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The Railroad Builders by John Moody

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The proposal was made to him; he did not invite it. In fact, it
is said that for some time he was much opposed to taking hold of
this disintegrated and broken-down system of railroads operating
largely in poor and unprogressive sections, populated for the
most part by negroes. Said Morgan, "Niggers are lazy, ignorant,
and unprogressive; railroad traffic is created only by
industrious, intelligent, and ambitious people."

After months of discussion, however, Morgan finally agreed to
undertake the task, and out of the previous chaos there emerged
the Southern Railway Company, which has been closely identified
with Morgan's name ever since. Probably of the many railroad
systems which Morgan reorganized from 1894 down to the time of
his death, no system has become more distinctly a Morgan property
than the Southern Railway Company.

The plan of reorganization whereby this great aggregation of
loosely controlled and poorly managed Southern railroads was
welded together into an efficient whole was a very drastic one in
its effect on the old security holders. Debts were slashed down
everywhere, assessments were levied, and old worthless stock
issues were wiped out. Valueless sections of mileage were lopped
off, and an effort was immediately made to strengthen those of
real or promising value. Millions of dollars of new capital were
spent in rebuilding the main lines; terminals of adequate scope
were constructed in all centers of population; and alliances were
made with connecting links with a view to building up through
traffic from the North and the West.

The first ten years of the Southern Railway system under the
Morgan control were practically years of rebuilding and
construction. While after ten years of work the main system still
radiated through most of the territory already occupied in a
crude way in 1894, yet it had acquired a large number of feeders
and smaller railroads in other sections. The Mobile and Ohio,
operating with its branches about one thousand miles from Mobile
to St. Louis, Missouri; the Georgia Southern and Florida,
furnishing an important connection from the main system to
various points in the State of Florida; the Alabama Great
Southern, operating in and near the Birmingham district of
Alabama--all these properties were molded into the system during
these years. The system was then rounded out toward the North and
consolidated through joint control, with the Louisville and
Nashville, of the Chicago, Indianapolis and Louisville Railroad,
which operated lines northward into Ohio and Illinois and on to
Chicago. Thus, with the lines of the Queen and Crescent route
running southward from Cincinnati to New Orleans, the system
secured a direct through line from its various southern points to
the shores of the Great Lakes.

In addition to these developments, the management of the Southern
Railway system arranged direct connection with Washington through
the joint acquisition with other lines of the Richmond,
Fredericksburg and Potomac; it made traffic arrangements with the
Pennsylvania and the Baltimore and Ohio systems to Baltimore,
Philadelphia, and New York; and it also developed close alliances
with the coastwise steamships plying northward from various
Southern points.

In the reorganization of 1894 the Central of Georgia Railway
system was cut off and separately reorganized, although it
remained under the control of Morgan for a number of years.
Finally in 1907 Morgan sold his Georgia properties to Charles W.
Morse. They subsequently passed to Edward H. Harriman, who
afterwards merged them into the Illinois Central system, under
which control they have since remained.

As compared with the old Richmond Terminal aggregation with its
broken-down rails and roadbed, poor equipment, and miserable
service, the modern Southern Railway system shows startling
changes. The Southern States have grown enormously in population
and wealth during the last generation; the industrial activities
of the South at the present time are elements of large importance
to the country as a whole. Cities have vastly increased in
population; new towns and manufacturing districts have been built
up; and at the present there is scarcely a mile of unprofitable
railroad in the entire 9000 miles under operation. In recent
years large soft coal deposits have been discovered and developed
on many of the branch lines, and today the coal tonnage of the
Southern Railway is exceeding the relatively unstable lumber
tonnage of two or three decades ago.


In a previous chapter there has been related the early history of
the great line that first joined the Atlantic and the Pacific
Oceans--the Union Pacific. But the history of this property in
recent years is almost as startling and romantic as its story in
the sixties and seventies. It was not until recent days that the
golden dreams entertained by these early builders came true. The
man who really reaped the harvest and who at the same time gave
the Union Pacific that position among American railroads which
its founders foresaw was the last, and some writers think, the
greatest of all American railroad leaders.

The Union Pacific, a bankrupt railroad in 1893, lay quiescent
under the stress of the hard times that lasted until 1898. The
long story of its tribulations hardly made it a tempting morsel
for the men who were then most active in the railroad field. In
1895 or 1896 the several protective committees which had been
appointed to look after the interests of stockholders and
defaulted bondholders had tried to induce J. P. Morgan to
undertake the reorganization, but he had refused. To reorganize
the Union Pacific meant that not far from one hundred millions of
new capital would sooner or later have to be supplied, and there
was no other banking-house in America at that time which seemed
strong enough for the task. Smaller concerns were all involved in
the Morgan syndicates or in other undertakings, and a combination
of these at the moment seemed out of the question.

About this time the German-Jewish bankinghouse of Kuhn, Loeb and
Company began looking into the situation. Kuhn, Loeb and Company
were known as a very conservative but very rich concern with
close connections in Frankfort and Berlin. Though it had been
long established in New York it had not been identified with the
railroad reorganization movement nor had it been prominent as an
investing or underwriting institution. But now the active partner
of the business, Jacob H. Schiff, set out seriously to persuade
the various committees to adopt a plan of reorganization which he
had devised. Though he made some progress, he soon found much
secret opposition and thought that Morgan might be quietly
attempting to secure the property. Morgan, however, was not
interested. The mystery was still unsolved.

The fact was that Edward H. Harriman, who for some years past had
been a powerful influence in the affairs of the Illinois Central
Railroad but who was unknown to the average Wall Street promoter
and totally unheard of throughout the country, had made up his
mind to reorganize the Union Pacific Railroad. He therefore began
to work quietly with various interests in an attempt to tie up
the property. But soon he, like Schiff, encountered serious
opposition. He also immediately jumped to the conclusion that
Morgan was secretly at work, and he called on Morgan for the
facts. Morgan replied, as he had replied to Schiff, that he was
not interested, but that he wished Harriman success.

As Schiff continued to meet with difficulty, he soon called on
Morgan again. Again Morgan replied that he was not interested.
"But," he said, "I think if you will go and see a chap named E.
H. Harriman you may find out something."

Who was Harriman? Schiff had hardly heard of him and had never
met him. How could a small man like Harriman, with no money, no
powerful friends, no big financial backing, reorganize a great
system like the Union Pacific Railroad? The idea seemed
ridiculous. Nevertheless, as the opposition continued, Schiff
soon got in touch with Harriman. In the course of a conference,
he warned this daring interloper to keep his hands off the Union
Pacific. But Harriman was not moved by threats. On the contrary,
he insisted that Schiff should leave the Union Pacific alone;
that he himself had already worked out his plans to reorganize
it. Schiff laughed at this idea, termed it chimerical, and
asserted that Kuhn, Loeb and Company were easily able to obtain
the needed one hundred millions or more through their foreign
connections on a basis of from four to five per cent, and that in
America no such sum of new capital could at that time be raised
through banking activities at better than six or seven per cent.

