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Railroad Management and the Interplay of Federal and State Regulation, 1885–1916*

Published online by Cambridge University Press:  11 June 2012

William R. Doezema
William R. Doezema
Affiliation:
Teaching Fellow in History, Kent State University
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Abstract

A content analysis of two major rail journal leads the author to conclude that too many historians have overestimated the radicalism of state regulation and have also operated on the questionable assumption that rail managers wanted the elimination of patchwork state controls in favor of uniform national regulation. Further, he maintains that the Transportation Act of 1920 was more a reversal than a continuation or logical culmination of Progressive regulation.

Type
Research Article
Information
Business History Review , Volume 50 , Issue 2 , Summer 1976 , pp. 153 - 178
Copyright
Copyright © The President and Fellows of Harvard College 1976

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References

1 Kolko, Gabriel, Railroads and Regulation, 1877–1916 (Princeton, N.J., 1965).CrossRefGoogle Scholar For Kolko's analysis of state regulation, see pp. 89–90, 118, 151, 164–168.

2 Harbeson, Robert W., “Railroads and Regulation, 1877–1916: Conspiracy or Public Interest?,” Journal of Economic History, XXVII (June, 1967), 230–242CrossRefGoogle Scholar; Purcell, Edward A., “Ideas and Interests: Businessmen and the Interstate Commerce Act,” Journal of American History, LIV (December, 1967) 561–578CrossRefGoogle Scholar; Austin Kerr, K., American Railroad Politics, 1914–1920: Rates, Wages, and Efficiency (Pittsburgh, 1968)Google Scholar; Martin, Albro, Enterprise Denied: Origins of the Decline of American Railroads, 1897–1917 (New York, 1971)Google Scholar and “The Troubled Subject of Railroad Regulation in the Gilded Age – A Reappraisal,” Journal of American History, LXI (September, 1974), 339–371. For a review of the literature in history, economics, political science, and law concerning regulatory commissions, see McCraw, Thomas K., “Regulation in America: A Review Article,” Business History Review, XLIX (Summer, 1975), 159–183.CrossRefGoogle Scholar

3 Caine, Stanley P., “Why Railroads Supported Regulation: The Case of Wisconsin, 1905–1910,” Business History Review, XLIV (Summer, 1970), 175–189.CrossRefGoogle Scholar Caine has elaborated on his thesis in The Myth of a Progressive Reform: Railroad Regulation in Wisconsin, 1903–1910 (Madison, Wise, 1970).

4 Doster, James F., Railroads in Alabama Politics, 1875–1914 (Montgomery, Alabama, 1957).Google Scholar

5 Kirkland, Edward C., Industry Comes of Age: Business, Labor, and Public Policy, 1860–1897 (New York, 1961), 127.Google Scholar

6 For substantial use of rail journals, see Kolko's Railroads and Regulation and Purcell's, “Ideas and Interests.” The Railway Review, XXV (January 3, 1885), 3Google Scholar, stated that “the railway papers have striven faithfully to overcome the prejudices excited against the great interest they represent.” The Railway Age Gazette, LVIII (March 12, 1915), 432, noted that “our contemporary, the Traffic World is not in any sense a ‘railway organ’ as the Railway Age Gazette is often accused of being.”

7 The three major rail management organs of this period were the Railroad Gazette, Railway Review, and Railway Age. Each of the journals originated in Chicago, and the Railway Review and Railway Age were continuously published in that city. The Railroad Gazette was moved to New York in 1882. Railway Age was absorbed by the Railroad Gazette in 1908; the Railway Review ceased publication in 1926. Circulation figures for the Rauroad Gazette were officially listed as “exceeding” 4,000 in 1893, 5,500 in 1900, and 6,000 in 1905. Figures for the Railway Review were listed as “exceeding” 2,250 in 1893, 4,500 in 1900, and 6,200 in 1905. These figures are taken from N. W. Ayer & Son's American Newspaper Annual and Directory: A Catalogue of American Newspapers (Philadelphia, 1800–). These figures are not beyond reproof. Perhaps the best available index of the journals' status within the industry is the journals' recognition of each other. The Railroad Gazette, for example, stated that “of the leading American periodicals of this kind we need hardly do more than mention the names. Besides the Railroad Gazette, we may mention in the same field, the Railway Age and the Railway Review.” XXIV (May 6, 1892), 333. Both journals chosen for this study underwent title changes. The Railway Review became the Railway and Engineering Review in April 1897, but reverted back to Railway Review in January 1914. The Railroad Gazette became the Railroad Age Gazette in June 1908, the Railway Age Gazette in July 1909, only to be finally titled Railway Age in 1918. To avoid confusion, the two journals will be referred to as the Review and the Gazette.

