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Railroads and Regulation, 1877–1916: Conspiracy or Public Interest?

Published online by Cambridge University Press:  03 February 2011

Robert W. Harbeson
Robert W. Harbeson
Affiliation:
University of Illinois
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Extract

Professor Gabriel Kolko in his recent work, Railroads and Regulation, 1877–1916, presents an interpretation or the origin, motivation, and consequences of the movement for federal regulation of railroads which differs in important respects from that which has hitherto been generally accepted. Thus it has generally been held that railway regulation was a response to the demands of farmers and other shippers for protection against monopolistic and discriminatory tactics on the part of the railroads and that regulation was bitterly resisted by the latter. Kolko, on the other hand, holds that regulation was actually welcomed by the railroads as a means of securing the rate and profit stability which they were unable to maintain by their own action, and that “the railroads, not the farmers and shippers, were the most important single advocates of federal regulation from 1877 to 1916” (p. 3). He concedes that “the movement for federal regulation of the railroad system was not, in any strict sense, deliberately initiated by the railroads’ (p. 20) and that legislation could not have been passed without shipper support, but points out that shippers were either inarticulate or divided with respect to the kind of regulation, if any, desired, and that the railroads were always able to secure the support of enough shipper groups to insure passage of the legislation which they favored. Furthermore, the railroads welcomed federal as opposed to state regulation, since they regarded the latter as punitive and restrictive and less amenable to their influence than federal regulation.

Type
Notes
Information
The Journal of Economic History , Volume 27 , Issue 2 , June 1967 , pp. 230 - 242
Copyright
Copyright © The Economic History Association 1967

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References

1 Kolko, Gabriel, Railroads and Regulation, 1877-1916 (Princeton: Princeton University Press, 1965).CrossRefGoogle Scholar

2 Ripley, W. Z., Railroads: Rates and Regulation (New York: Longmans Green &Co., 1912Google Scholar), ch. xii; and Locklin, D. P., Economics of Transportation (6th ed.; , Homewood, III.: Richard D. Irwin, Inc., 1966), p. 11Google Scholar.

3 It is probable that not all of these routes were effectively competitive in the shipment of all commodities, partly because of the time in transit on very circuitous routes and partly because some kinds of equipment can not be handled on some routes due to physical limitations.

4 Kolko's view of the role of shippers in the development of regulation is well expressed in the following:

Shipper sentiment for railroad legislation was often conservative in motive and variable in direction. The railroads were always able to find at least some shipper group willing to help serve as a spokesman for the railroad position, and the manipulation of the naturally divided shippers is a continuous feature of the history of agitation for national legislation (p. 106).

5 See Locklin, Economics of Transportation, ch. xxi.

6 See, for example, , Ripley, Railroads, pp. 206–207Google Scholar; Jones, Eliot, Principles of Railway Transportation (New York: Macmillan, 1924), p. 234Google Scholar; Sharfman, I. L., The Interstate Commerce Commission (5 vols.; New York: The Commonwealth Fund, 1931-1937), I, 36Google Scholar; Healy, K. T., The Economics of Transportation in America (New York: Ronald Press, 1940), p. 389Google Scholar; Westmeyer, R. E., Economics of Transportation (Englewood Cliffs, N.J.: Prentice-Hall, 1952), p. 117Google Scholar; Fair, M. L. and Williams, E. W. Jr, Economics of Transportation (rev. ed.; New York: Harper and Bros., 1959), p. 445Google Scholar; , Locklin, Economics of Transportation, p. 214Google Scholar.

7 It is true that the Elkins Act made the establishment of effective control over rates more important, since in oligopolistic industries it is easier to raise and maintain prices by price leadership and tacit collusion when secret price concessions are suppressed. However, while railway earnings and average ton-mile revenue increased as a result of the elimination of concessions it has not been shown that the Elkins Act resulted in any significant increase in the level of published rates or in an unreasonable level of earnings, even though at that time the Commission's control over rates had been rendered largely ineffective by Supreme Court decisions. In any event, effective control over rates was soon to be achieved by the Hepburn Act of 1906.