Harriman then sprang his surprise on Schiff. For some years he
had been financially interested in the affairs of the Illinois
Central. This property had at that time higher credit than any
other American railroad; it had raised large sums of capital in
Europe on as low a basis as three per cent, and on most of its
bonds paid only three and one-half per cent interest. For nearly
fifty years the property had been paying dividends with hardly an
interruption, and altogether it had an enviable reputation as one
of the soundest investments. Harriman's influence in the affairs
of the company had been increasing quietly for years; the
management had been left almost completely in his hands; and the
directors were in effect largely his puppets, and a majority
would do his bidding in almost anything he might propose.

Harriman now announced to Schiff that he intended to have the
Union Pacific reorganized as an appendage of the Illinois
Central. The necessary one hundred millions would be raised by a
first mortgage on the entire Union Pacific lines at three per
cent, and the mortgage would be guaranteed by the Illinois
Central, while the latter company would receive a majority of the
new Union Pacific stock in consideration for giving its

Here was a poser for Schiff, who saw at once that if Harriman
could use the Illinois Central credit in this way, he certainly
could carry out his plan. Schiff soon found that Harriman would
have no difficulty in using Illinois Central credit. The upshot
of the matter was that the two men got together and jointly
reorganized the Union Pacific. Harriman was made chairman of the
Board of Directors, and Kuhn, Loeb and Company became the
permanent bankers for the new railroad system.

Thus with one bound Harriman had leaped to the forefront in
American railroad finance and by a bold act which was
characteristic of the man. For Edward H. Harriman was not only a
hardheaded, practical business builder who like Morgan thought in
big figures, but he was also a bold plunger, which Morgan was
not. Possessing a vivid imagination, he not only saw far into the
future but he also planned far into that same future. Morgan was
also a man of vision, but his vision did not carry him far beyond
the present. The things Morgan saw best were those immediately
before him, while the things that Harriman saw best were at a
distance. Morgan's big plans of procedure were based on what he
saw in a business way in the near future; he reorganized his
railroads with the idea of making them pay their way as soon as
possible and of showing a good return on the capital invested. He
thought little of what might be the outcome a decade or two hence
or of what combinations might later be worked on the chessboard
as a result of his immediate moves. Morgan's mind was not
philosophical; it was intensely practical.

While Morgan declined the proffered control of the Union Pacific
on the theory that it was only a "streak of rust" running through
a sparsely settled country and across an arid desert, Harriman
dreamed of the great undeveloped West filling up with people
during the following generation, of the empty plains being
everywhere put under cultivation, and of the arid desert
responding to the effects of irrigation on a large and
comprehensive scale. He foresaw the wonderful future of the
Pacific States--the opening up of natural resources in the
mountains, the steady stream of men and women who would
ultimately emigrate to this vast section from the East and from
foreign lands and who would build up towns and great cities. At
the same time, with that practical mind of his, Harriman
calculated that the Union Pacific Railroad--situated in the heart
of this huge area, having the most direct and shortest line to
the Pacific, and with all traffic from the East converging over
half a dozen feeder lines to Omaha and Kansas City--would haul
enormous amounts of tonnage just as soon as the Western country
revived from the depression under which it had been struggling
for half a dozen years.

When Harriman took hold of the Union Pacific he had already
determined to absorb the Oregon lines, with their tributaries
running up into the Puget Sound country and to the Butte mining
district; to get hold of the Southern Pacific properties at the
earliest possible moment; and to link the Illinois Central in
some way to the Union Pacific so that the latter would have its
own independent outlets to Chicago and St. Louis. All these plans
he ultimately accomplished, as well as many others, some of which
his farseeing imagination may have conceived then.

While Harriman was able very promptly to carry through his first
scheme and recapture the Oregon lines, which had been separately
reorganized as a result of the receivership, he found it a far
more difficult matter to secure a dominating interest in the
great system of railroads controlled by Collis P. Huntington.
Huntington was a hard man to deal with. Himself one of the
practical railroad magnates of his time, he also had the gift of
vision and undoubtedly foresaw that the ultimate result must be a
consolidation of the properties; but he fully expected that his
company would absorb the Union Pacific. Had it not been that
during the panic period the Southern Pacific had heavy loads of
its own to carry and that its credit was none too high,
Huntington might then have attempted to gain control of the Union

Events finally worked to the benefit of Harriman. When Collis P.
Huntington died in 1900, it was in most people's minds only a
question of time as to when the powerful Harriman interests would
take over the Southern Pacific properties. Consequently there was
no surprise when in 1901 announcement was made that the Union
Pacific had purchased the holdings of the Huntington estate in
the Southern Pacific Company and was therefore in virtual

By a master stroke the railroad situation in the West had been
radically changed. The Huntington system comprehended many
properties of large and growing value, which were now feeling the
full benefit of the agricultural prosperity at that time
spreading throughout the great Southwest. Aside from this prize,
the Union Pacific acquired the main line to the Pacific coast
which it had always coveted and thus added to its system over
nine thousand miles of railroad and over four thousand miles of
water lines, besides obtaining a grip on the railroad empire of
this entire portion of the continent not to be readily loosened
by competitors.

At the same time that Harriman was strengthening his position on
the west and south, the Great Northern and Northern Pacific
properties, both now operated under the definite control of James
J. Hill, were following a policy of expansion fully as gigantic
as that of the Union Pacific. The Great Northern lines operating
from Duluth to the Pacific coast had become powerful elements in
the Western railroad situation, and Hill had devised many plans
for diverting to the north the through traffic coming from the
central section of the continent. He had established on the Great
Lakes a line of steamships running from Duluth to Buffalo, and
was also operating on the Pacific Ocean steamship lines which
gave him a connection with Japan, China, and other oriental

After the reorganization of the Northern Pacific Railroad, which
fell under the domination of Morgan, the affiliations of the Hill
and Morgan interests became very close, and in a short time Hill
had as secure a grip on the Northern Pacific as he had always had
on the Great Northern. This powerful combination looked like a
menace to the Harriman-Kuhn-Loeb interests which controlled the
territory to the south and radiated throughout the State of
Oregon. When, therefore, the Northern Pacific began a little
later to build into territory in Oregon and Washington which the
Union Pacific regarded as a part of its own preserves, much bad
feeling was engendered between the two interests. Matters were
brought to a climax in the spring of 1901 when the Harriman
people suddenly made the discovery that the Hill-Morgan
combination had been quietly buying control of the valuable
Chicago, Burlington and Quincy Railroad, which operated a vast
system west and northwest of Chicago, penetrated as far into the
Union Pacific main-line territory as Denver, and connected at the
north with the eastern terminals of both the Great Northern and
Northern Pacific systems. This move meant but one thing to
Harriman: the Hill-Morgan interests were trying to surround the
Union Pacific and make it powerless, just as the Southern Pacific
had attempted to do many years before.