8 Some neutrally-defined editorials did express opinions, but the references to regulation were neutral. A special problem developd with respect to coding editorials related to the Interstate Commerce Commission. This body produced a copious amount of statistics on various aspects of the rail industry. Many of the editorials that mentioned the ICC, therefore, merely acknowledged this agency as a source of statistical information from which to editorialize about nonregulative subjects. Since these kinds of editorials differed from other neutrally-defined editorials in that they did not occur within a potentially opinionative context, it was decided to eliminate them from the coded information. Editorials urging a “continuation” of regulation were defined to mean basic satisfaction with the regulation commented on.

9 Grouping data into four-year periods disguises, of course, shorter-term fluctuations, but it has the advantage of making long-term trends more discernible, in line with the purpose of this article. Some changes in the percentages would result if the data were arranged in different four-year periods, but these changes would not substantially alter the long-term picture.

As was mentioned, the positions of the two journals proved to be very compatible. The tables suggest, for example, thirty bases for percentage comparisons (three tables, each with five categories and two levels of government). When based on the thirty-two year proportions of the total number of editorials for each of the thirty percentage comparisons, the percentage variance averaged out at only 5.5 percent.

Of course, the methodology used in this study gives only a crude, general measurement of regulative positions; the statistics are essentially an aggregate of editorial responses to a variety of different regulatory issues and, in the case of Table 1, governmental authorities. Editorials concerned with state regulation, moreover, dealt with individual states, groups of states, and state regulation in general. My master's thesis, “Railroad Management's Accommodation with Government, 1885–1916: Railroad Journals as a Vantage Point” (Kent State University, 1974), provides a more sophisticated methodology and is more discriminating in its treatment of different states and regulative authorities, but its purpose, as well as the intent of this article, is mainly to provide a general overview of positions on regulation through time. This article indicates the necessity of studying regulation at the state level in greater depth.

10 Review, XXV (January 24, 1885), 40. For other studies revealing an anti-democratic business mentality, see Cochran, Thomas C., Railroad Leaders, 1845–1890: The Business Mind in Action (New York, 1953Google Scholar; reprint edition, 1966), 190–192; Kirkland, Edward C., Dream and Thought in the Business Community, 1860–1900 (Ithaca, N.Y., 1956), 127–139.Google Scholar

11 Gazette, XXIII (January 30, 1891), 81.

12 Detrick, Charles R., “The Effects of the Granger Acts,” Journal of Political Economy, IX (March, 1903), 237–256CrossRefGoogle Scholar; Buck, Solon Justus, The Granger Movement: A Study of Agricultural Organization and its Political, Economic, and Social Manifestations, 1870–1880 (Cambridge, Mass., 1913), 186–193Google Scholar; Throne, Mildred, “The Repeal of the Iowa Granger Law, 1878” Iowa Journal of History, LIII (April, 1953), 97–130Google Scholar; Hunt, Robert S., Law and Locomotives: The Impact of the Railroad on Wisconsin Law in the Nineteenth Century (Madison, Wise, 1958), 142–170Google Scholar; Burton, William L., “Wisconsin's First Railroad Commission: A Case Study in Apostasy,” Wisconsin Magazine of History, XLV (Spring, 1962), 190–198.Google Scholar

13 Review, XXV (February 14, 1885), 76; XXVI (September 4, 1886), 469; XXVI (February 6, 1886), 64.

14 Benton, John E., “The State Commissions and the Interstate Commerce Commission,” in Exercises Commemorating the Fifty Years' Service of the Interstate Commerce Commission, April 1, 1937 (Washington, D.C., 1937), 23Google Scholar; Gazette, XXXIX (August 4, 1905), 108.

15 Review, XXVIII (August 25, 1888), 489.

16 See McLean, Simon J., “State Regulation of Railways in the United States,” Economic Journal, X (September, 1900), 356Google Scholar; Kirkland, Dream and Thought, 138.

17 Jacobs, Clyde E., Law Writers and the Courts: The Influence of Thomas M. Cooley, Christopher G. Tiedman, and John F. Dillon upon American Constitutional Law (Berkeley, Cal., 1954), 49, 63Google Scholar; Anderson, William, The Nation and the States, Rivals or Partners? (Minneapolis, Minn., 1955), 102Google Scholar; Roche, John P., “Entrepreneurial Liberty and the Fourteenth Amendment,” in Coben, Stanley and Hill, Forest G., eds., American Economic History: Essays in Interpretation (Philadelphia, 1966), 413, 427Google Scholar; Hacker, Louis M., The Course of American Economic Growth and Development (New York, 1970), 198–201.Google Scholar

18 Benton, “The State Commissions and the Interstate Commerce Commission,” 23; Review, XXVII (June 11, 1887), 342.

19 Review, XXVII (February 19, 1887), 102.

20 Review, XXVI (January 9, 1886), 17. See also the Review, XXVI (April 10, 1886), 172.

21 Letters of Stuyvesant Fish “To B. F. Ayer,” September 10, 1888; “To Edward T. Jeffery,” September 12, 1888, in Cochran, Railroad Leaders, 322.

