See DAB, s.v. “Louis Dembitz Brandeis,” and s.v. “Joseph Bartlett Eastman.” For use of prudent investment in Massachusetts, see Barnes, Public Utility Control in Massachusetts, chap. 4. See Fuess, Claude M., Joseph B. Eastman: Servant of the People (New York, 1952), 73–79.Google Scholar

66 Clark, Social Control of Business, chap. 20; Konefsky, Samuel J., The Legacy of Holmes and Brandeis: A Study in the Influence of Ideas (New York, 1956), 271–81Google Scholar; Urofsky, Melvin I., Louis D. Brandeis and the Progressive Tradition (Boston, 1981), 126–27Google Scholar; and Sharfman, ICC, 3A: 274–75. See also Brandeis's opinion in S. W. Tel. Co. v. Pub. Serv. Comm., 262 US 276.

67 See Clark, Social Control of Business, chap. 21.

68 Excess Income of St. Louis & O'Fallon Ry. Co., 124 ICC 3 (1927). See also Fuess, Joseph B. Eastman, 154–61; Mason, Brandeis, 547–51; and Sharfman, ICC, 3A: 268–86.

69 Sharfman, ICC, 3A: 268–301.

70 Fuess, Joseph B. Eastman, 161–65; and Mason, Brandeis, 551–53.

71 Telephone and Railroad Depreciation Charges, 118 ICC 295 (1926); Telephone and Railroad Depreciation Charges, 177 ICC 351 (1931). See also Sharfman, ICC, 3A: 51–55.

72 Hoogenboom and Hoogenboom, ICC, 119–21.

73 Fifteen Per Cent Case, 1931, 178 ICC 538 (1931), 179 ICC 215 (1931), 191 ICC 361 (1933). See also Hoogenboom and Hoogenboom, ICC, 121–23; and Sharfman, ICC, 3B:161–79 and 191.

74 Fuess, Joseph B. Eastman, chaps. 11–12; Hoogenboom and Hoogenboom, ICC, 125–27; and Sharfman, ICC, 3A: 424–29.

75 Hoogenboom and Hoogenboom, ICC, 127; and Sharfman, ICC, 3A: 310–11 and 494–99. For Bonbright's influence on regulatory accounting in New York, see State of New York, Report of Commission on Revision of the Public Service Commissions Law, 3 vols. (Albany, N.Y., 1930), 1: 16–24.Google Scholar

76 Friedlaender, Dilemma of Freight Transport Reaktion, 22–23; Friendly, Henry J., The Federal Administrative Agencies: The Need for Better Definition of Standards (Cambridge, Mass., 1962), 113–40CrossRefGoogle Scholar; Fuess, Joseph B. Eastman, chap. 13; Hoogenboom and Hoogenboom, ICC, 127–38; and Sharfman, ICC, 4: 99–121.

77 See Thompson, “The Misuse of Product Costing,” in this issue of the Business History Repiew for a discussion of the developing relationship among Lorenz, Clarence Day, and Ford K. Edwards during the 1920s and 1930s. The procedures followed in the development of regional operating costs estimates that were prepared under the supervision of Lorenz with the assistance of Ford K. Edwards are summarized in Rail Freight Service Costs in the Various Territories of the United States, 78th Cong., 1st sess., S. Doc. No. 63.

78 ICC, Value of Service in Rate-Making, 330–50 and 351–65; and Friedlaender, Dilemma of Freight Transport Regulation, 20–27. See also Williams, Ernest W. Jr, The Regulation of Rail-Motor Carrier Rate Competition (New York, 1957)Google Scholar, esp. chaps. 6–7 for equilibrating rates.

79 Many recent studies have criticized the distortive effects regulation has exerted on domestic transportation since the end of the Second World War. See, for example, the studies of: Bernstein, Regulating Business by Independent Commission; Friedlaender, Dilemma of Freight Transport Regulation, chaps. 5–8; Hoogenboom and Hoogenboom, ICC, chap. 5; Huntington, “The Marasmus of the ICC“; Meyer, John R., et al. , The Economics of Competition in the Transportation Industries (Cambridge, Mass., 1959)Google Scholar; and Nelson, John C., Railroad Transportation and Public Policy (Washington, D.C., 1959).Google Scholar

80 See Seely, Bruce E., Building the American Highway System: Engineers as Policy Makers (Philadelphia, Pa., 1987), chap. 4, esp. 83–87.Google Scholar

81 See McCraw, Prophets of Regulation, 188–92; and Miranti, Accountancy Comes of Age, chap. 8–9 for a discussion of the SEC's standardization of financial accounting. See also Miranti, “Associationalism, Statism, and Professional Regulation,” 465–68 for a comparison of objectives of accounting at the ICC and the SEC.

82 See Healy, Kent T., The Economics of Transportation in America: The Dynamic Forces in Development, Organization, Functioning and Regulation (New York, 1940), chap. 2.Google Scholar

83 See McCraw, Prophets of Regulation, chap. 7. For a concise view of the changing nature of American business and its relationships with government, see Galambos and Pratt, Rise of the Corporate Commonwealth, chaps. 9–11.

84 Motor Carrier Act of 1980 (P.L. 96–296); and the Stagger's Rail Act of 1980 (P.L. 96–448)