Harriman now played one of his bold strokes. He immediately began
to purchase Northern Pacific stock in the open market in order to
secure control of that property. It was well known that while the
Hill-Morgan alliance dominated the Northern Pacific, it did not
actually own a majority of the stock, and to secure this majority
was Harriman's purpose. This move would effectually check the
invasion of the Union Pacific territory by giving the Harriman
interests a voice in the control of the Chicago, Burlington and

The price of Northern Pacific common stock soared day after day
until on May 9, 1901, it sold at $1000 a share, and a momentary
panic ensued. At the time Morgan was on the ocean and could not
be reached. His partners were apparently not equal to the
emergency. But Harriman was. When the panic reached its height,
both interests had purchased far more than a majority of Northern
Pacific stock--in contracts for future delivery. It was seen that
to insist on the delivery of shares which did not exist would not
only bankrupt every "short" speculator, large and small, but
would undoubtedly bring all Wall Street tumbling down like a
house of cards. So, in the midst of the excitement, the two
interests reached a compromise.

The outcome was the formation of the Northern Securities Company
with a capital of $400,000,000, nearly all of which was issued to
acquire the capital stocks of the Northern Pacific and Great
Northern railroads. All the properties, including the Burlington,
thus came under the joint control of the Harriman and Hill
groups. The division of territory on both the east and the west
was worked out amicably: the Northern Pacific abandoned some of
its plans for extensions in Oregon, and the Burlington system
remained as it was, with the understanding that no extensions
should be built to the Pacific coast. Later the Burlington
acquired control of a cross-country system, the Colorado
Southern, extending south to the Gulf, but to this day has made
no attempt to build beyond the lines it owned to Wyoming in 1901.

As is well known, the Northern Securities Company was
subsequently declared to exist in violation of the Sherman
Anti-Trust Act, and on a decision of the United States Supreme
Court in 1904 it was practically dissolved and all its securities
were returned to the original holders. This dissolution left the
Hill-Morgan interests in undisputed control of the Burlington
properties, but harmonious relations had in the meantime been
established among the contestants, assuring an equitable division
of territory and traffic. The final outcome was that the Union
Pacific Railroad Company, which had purchased with its large
surplus and by the use of its high credit many million dollars'
worth of the capital stocks of the Great Northern and Northern
Pacific railroads, received these stocks back after several years
of great prosperity and after the appreciation in the market
values of the stocks had exceeded $60,000,000. There was no
further necessity for holding them and most of the stocks were
sold at the high prices of 1905 and 1906, with actual net profit
for the Union Pacific Railroad in excess of $50,000,000. No such
gigantic financial transaction as this had ever before been
carried through by an American railroad corporation.

With an overflowing treasury in the Union Pacific, Harriman
immediately turned his face toward the East. It had for years
been one of his dreams to control a continuous line of railroad
from the Atlantic to the Pacific. As early as 1902 he had all but
completed negotiations for the acquisition of the New York
Central lines in the interest of the Union Pacific; but this plan
had met with opposition from the Vanderbilts and Morgan and had
been dropped. Harriman now took advantage of an opportunity which
presented itself to acquire for the Union Pacific what was
practically a dominating interest in the Baltimore and Ohio, a
large block of whose stock was disposed of by the Pennsylvania
Railroad. Harriman had already largely added to the Union
Pacific's holdings in the Illinois Central. Jointly with the Lake
Shore of the Vanderbilt system, the Baltimore and Ohio had, as
already described, acquired a dominating interest in the Reading
Company, including all the latter company's interests and
affiliations as well as its entry into the New York district
through control of the Central Railroad of New Jersey. Harriman,
therefore, by a single stroke, now found himself in practical
possession of a coast-to-coast system of railroads extending all
the way from New York to San Francisco, Portland, and Los
Angeles, and passing through all the important cities of the
country. The Illinois Central system, operating nearly five
thousand miles of road southward from Chicago to New Orleans,
passing through St. Louis, with an arm reaching out to Sioux City
on the west and a network of branches covering the Middle States,
had thus become the great link welding together the eastern and
western Harriman systems.

Later the Union Pacific acquired large interests in other
properties and purchased substantial amounts of stock in the
Atchison, Topeka and Santa Fe, the New York Central. the St.
Paul, and the Chicago and North Western railroads. It also
acquired a dominating interest in the Chicago and Alton property,
operating from Chicago to St. Louis, with Western branches. In
the panic period of 1907, Harriman personally purchased from
Charles W. Morse, who had acquired the property from Morgan a
short time before, the entire capital stock of the Central of
Georgia Railway, which he later turned over to the Illinois
Central. The Central of Georgia lines connect at several points
with the Illinois Central and have given the system various
outlets on the South Atlantic seaboard.

Harriman died in September of 1909, and with his death the wizard
touch was clearly gone. What would have been the later history of
the Union Pacific had he lived can be only conjectured. The new
management, with Judge Robert S. Lovett at its head, continued
the broad and efficient operation which had characterized Mr.
Harriman's regime, but it soon abandoned the policy of further
growth and expansion. This alteration in policy, however, was
perhaps more the result of changing conditions than of
relinquishment of Harriman's aims. Many new laws for the
regulation of the railways had been passed, and in 1906 the
powers of the Interstate Commerce Commission were greatly
augmented. A period of reform had now begun, and after 1909 a
wave of "progressivism" overspread the country. New
interpretations were given to the Sherman Act, and suits were
soon under way against all the railroads and industrial
combinations which appeared to be infringing that statute. The
great Standard Oil and Tobacco trusts were dissolved in this
period, and a suit which was brought to divorce the Union Pacific
and the Southern Pacific Company was finally decided against the
Union Pacific, with the result that the two big properties were
separated. The Union Pacific turned a large amount of its
Southern Pacific stock holdings over to the Pennsylvania
Railroad, in exchange for which it received from the Pennsylvania
the remainder of the Baltimore and Ohio stock which the
Pennsylvania interests had retained after the sale to the Union
Pacific in 1906. Immediately after this, the Union Pacific
management, seeing no particular advantage in retaining an
interest in the Baltimore and Ohio, gave the shares to its own
stockholders in a special dividend.