22 Interstate Commerce Commission, Third Annual Report of the Interstate Commerce Commission (Washington, 1889), 74–75Google Scholar; Fourth Annual Report of the Interstate Commerce Commission (Washington, 1890), 4–7, 56–57; Twenty-Third Annual Report of the Interstate Commerce Commission (Washington, 1910), 15. For an interesting example of how railroad executives tried to soften the regulatory rigor of the ICC by an appeal to the comparative leniency of state regulation, see the letter of John Peck (General Manager of the Southern Carolina Railway) in the First Annual Report of the Interstate Commerce Commission (Washington, 1887), 220. Many state railroad commissioners, moveover, accepted the idea of pooling long before the ICC and urged the Commission to take a positive stand on this issue: McLean, Simon J., “Federal Regulation of Railways in the United States,” Economic Journal, X (June, 1900), 167Google Scholar; Kirkland, Industry Comes of Age, 133; Chandler, Alfred D., ed. and comp., The Railroads: The Nation's First Big Business – Sources and Readings (New York, 1965), 186.Google Scholar For state commissioners' pro-pooling views, see Interstate Commerce Commission, “Circular of the Commission and Answers thereto in Regard to Proposed Amendment of the Anti-Pooling Clause,” Sixth Annual Report of the Interstate Commerce Commission (Washington, 1892), 213–265Google Scholar, passim.

23 Twiss, Benjamin R., Lawyers and the Constitution: How Laissez Faire Came to the Supreme Court (New York, 1962), 167.Google Scholar

24 See the statements of railroad presidents in the Gazette, XXXIV (January 10, 1902), 15–16; XXXV (January 9, 1903), 19–20; XXXVIII (January 6, 1905), 32–33.

25 Martin, Enterprise Denied, 38–39, 124.

26 In 1896 and 1897 in the Social Circle and Maximum Freight Rate cases, the Supreme Court ruled that the ICC possessed no right to set rates for the future, and in the 1897 Alabama Midland case it removed all potency from the short-haul clause. The ICC, in the words of George E. Mowry, became “not much more than a statistical bureau,” until Congress armed the agency with new rate powers in 1906 and 1910 with the Hepburn and Mann-Elkins Acts; Mowry, , The Era of Theodore Roosevelt and the Birth of Modern America, 1900–1912 (New York, 1958), 198.Google Scholar In the Trans-Missouri Freight Association and Joint Traffic Association cases of 1897 and 1898, the Court was less generous, for the decisions made illegal any traffic associations – economic arrangements formed to circumvent the provisions of the anti-pooling clause. This legal obstacle was partially offset, however, by the revenue-saving features of the Elkins Act of 1903, which strengthened sanctions against rebating. There are no railroad historians who dispute the fact that most rail executives supported passage of the Elkins Bill.

27 Huebner, Grover G., “Five Years of Railroad Regulation by the States,” The Annals of the American Academy of Political and Social Science, XXXII (July, 1908), 138–156Google Scholar; Ripley, William Z., Railroads: Rates and Regulation (New York, 1912), 628–631.Google Scholar

28 Gazette, XLIV (January 3, 1908), 3.

29 Gazette, XXXI (March 17, 1899), 190; XXIV (December 26, 1902), 983; Willcox, David, “Government Rate-Making is Unnecessary and Would Be Very Dangerous,” North American Review, CLXXX (March, 1905), 427Google Scholar; Blum, John M., “Theodore Roosevelt and the Hepburn Act: Toward an Orderly System of Control,” in Morison, Elting E., ed., The Letters of Theodore Roosevelt, vol. 6 (Cambridge, Mass., 1952), 1565Google Scholar; Willcox, “Government Rate-Making is Unnecessary,” 423. See also Smith, Milton R. (affiliated with the Louisville and Nashville), “The Inordinate Demands of the Interstate Commerce Commission,” Forum, XXVII (July, 1899), 551–563Google Scholar; the statement of Ashley, O. D. (affiliated with the Wabash) in the Gazette, XXXIV (January 10, 1902), 15Google Scholar (reprinted from an interview in the New York Evening Post); the statement of Hines, Walker D. Vice President, of the Louisville and Nashville, in the Gazette, XXXIV (January 3, 1902), 5Google Scholar (reprinted from a letter written to the New York Times); Gazette, XXXVII (December 16, 1904), 633 and XL (May 4, 1906), 441; Butterfield, O. E. (attorney for the Michigan Central), “Limitations upon National Regulation of Railroads,” The Annals of the American Academy of Political and Social Science, XXVI (November, 1905), 629–641.Google Scholar

30 Gazette, XLV (December 4, 1908), 1466; Gazette, XLIV (March 6, 1908), 300 and XLVI (June 25, 1909), 1511; Review, L (October 15, 1910), 966. For specific objections to the Hepburn Bill, see the Gazette, XL (May 4, 1906), 441.

