* 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 charge.
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.
BIBLIOGRAPHICAL NOTE
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 Ohio.