Thus, since Harriman's death, the Union Pacific Railroad has once
more returned to very much its original condition prior to its
acquisition of the Southern Pacific. It still controls the
Illinois Central and the Chicago and Alton and has investment
interests in a large number of other railroads. It is still the
premier system of the West and promises to remain so
indefinitely; but the bold Harriman touch is gone and will never


During the last fifty years the railroad has perhaps been most
familiar to the American people as a "problem." As a problem it
has figured constantly in politics and has held an important
position in many political campaigns. The details that comprise
this problem have been indicated to some extent in the preceding
pages--the speculative character of much railroad building, the
rascality of some railroad promoters, the corrupting influence
which the railroad has too frequently exerted in legislatures and
even in the courts. The attempts to subject this new "monster" to
government regulation and control have furnished many of the
liveliest legislative and judicial battles in American history.
Farmers, merchants, manufacturers, and the traveling public have
all had their troubles with the transportation lines, and the
difficulties to which these struggles have given rise have
produced that problem which is even now apparently far from

Railroads had been operating for many years in this country
before it dawned upon the farmers that this great improvement,
which many had hailed as his greatest friend, might be his
greatest enemy. It had been operating for several decades in the
manufacturing sections before the enterprising industrialist
discovered that the railroad might not only build up his business
but also destroy it. From these discoveries arose all those
discordant cries of "extortion," "rebate," "competition," "long
haul and short haul," "regulation," and "government ownership,"
which have given railroad literature a vocabulary all its own and
have written new chapters in the science of economics. The storm
center of all this agitation concerned primarily one thing--the
amount which the railroad might fairly charge for transporting
passengers and freight. The battle of the people with the
railroads for fifty years has been the "battle of the rate." This
has taken mainly two forms, the agrarian agitation of the West
against transportation charges, and the fight of the
manufacturing centers, mainly in the East, against
discriminations. Perhaps its most characteristic episodes have
been the fight of the "Grangers" and their successors against the
trunk lines and that of the general public against the Standard
Oil Company.

Even in the fifties and the sixties, the American public had its
railroad problem, but it was quite different in character from
the one with which we have since grown so familiar. The problem
in this earlier period was merely that of getting more railroads.
The farmer pioneers in those days were not demanding lower rates,
better service, and no discrimination and antipooling clauses;
they asked for the building of more lines upon practically any
terms. This insistence on railroad construction in the sixties
explains to a great extent the difficulties subsequently
encountered. In a large number of cases railroad building became
a purely speculative enterprise; the capitalists who engaged in
this business had no interest in transportation but were seeking
merely to make their fortunes out of constructing the lines. Not
infrequently the farmers themselves furnished a considerable
amount of money, expecting to obtain not only personal dividends
on the investment but larger general dividends in the shape of
cheap transportation rates and the development of the country.
Even when the builders were more honest, their mistaken
enthusiasm had consequences which were similarly disastrous. The
simple fact is that a considerable part of the Mississippi
Valley, five or ten years after the Civil War, found itself in
the possession of railroads far in excess of the public need. In
the long run this state of affairs was probably not a great
economic evil, for it stimulated development on a tremendous
scale; but its temporary effect was disastrous not only to the
railroads themselves but to the struggling population. The farmer
had mortgaged his farm to buy stock in the road; and his town or
county or State had subsidized the line by borrowing money which
it frequently could not repay. When this property became
bankrupt, not only wiping out these investments but leaving the
agricultural population at the mercy of what it regarded as
exorbitant rates and all kinds of unfair discriminations with
high interest charges on its mortgages and high local taxes, the
blind fury that resulted among the farmers was not unnatural.

Many of the railroad evils were inherent in the situation; they
were explained by the fact that both managers and public were
dealing with a new agency whose laws they did not completely
understand. But the mere play of personal forces in themselves
aggravated the antagonism. The fact that most of the railroad
magnates lived in the East added that element of absentee
landlordism which is essential to most agrarian problems. Many of
the Western capitalists were real leaders; yet it is only
necessary to remember that the most active man in Western
railroads in the seventies was Jay Gould, to understand the
suspicion in which the railroad promoter of that day was
generally held. It is significant that of all the existing
railroad abuses, the one which seemed to arouse particular
hostility was the free pass. There were many greater practical
evils than this, yet the fact that most editors and public
officials and politicians and legislators and even many judges
rode "deadhead" was a constant reminder of the influence which
this "alien" power exercised over the government and the public
opinion of the communities of which it was theoretically the
servant. Many of these roads had a greater income than the States
they served; their payrolls were much larger; their head
officials received higher salaries than governors and presidents.
The extent to which these roads controlled legislatures and, as
it seemed at times, even the courts themselves, alarmed the
people. The stock-jobbing that had formed so large a part of
their history added nothing to their popularity. Yet, when all
these charges against the railroads are admitted, the fundamental
difficulty was one which, at that stage of public enlightenment,
was beyond the power of individuals to control. Nearly all the
deep-seated evils arose from the fact that the railroads were
attempting to do something which, in the nature of the case, they
were entirely unfitted to do--that is, compete against one
another. When the great trunk lines were constructed, the idea
that competition was the life of trade held sway in America, and
the popular impression prevailed that this rule would apply to
railroads as well as to other forms of business. To the few
farseeing prophets who predicted the difficulties which
subsequently materialized, the answer was always made that
competition would protect the public from extortion and other
abuses. But competition between railroads is well-nigh
impossible. Only in case different companies operated their cars
upon the same roadbed--something which, in the earliest days,
they actually did on certain lines--could they compete, and any
such system as a general practice is clearly impracticable. One
railroad which paralleled another in all its details might
compete with it, but there are almost no routes that can furnish
business enough for two such lines, and the carrying out of such
an idea involves a waste of capital on an enormous scale.
Probably the country received its most striking illustration of
this when the West Shore Railroad in New York State was built
almost completely duplicating the New York Central, with the
result that both roads were nearly bankrupted.

While no one railroad can completely duplicate another line, two
or more may compete at particular points. By 1870 this
contingency had produced what was regarded as the greatest abuse
of the time--the familiar problem of "long and short haul." Two
or more railroads, starting at an identical point, would each
pursue a separate course for several hundred miles and then
suddenly come together again at another large city. The result
was that they competed at terminals, but that each existed as an
independent monopoly at intermediate points. The scramble for
business would thus cause the roads to cut rates furiously at
terminals; but since there was no competition at the intervening
places the rates at these points were kept up, and sometimes, it
was charged, were raised in order to compensate for losses at the
terminals. Thus resulted that anomaly which strikes so strangely
the investigator of the railroad problem--that rates apparently
have no relation to the distance covered, and that the charge for
hauling a load for seventy-five miles may be actually higher than
that for hauling the same load one hundred or one hundred and
fifty miles. The expert, looking back upon nearly a hundred years
of railroad history, may now satisfactorily explain this curious
circumstance; but it is not surprising that the farmer of the
early seventies, overburdened with debt and burning his own corn
for fuel because he could not pay the freight exacted for hauling
it to market, saw in the system, only an attempt to plunder. Yet
even the shippers at terminal points had their grievances, for
the competition at these points became so savage and so ruinous
that the roads soon entered into agreements fixing rates or
formed "pools." In accordance with this latter arrangement, all
business was put into a common pot, as the natural property of
the roads constituting the pool; it was then allotted to
different lines according to a percentage agreement, and the
profits were divided accordingly. As the purpose of rate
agreements and pools was to stop competition and to keep up
prices, it is hardly surprising that they were not popular in the
Communities which they affected. The circumstance that, after
solemnly entering into pools, the allied roads would frequently
violate their agreements and cut rates surreptitiously merely
added to the general confusion.