31 Gazette, XLV (December 4, 1908), 1466; XLII (June 28, 1907), 922; XLV (December 25, 1908), 1621–1622.

32 Gazette, XLIV (January 3, 1908), 14–25; XLV (December 25, 1908), 1640–1655.

33 Road C – South and Road G – East, Gazette, XLV (December 25, 1908), 1654. In most of the Gazette's polls, neither the names of responding executives nor their railroads were identified. Instead, the replies were grouped according to the geographic region in which a particular respondent's railroad was located. In some of the polls, each response within a single geographic region was labeled by a capital letter, as cited above.

34 Roads G and E – Central West and Trunk Lines; Road A – East; Road M – Central West and Trunk Lines, Gazette, XLV (December 25, 1908), 1653.

35 Gazette, XLV (December 25, 1908), 1648–1651.

36 Road A – South; Road M – Central West and Trunk Lines; Road C – Southwest, Gazette, XLVII (December 31, 1909), 1311. Road D – East, Gazette, XLIX (December 30, 1910), 1235.

37 Road F – Central West and Trunk Lines; Road F – West and Transcontinental; Road A–South; Road D – West and Transcontinental, Gazette, XLIX (December 30, 1910), 1233–1234. Kolko, Railroads and Regulation, 204. For a favorable editorial response to a valuation made by the Minnesota Railroad Commission, see the Gazette, XLVII (December 31, 1909), 1270.

38 Gazette, LI (December 29, 1911), 1314–1315.

39 Road B's – Western and Mudge's December statements are in the Gazette, LI (December 29, 1911), 1314. Mudge's April statement is quoted from Kolko, Railroads and Regulation, 206. Kolko alleges that Mudge was “seeing history somewhat hazily.”

40 Road A – Southwestern, Gazette, LI (December 29, 1911), 1314.

41 Road K – Central West and Trunk Lines, Gazette, XLV (December 25, 1908), 1640.

42 In keeping with their tactic of playing off federal and state governments against each other, the journals argued that the proposed tax was an infringement upon state prerogatives. See the Review, XLIX (July 3, 1909), 610–611; Gazette, XLVII (July 16, 1909), 90.

43 Gazette, XLVII (December 3, 1909), 1047; XLIX (July 1, 1910), 4; XLVIII (January 14, 1910), 80.

44 Quoted from Kolko, Railroads and Regulation, 199.

45 Review, L (October 15, 1910), 966.

46 Sharfman, I. L., The Interstate Commerce Commission: A Study in Administrative Law and Procedure, 4 vols. (New York, 1931–1937), I, 64, 65, 69.Google Scholar

47 Ibid., 68.

48 Kerr, American Railroad Politics, 20, 29.

49 Review, LVII (October 30, 1915), 562; Gazette, LX (June 16, 1916), 1315.

50 Review, LII (April 6, 1912), 323; Gazette, LIII (August 30, 1912), 371.

51 Review, LI (December 2, 1911), 1044; Road E – Western, Gazette, LI (December 29, 1911), 1312; Review, LV (September 5, 1914), 289.

52 Harbeson, “Railroads and Regulation,” 231, 241; Martin, Enterprise Denied, 130–136 and passim.

53 Garrett's statement is in the Gazette's 1912 poll, LIII (December 27, 1912), 1253. There are similar expressions by other rail managers scattered throughout this poll, pp. 1247–1255.

54 Gazette, LIII (August 30, 1912), 372; Harrison, Fairfax, “Railways Handicapped by Over-Regulation,” Review, LIII (December 27, 1913), 1189Google Scholar; Review, LVII (December 11, 1915), 760.

55 Review, LVII (December 11, 1915), 760; Gazette, LIX (December 31, 1915), 1221.

56 For an elaboration on these developments, see Kerr, American Railroad Politics.

57 Ibid., 150.

58 Ibid.., 231; Kolko, Railroads and Regulation, 229. For opposing viewpoints, see Martin, Enterprise Denied, n. 55, 345; Harbeson, Robert W., “Transport Regulation: A Centennial Evaluation,” I. C. C. Practitioners' Journal, XXXIX (July–August, 1972), 632–633.Google Scholar