8 Houston East and West Texas Ry. v. U.S., 234 U.S. 342 (1914).

9 See, for example, , Ripley, Railroads, pp. 460–67Google Scholar; , Jones, Principles of Railway Transportation, pp. 223–25Google Scholar; , Sharfman, The I.C.C., I, 23–25Google Scholar; , Healy, Economics of Transportation, pp. 386–87Google Scholar; Bigham, T. C. and Roberts, M. J., Transportation, Principles and Problems (rev. ed.; New York: McGraw-Hill, 1952), pp. 217–18Google Scholar; , Westmeyer, Economics of Transportation, p. 114Google Scholar; , Fair and , Williams, Economics of Transportation, p. 443Google Scholar; , Locklin, Economics of Transportation, pp. 218–20.Google Scholar

The passage of the Expediting Act in 1903 was helpful in reducing delays in litigation.

10 It is worthy of note that a study some years ago by a distinguished group of specialists in administrative law, in referring to the work of the I.C.C.'s Bureau of Informal Cases, commented, “The work of this Bureau has been highly effective in achieving economies of time and money,” and recommended that even parties who had already filed formal complaints in rate matters be encouraged to make use of the services of this Bureau. Report of the Attorney General's Committee on Administrative Procedure, Administrative Procedure in Government Agencies (Washington, D.C.: U.S. Government Printing Office, 1941), pp 179–80.Google Scholar

11 Re Southern Ry. and Steamship Assn., 11.C.R. 278 (1887).

12 Trammell v. Clyde Steamship Co., 4 I.C.R. 120 (1892).

13 I.C.C. v. Alabama Midland Ry. Co., 168 U.S. 144 (1897).

14 It may be noted that, in contrast to this statement, a distinguished jurist has recently singled out the Louisville and Nashville decision for special commendation, saying that not only was it decided with exemplary promptness but that “if Cooley had deliberately set out to write an opinion that would forever be a model for administrators, he could scarcely have done better.” Friendly, Henry J., The Federal Administrative Agencies, The Need for Better Definition of Standards (Cambridge: Harvard University Press, 1962), p. 29.CrossRefGoogle Scholar

15 See , Ripley, Railroads, pp. 481–83Google Scholar; , Jones, Principles of Railway Transportation, pp. 228–30Google Scholar; , Sharfman, The I.C.C, IIIB, 551–53Google Scholar; Dewey, R. L., The Long and Short Haul Principle of Rate Regulation (Columbus: Ohio State University Press, 1935), pp. 76–78Google Scholar; , Healy, Economics of Transportation, p. 387Google Scholar; , Bigham and , Roberts, Transportation, pp. 219–20Google Scholar; , Westmeyer, Economics of Transportation, pp. 115–16Google Scholar; Troxel, Emery, Economics of Transport (New York: Rinehart and Co., 1955), p. 362Google Scholar; , Fair and , Williams, Economics of Transportation, p. 444Google Scholar; Pegrum, D. F., Transportation, Economics and Public Policy (Homewood, Ill.: Richard D. Irwin, Inc., 1963), pp. 294–95Google Scholar; , Locklin, Economics of Transportation, pp. 477–79Google Scholar.

16 The cases involved were Advances in Rates, Eastern Case, 20 I.C.C. 243 (1911); Advances in Rates, Western Case, 20 I.C.C. 207 (1911); The Five Per Cent Case, 31 I.C.C. 351 (1914), 32 I.C.C. 325 (1914); Western Rate Advance Case, 35 I.C.C. 497 (1915); Fifteen Per Cent Case, 45 I.C.C. 303 (1917).

17 , Locklin, Economics of Transportation, p. 347.Google Scholar

18 , Sharfman, The I.C.C, IIIB, 94.Google Scholar