The early seventies were not a time of great prosperity in the
newly opened West, and the farmers, looking about for the source
of their discomforts, not unnaturally fixed upon the railroads.
Their period of discontent coincided with what will always be
known in American history as "the Granger movement." In its
origin this organization apparently had no relation to the
dissatisfaction which its leaders afterward so successfully
capitalized. Its founder, Oliver Hudson Kelley, at the time when
he started the fraternity was not even a farmer but a clerk in
the Agricultural Bureau at Washington. Afterward, when the
Grangers had become an agrarian force to be feared, if not
respected, it was a popular jest to refer to the originators of
this great farmers' organization as "one fruit grower and six
government clerks." Kelley's first conception seems to have been
to organize the farmers of the nation into a kind of Masonic
order. The Patrons of Husbandry, which was the official title of
his society, was a secret organization, with signs, grips,
passwords, oaths, degrees, and all the other impressive
paraphernalia of its prototype. Its officers were called Master,
Lecturer, and Treasurer and Secretary; its subordinate degrees
for men were Laborer, Cultivator, Harvester, and Husbandman; for
women--and women took an important part in the movement--were
Maid, Shepherdess, Gleaner, and Matron, while there were higher
orders for those especially ambitious and influential, such as
Pomona (Hope), Demeter (Faith), and Flora (Charity). Certainly
these titles suggest peace and quiet rather than discontent and
political agitation; and, indeed, the organization, as evolved in
Kelley's brain, aimed at nothing more startling than the social,
intellectual, and economic improvement of the agricultural
classes. Its constitution especially excluded politics and
religion as not being appropriate fields of activity. It did
propose certain forms of business cooperation, such as the common
purchase of supplies, the marketing of products, perhaps the
manufacture of agricultural implements; but its main idea was to
contribute to the social well-being of the farmers and their
families by frequent meetings and entertainments, and to improve
farming methods by collecting agricultural statistics and by
spreading the earliest applications of science to agriculture.
The idea that the "Grange," as the organization was generally
known, would ultimately devote the larger part of its energies to
fighting the railroads apparently never entered the minds of its

Had it not been for the increasing agricultural discontent
against railroads and corporations in general, the Patrons of
Husbandry would probably have died a painless death. But in the
early seventies this hostility broke out in the form of minority
political parties, the principal plank in whose platform was the
regulation of the railroads. Farmers' tickets, anti-monopoly
parties, and anti-railroad candidates began to appear in county
and even state elections, sometimes achieving such success as to
frighten the leaders of the established organizations. The chief
aim of the discontented was "protection from the intolerable
wrongs now inflicted onus by the railroads." "Railroad steals,"
"railroad pirates," "Wall Street stock-jobbers," and like phrases
supplied the favorite slogans of the spirited rural campaigns.
These parties, though much ridiculed by the metropolitan press,
started a political agitation which spread with increasing force
in the next forty years and in recent times eventually gained the
ascendency in both the old political parties.

The panic of 1873 and the unusually hard times that followed
added fuel to the flame. It was about this time that the Patrons
of Husbandry gave evidences of a new vitality, chiefly manifested
in a rapidly increasing membership. On May 19,1873, there were
3360 Granges in the United States, while nineteen months later,
on January 1, 1875, there were 21,697, with a total membership of
over seven hundred thousand. In the Eastern States the movement
had made little progress; in the South it had become somewhat
more popular; in such States as Missouri, Iowa, Kansas, Nebraska,
Montana, Idaho, and Oregon, it had developed into almost a
dominating influence. It is not difficult to explain this sudden
and astonishing growth: the farmers in the great grain States
seized upon this organization as the most available agency for
remedying their wrongs and rescuing them from poverty. In their
minds the National Grange now became the one means through which
they could obtain that which they most desired--cheaper
transportation. Not only did its membership show great increase,
but money from dues now filled the treasury to overflowing. At
the same time the organs of the capitalist press began to attack
the Grange violently, while the politicians in the sections where
it was strongest sedulously cultivated it. But the leaders of the
movement never made the fatal mistake of converting their
organization into a political party. It held no political
conventions, named no candidates for office, and even officially
warned its members against discussing political questions at
their meetings. Yet, according to a statement in the "New York
Tribune", "within a few weeks the Grange menaced the political
equilibrium of the most steadfast States. It had upset the
calculations of veteran campaigners, and put the professional
office-seekers to more embarrassment than even the Back Pay." The
Grangers fixed their eyes, not upon men or upon parties, but upon
measures. They developed the habit of questioning candidates for
office concerning their attitude on pending legislation and of
publishing their replies. Another favorite device was to hold
Granger conventions in state capitals while the legislature was
sitting and thus to bring personal pressure in the interest of
their favorite bills. This method of suasion is an extremely
potent political force and explains the fact that, in certain
States where the Granges were most powerful, they had practically
everything their own way in railroad legislation.

The measures which they thus forced upon the statute books and
which represented the first comprehensive attempt to regulate
railroads have always been known as the "Granger Laws." These
differed in severity in different States, but in the main their
outlines were the same. Practically all the Granger legislatures
prohibited free passes to members of the legislatures and to
public officials. A law fixing the rate of passenger fares--the
maximum ranging all the way from two and one-half to five cents a
mile--was a regular feature of the Granger programme. Attempts
were made to end the "long and short haul" abuse by passing acts
which prohibited any road from charging more for the short
distance than for the long one. More drastic still were the laws
passed by Iowa in 1874 and the famous Potter bill passed by
Wisconsin in the same year. Both these measures, besides fixing
passenger fares, wrote in the law itself detailed schedules of
freight rates. The Iowa act included a provision establishing a
fund of $10,000 which was to be used by private individuals to
pay the expenses of suits for damages under the act, and this
same act made all railroad officials and employees who were
convicted of violations subject to fine and imprisonment. The
Potter act was even more severe. It not only fixed maximum
freight rates, but it established classifications of its own. The
railroads asserted that the framers of this law had simply taken
the lowest rates in force everywhere and reduced them twenty-five
per cent. But Iowa and Wisconsin and practically all the States
that passed the Granger laws also established railroad
commissions. For the most part these commissions followed the
model of that established by Massachusetts in 1869, a body which
had little mandatory authority to fix rates or determine service,
but which depended upon persuasion, arbitration, and, above all,
publicity, to accomplish the desired ends. The Massachusetts
commission, largely owing to the high character and ability of
its membership--Charles Francis Adams serving as chairman for
many years--had worked admirably. In the most part these new
Western commissions were limited in their activities to
regulating accounting, obtaining detailed reports, collecting
statistics, and enforcing the new railroad laws.

