§ 19. #Other peculiar privileges of railroads.# Further, do the various grants of lands and money to the railroads make them other than mere private enterprises? One answer, that of those financially interested in the railroads, was No. They said that the bargain was a fair one, and was then closed. The public gave because it expected benefit; the corporation fulfilled its agreement by building the road. The terms of the charter, as granted, determined the rights of the public; but no new terms could later be read into it, even tho the public came to see the question in a new light. Similar grants, tho not so large, have been made to other industries. Sugar-factories were given bounties; iron-forges and woolen-mills were favored by tariffs; factories have been given, by competing cities, land and exemption from taxation; yet these enterprises have not on that account, been treated, thereafter, in any exceptional way. So, it was said, the railroad was still merely a private business.
But the social answer is stronger than this. The privileges of railroads are greater in amount and more important in character than those granted to any ordinary private enterprise. The legislatures recognize constantly the peculiar public functions of the railroads. In other private enterprises, investors take all the risk; legislatures and courts recognize the duty of guarding, where possible, the investment of capital in railroads. Laws have been passed in several states to protect the railroads against ticket-scalping. Whenever the question comes before them, the courts maintain the right of the railroads to earn a fair dividend. Private enterprise has been invited to undertake a public work, yet public interests are paramount.
§ 20. #Private and public interests to be harmonized.# If an extremely abstract view is taken there is danger of losing sight of the real problem, which is that of harmonizing these two interests in thought and in public policy. Yet the extreme advocates of the private control of railroads for a long time resented indignantly any public interference with railroad rates and with railroad management as an infringement of individual liberty. Before the passage of the Interstate Commerce Act, in 1887, this position was inconsistently taken by those in whose interests free competition had been violently set aside at the very outset of railroad construction, and for whom governmental interference had made possible great fortunes. It has become generally recognized that the railroads ought not to be allowed to change from a public to a private character just as it suits their convenience. True, they are private enterprises as regards the character of the investment, but they are public enterprises as to their privileges, functions, and obligations.
Finally, it might be said that if there were none of these special reasons for the public control of railways, there is an all-sufficient general reason in the fact that a railroad is always, in some respects and to some degree, a monopoly. Therefore, the railroad problem may be viewed as but one aspect of the general problem of monopoly. To other aspects of this problem we are now to turn our attention.
[Footnote 1: Returns for 1915. The following figures are from the census taken in 1909.]
[Footnote 2: See A.T. Hadley, "Railroad Transportation," pp. 10, 32.]
[Footnote 3: See Vol. I, pp. 437, 438, 443.]
CHAPTER 28
THE PROBLEM OF INDUSTRIAL MONOPOLY
§ 1. Kinds of monopoly. § 2. Political sources of monopoly. § 3. Natural agents as sources of monopoly. § 4. Capitalistic monopoly; aspects of the problem. § 5. Industrial monopoly and fostering conditions. § 6. Growth of large industry in the nineteenth century. § 7. Methods of forming combinations. § 8. Growth of combinations after 1880. § 9. The great period of trust formation. § 10. Height of the movement toward combinations. § 11. Motive to avoid competition. § 12. Motive to effect economies. § 13. Profits from monopoly and gains of promoters. § 14. Monopoly's power to raise prices.