These measures, following one another in rapid succession,
produced a national, even an international sensation. The
railroad managements stood aghast at what they regarded as
demagogic invasions of their rights, and the more conservative
elements of the American public looked upon them as a violent
attack upon property. Up to this time there had been little
general understanding of the nature of railroad property. In the
minds of most people a railroad was a business, precisely like
any other business, and the modern notion that it was "affected
with a public interest" and that the public was therefore
necessarily a partner in the railroad business had made
practically no headway. "Can't I do what I want with my own?"
Commodore Vanderbilt had exclaimed, asserting his exclusive right
to control the operations of the New York Central system; and
that question fairly well represented the popular attitude. That
the railroad exercised certain rights of sovereignty, such as
that of eminent domain, that it actually used in its operations
property belonging to the State, and that these facts in
themselves gave the State the right to supervise its management,
and even, if necessity arose, to control it--all this may have
been recognized as an abstruse legal proposition, but it occupied
no practical place in the business consciousness of that time.
Naturally the first step of the railroads was therefore to
contest the constitutionality of the laws, and while these suits
were pending they resorted to various expedients to evade these
laws or to mitigate their severity. A touch of liveliness and
humor was added to the situation by the thousands of legal fare
cases that filled the courts, for farmers used to indulge in one
of their favorite agricultural sports--getting on trains and
tendering the legal two and a half cents a mile fare, a situation
that usually led to ejectment for nonpayment and then to a suit
for damages. The railroads easily met the laws forbidding lighter
charges for long than for short hauls by increasing the rates for
the longer distances, and the laws fixing maximum rates within
the State by increasing the rates outside the State. When the
courts decided the cases against the railroads, as in most cases
they did, these corporations set about to secure the repeal of
the laws. They started campaigns of education, frequently through
magazine or newspaper articles pointing out the injustice of the
Granger laws and insisting that they were working great public
damage. It is a fact that a decrease in railroad construction
followed the Granger demonstration, and the friends of the
railroads insisted that timid capital hesitated to embark in an
enterprise that was constantly subject to legislative attack.
These campaigns succeeded much better than the more violent
opposition to which the railroads had first resorted. The Western
States in the majority of cases repealed their most drastic
legislation. Nearly all the laws fixing maximum rates disappeared
from the books, and even Iowa and Wisconsin substituted for these
measures supervisory and advisory commissions after the
Massachusetts model.

While the Granger movement thus failed effectively to curb the
railroads, it succeeded in arousing great popular interest in the
railroad problem and in placing before the public several of the
most important details of that problem. Not the least of its
achievements were the decisions which it obtained from the
Supreme Court of the United States. The Granger cases are among
the most epoch-making in American history, and they fixed for all
time the principles of American policy in dealing with the
railroad question. They are particularly worthy of study by those
who have regarded the Supreme Court as the bulwark of social
injustice and as a body which can always be relied upon to
protect the rights of property against the interests of the
masses. In its railroad decisions this change hardly holds; for
these Granger cases sustain practically all the legal contentions
made by the Granger legislatures.* The cases fixed for all time
the point that a State, acting under the police power, may
regulate the charges of a railroad even to the extent of fixing
maximum rates. They even went so far as to hold that the right to
fix rates is not subject to any restraint by the court on the
ground of unreasonableness, a principle which the Supreme Court
has reversed in more recent times. The courts also held that a
State, at least until Congress acted, could regulate interstate
commerce, but this decision also has since then been reversed.
These subsequent reversals of decisions which were exceedingly
popular at the time, however, not only constituted sound law but
promoted the public interest, for they established that body of
law which has made possible the present more comprehensive system
of Federal regulation of railroads.

* The cases of particular interest were: Munn vs. Illinois, 94
U.S. 114; Peik vs. Chicago and Northwestern Railway Company, 94
U.S. 164; and Chicago, Burlington and Quincy Railway Company vs.
Cutts, 94 U.S. 155.

Meanwhile the demand for regulation was gaining strength in the
Eastern States, but for somewhat different reasons. The farmers
of New England, New York, and the Eastern region in general had
not particularly sympathized with the Granger legislation; they
already had great difficulty in competing with the large Western
farms, and a reduction in rates to the seaboard would have made
their position even less endurable. This attitude was
unquestionably selfish but entirely comprehensible. The agitation
for railroad reform in the East came chiefly from the
manufacturing and commercial classes. Here the main burden of the
complaint was the railroad rebate. This was a method of giving
lower rates to large shippers than to small--charging the favored
shipper the published rate and then, at stated periods,
surreptitiously returning part of the payment. This was perhaps
the most vicious abuse of which the railroads have ever been
guilty. That the common law forbade the practice and that it
likewise violated the implied contract upon which the railroad
obtained its franchise was hardly open to dispute; yet up to 1887
no specific law in this country prohibited the practice. For many
years the rebate hung over the American business world, a thing
whose existence was half admitted, half denied, a kind of ghostly
economic terror that seemed persistently to drive the small
corporation to bankruptcy and the large corporation to dominating
influence. The Standard Oil Company was the "monster" that was
believed especially to thrive upon this kind of sustenance,
though this was by no means the only industry that maintained
such secret relations with the railroads; the Carnegie Steel
Corporation, for example, accepted rebates almost as
persistently. It was not until 1879, when the Hepburn Committee
in New York State had its hearings, that all the facts concerning
the rebate were exposed officially to public view. The contracts
of the Standard Oil Company with the railroads were placed upon
the records and these showed that all the worst suspicions
regarding this practice were justified. This disclosure made the
railroad rebate one of the most familiar facts in American
industrial life; and in consequence a demand arose for Federal
legislation that would definitely make the practice a crime and
also for some kind of Federal supervision to do effectively the
work which the state commissions had failed to do.

By this time it was clear enough that the only hope of adequate
regulation lay with the Federal Government. Congressman Reagan,
of Texas, had for years been pushing a bill to regulate
interstate commerce and to prohibit unjust discriminations by
common carriers; other measures periodically made their
appearance in the Senate; but the Houses had been unable to agree
and nothing had been done.

Two facts presently gave great impetus to the movement; in 1886
the United States Supreme Court, reversing its previous decision,
decided that no State could fix rates for railroad lines outside
its own borders, in other words, that interstate rates were
exclusively within the jurisdiction of the Federal authority*;
and a Senate committee, under the chairmanship of Shelby B.
Cullom, conducted an investigation of railroad conditions which
made clear the need of immediate reform. As a consequence,
Congress passed the Interstate Commerce Act, which received
President Cleveland's signature on February 4, 1887. This measure
specifically made illegal rebates, pools, higher charges for
short than for long hauls (when the hauls in question were upon
the same road); it required railroads to file their tariffs, and
it established a commission of five members, who had powers of
investigation, including the right to make the companies produce
their books. This commission received power to establish systems
of accounting and the like, but it had no prerogative to fix
rates. Inadequate as this measure seemed to the radical element,
it was generally hailed as marking the beginning of an era in the
Federal control not only of railroads but of other corporations,
and this impression was increased by the high character of the
men whom President Cleveland appointed to the first board.

* Wabash, St. Louis and Pacific Railway Company vs. Illinois, 118
U.S. 557.

The Interstate Commerce Commission lasted essentially in this
form for nearly twenty years. On the whole it was a failure. Such
was the judgment passed by Justice Harlan of the United States
Supreme Court when he remarked in one of his decisions that the
commission was "a useless body for all practical purposes"; and
such, indeed, was the judgment of the commission itself, for in
its report of 1898 it declared that the attempt at Federal
regulation had failed. The chief reasons for this failure, the
commission said, were the continued existence of secret rates and
the fact that published tariffs were not observed.* The managers
of the great American railroad systems would not yet admit that
the fixing of railroad rates was the concern of any one but
themselves, and they still regarded railroad management as
essentially a private business. If they could obtain large
shipments by granting special rates, even though they had to do
it by such underhanded ways as granting rebates, they believed
that they were entirely justified in doing so. Thus rebates
flourished almost as much as ever, passes were still liberally
bestowed, and pools were still formed, though they sometimes took
the shape of "gentlemen's agreements."

* But it should be added that the effectiveness of the commission
as an administrative and regulating body was diminished by
decisions of the courts, notably the decision of the Supreme
Court in the maximum rate case. See 160 U.S. 479.

In 1906, when President Roosevelt became intensely active in the
railroad problem, conditions were fairly demoralized. Attempts to
enforce the anti-pooling clause had led railroads to purchase
competing lines, and when the United States Supreme Court
pronounced this illegal, the situation became chaotic. The evils
of overcapitalization also became an issue of the times. The
Interstate Commerce Commission had become almost moribund, and
there was a general sentiment that the trouble arose from the
fact that the commission had no power to fix rates and that the
solution of the railroad problem would come only when such power
was vested in it.* The Interstate Commerce Act which became a law
on June 29, 1906, was the outcome of one of the greatest battles
of President Roosevelt's political life. The act increased the
membership of the commission from five to seven members, placed
under its jurisdiction not only railroads but pipe lines, express
companies, and sleeping-car companies, added to the other
familiar restrictions a "commodities clause," which prohibited
any railroad from transporting a product which it had produced or
mined, "except such articles or commodities as may be necessary
and intended for its use in the conduct of its business as a
common carrier"--this clause was intended to end the railroad
monopoly of the coal mines--and made the failure to observe
published tariffs a crime punishable with imprisonment. The
amended law did not give the commission the right to fix rates in
the first instance but did empower it, on complaint, to
investigate charges and on the basis of this investigation to
determine just maximum rates, regulations, and practices, though
carriers were given the right of appeal to the courts.

* The Elkins Act of 1903 had, it is true, increased the
effectiveness of the commission in dealing with discriminations,
but it had not solved the problem of securing reasonable rates.

Thus, in essence, the public had obtained the reform which it had
been demanding for years. The reorganized commission did not
hesitate to exercise its new powers. It soon began actually
fixing rates, and from being a half-alive despised institution it
rapidly developed into one of the most powerful agencies of
administration. In the succeeding ten years its powers were still
further enlarged by acts of Congress and the privilege of fixing
charges practically passed out of the hands of the railroads into
the control of the Interstate Commerce Commission. The railroads,
that is, practically lost the power to regulate their own income.
Meanwhile, the progressive movement in American politics had led
to the creation of commissions in most of the States, with
similar authority over rate making within the States, besides
exercising numerous other powers over service and capitalization.
Many railroads fell upon evil days and receiverships again became
common. Naturally the railroad managers attributed these
calamities to the fact that they were so constantly being
regulated; but they probably pushed this claim too far, for the
causes of their troubles were more complex.

In 1916, in the heat of a political campaign, the Federal
Government took a step which introduced a new principle into
railroad management and made the roads practically helpless. The
four brotherhoods of railroad operatives were making demands for
a so-called eight-hour day, and threatened a general strike that
would paralyze all business and industry and throw the whole life
of the nation into chaos. Properly to appreciate the consequences
of this event, it is necessary to keep in mind the fact that the
plea for an "eight-hour day" was spurious. An eight-hour day
cannot be rigidly enforced on railroads; the workmen well knew
this, and indeed they did not really demand such working hours.
What they asked for was a full day's pay for eight hours and
"time and a half " pay for all in excess of that amount; that is,
they demanded an increase in wages. President Wilson, having
failed in his attempt to settle the difficulty by arbitration,
compelled a Democratic Congress over which his sway was absolute
to pass a law-sponsored by Chairman Adamson of the House
Committee on Interstate Commerce--which granted practically what
the unions demanded. In passing this law, Congress asserted an
entirely new power which no one had ever suspected that it
possessed--that of fixing the wages which should be paid by
common carriers and possibly by other corporations engaged in
interstate commerce. The railroads immediately took the case to
the United States Supreme Court, which promptly sustained the
law. This decision, unquestionably the most radical in the
history of that body, declared virtually that Congress could pass
any law regulating railroads which the public interest demanded.

And thus, after fifty years of almost incessant struggle with the
public, was the mighty railroad monster humbled. It had lost
power to regulate the two items which represent the existence of
a business--its income and its outgo. The Interstate Commerce
Commission was now fixing railroad rates, and Congress was fixing
the amounts of railroad wages. It remained for the Great War to
precipitate the only logical outcome of this situation--
government control. The steadily increasing responsibilities of
war soon told heavily upon all lines until, in the latter part of
1917, the whole railroad system of the United States had all but
broken down. The unions were pressing demands for wage increases
that would have added a billion dollars a year to their annual
budgets. The fact that so large a part of the output of American
locomotive works was being shipped to the Allies made it
difficult for the American lines to maintain their own supply.
Nearly all coastwise ships and tugs were utilized for war work, a
large part of them had been sent to the other side, and this put
an additional strain upon the railroads. The movement of troops,
the heavy building operations in cantonments and shipbuilding
plants, the manufacture and transportation of munitions, all put
an unprecedented pressure upon them. Everywhere there was great
shortage of cars, equipment, and materials. Possibly the
railroads might have risen to the occasion except for the fact
that the enormous increase in the cost of labor and supplies made
demands upon their treasuries which they could not meet. They
repeatedly asked the Interstate Commerce Commission for an
increase in rates, but this request was repeatedly refused. The
roads were therefore helpless, and their operations became so
congested as to create a positive military danger. Under these
circumstances there was profound relief when President Wilson
took over the roads and placed them under government control,
with William Gibbs McAdoo, Secretary of the Treasury, in active

McAdoo immediately took the step which the Administration, while
the railroads were under private control, had steadily refused to
sanction, and now increased the rates. These increases were so
great that they made the public fairly gasp, but, under the
impulse of patriotism, there was a good-natured acquiescence.
McAdoo also increased wages by hundreds of millions of dollars.
His administration on the whole was an able one. He ignored for
the moment the prevailing organization and managed the roads as
though they constituted a single system. He instituted economies
by concentrating ticket offices, establishing uniform freight
classifications, making common the use of terminals and repair
shops, abolishing circuitous routes, standardizing equipment,
increasing the loads of cars and by introducing a multitude of
other changes. All these reforms greatly increased the usefulness
of the roads, which now became an important element in winning
the war. Properly regarded, the American railroads became as
important a link in the chain of communications reaching France
as the British fleet itself. It is not too much to say that the
fate of the world in the critical year 1918 hung upon this
tremendous railroad system which the enterprise and genius of
Americans had built up in three-quarters of a century. In
February, 1918, Great Britain, France, and Italy made official
representations to the American Government, declaring that unless
food deliveries could be made as they had been promised by
Hoover's food administration, Germany would win the war. McAdoo
acted immediately upon this information. He gathered all
available cars, taking them away from their ordinary routes, and
rushed them from all parts of the country to the great grain
producing States. All other kinds of shipments were discontinued;
officials and employees from the highest to the lowest worked day
and night; and presently the huge supplies of the indispensable
food started towards the Atlantic coast. So successful was this
operation that, on the 12th of March, the supplies so exceeded
the shipping capacity of the Allies that 6318 carloads of food
stood at the great North Atlantic ports awaiting transportation.
This dramatic movement of American food supplies was an important
item in winning the war and fairly illustrated the great part
which the American railroads played in turning the tide of battle
from defeat to victory.


General literature on the history of American railroads is
surprisingly scarce. While numerous volumes have been written in
recent years on special phases of the railroad question, few
histories of any real value are available. Probably the best
outline history of American railroad development as a whole is
still Arthur T. Hadley's "Railroad Transportation, its History
and its Laws" (1885), but this necessarily covers only the
earlier periods of railroad growth and its discussions are
limited to the problems which confronted the carriers many years
ago. An extremely valuable book (now out of print) giving a very
complete picture of railroad building and expansion in the
pre-Civil War period is "The Book of the Great Railway
Celebration of 1857", by William Prescott Smith. This is
primarily a description of the opening of the Ohio and
Mississippi Railway, which connected the Mississippi Valley for
the first time with the Eastern seaboard. A volume of real value,
but somewhat technical, giving a complete and accurate view of
the reorganization period of the great railroad systems, from
1885 to 1900, is "Railroad Reorganization", by Stewart Daggett
(1910). This book contains outline sketches of the histories of
nearly all of the large systems, as well as very accurate details
of the financial reorganizations of all of the defaulted
properties. The most comprehensive history of any American
railroad system is "The Story of Erie", by H. S. Mott (1900), but
even this is partially unreliable and much of it is compiled from
unofficial sources. On the financial history of the Erie
Railroad, the really valuable authority is Charles Francis Adams
in his "Chapters of Erie" (1871). This book furnishes a full and
accurate account of the regime of Daniel Drew, Jay Gould, James
Fisk, Jr., and the famous "Erie ring," including "Boss" Tweed,
and also throws side lights on the character and career of
Commodore Vanderbilt. Among other important histories of
particular railroad systems may be mentioned "The Union Pacific
Railway", by John P. Davis (1894) and "History of the Northern
Pacific Railroad", by Eugene V. Smalley (1883); but neither of
these volumes covers the recent and more interesting periods in
the development of these properties. To get a complete and
satisfactory view of the later development of the Northern
Pacific system, one must turn to modern biographical works, such
as the "Life of Jay Cooke", by E. P. Oberholtzer (1910), the
"Memoirs of Henry Villard" (1909), and the "Life of James J.
Hill", by Joseph Gilpin Pyle (1916), which also recounts at
length the rise and development of the Great Northern Railway
system. But in these volumes, as in many biographies of great
men, the authors often betray a bias and misrepresent facts vital
to an understanding of the development of both of these railroad
systems. A recent volume entitled the "Life Story of J. P.
Morgan", by Carl Hovey, although extremely laudatory and
therefore in many ways misleading, contains valuable information
about the development of the Vanderbilt lines after 1880 and also
about the financial vicissitudes and rehabilitation of the many
Morgan properties, such as the Southern Railway, the modern Erie
system, the Northern Pacific, the Reading, and the Baltimore and

Some of the railroad companies many years ago themselves
published histories of their lines, but most of these attempts
were of little value, as they were always too laudatory and
one-sided and evidently were usually written for political
purposes. The best of this class of railroad histories was a book
issued by the Pennsylvania Railroad many years ago, giving a
record (largely statistical) of the growth and development of its
lines. But this book has been long out of print and covers the
period prior to 1885 only.

For original material on American railroad history, one must
depend almost entirely on financial and railroad periodicals and
official and state documents. By far the most valuable sources
for all aspects of railroad building and financing during the
long period from 1830 to 1870 are the "American Railroad Journal"
(1832-1871) and "Hunt's Merchant Magazine" (1831-1870). Both of
these periodicals are replete with details of railroad building
and growth. And for the period from 1870 to the present time the
best authority is the "Commercial and Financial Chronicle", with
its various supplements. The story of modern railroading is so
intertwined with finance and banking that to get any broad and
complete view of the subject one must consider it largely from
the viewpoint of Wall Street. For facts regarding operation and
management of modern railroads, the "Railroad Age-Gazette" also
is extremely useful. By far the most valuable sources for
railroad statistics, railroad legislation, and all related facts,
are the annual reports and bulletins of the Interstate Commerce
Commission, which have been regularly issued since 1888. Many
state commissions also have issued volumes of value.

The best account of the origin of the Granger laws is contained
in S. J. Buck's "The Granger Movement" (1913). The beginnings of
Federal regulation are traced in L. H. Haney's "A Congressional
History of Railways in the United States, 1850-1887" (1910). The
history of recent railroad regulation by state and Federal
legislation, and of court decisions affecting the railroads, is
clearly and succinctly told in William Z. Ripley's "Railroads:
Rates and Regulation" (1912), and in Johnson and Van Metre's
"Principles of Railroad Transportation" (1916).

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