In studying the history of the large corporations, it pays in the beginning to indicate clearly the difference between (1) public service corporations, those which enjoy partial or complete monopoly under franchises granted by the government, and (2) industrial corporations, whose operations do not differ essentially from the enterprises of single individuals, except in the amount of capital which they command. Public service corporations may again be divided into two classes: (1) the interstate railroads, and (2) those corporations whose business is local in its nature, such as the street railroad, the water companies and the gas companies.
Attacking the problem of the interstate railroads first, the class must begin its work by studying the history of the growth of the great trunk lines, like the New York Central and the Pennsylvania, and of the transcontinental railroads, like the Union Pacific and the Northern Pacific. Next in order will come the story of the vicious practices which grew out of the excessive competition among these railroads: rate wars, unfair discriminations against localities and against individual shippers, overcapitalization, etc.
Early in the ’80’s the railroads themselves attempted to remedy these evils by forming the famous pooling associations, but these pooling associations were later prohibited by law. Next the individual states attempted to improve conditions by passing special railroad codes and by creating state railroad commissions. Finally, in 1887, the national government, by the Interstate Commerce Act attempted to better conditions, but improvement came but slowly. Since then, by numerous Court decisions, the most important of which was the decision in the Northern Securities Case, and by at least two amendments to the Interstate Commerce Act, the Elkins Act of 1903 and the Hepburn Act of 1907, the national government has attempted to improve the situation. Conditions to-day are much better than they have ever been in the past, but there is still room for much improvement.
Municipal Public Service Corporations.
In discussing local public service corporations, it is well for the teacher to develop in the beginning the fact that there are two possible ways of dealing with them: (1) municipal ownership, and (2) state regulation. Even in this country the first method has been tried to some extent; most of our largest cities now own their own water supply, and some of them are in possession of their own gas and electric light plants. Thus far, however, most American states and cities have been content to confine their activities in dealing with public service corporation to regulating their functions and privileges by special legislation and by establishing special commissions. Still, the history of the regulation of public service corporations in this country is as yet in its beginnings; the teacher can therefore go but little farther than to set his students thinking upon the question as to which is the better method of dealing with the problem.
Industrial Corporations.
Like the trunk lines and the transcontinental railroads, the great industrial corporations had their origin in the years following the period of the Civil War and Reconstruction. Among these corporations, the Standard Oil Company is, of course, the most famous; still, the teacher will do well to attempt to follow with his class the history of some other industrial corporation as well—if possible, some corporation whose operations have not stirred up so much opposition as the Standard Oil Company. In estimating the effect of these corporations upon the economic history of the country, one should attempt to bring out the benefits which they have bestowed upon the people as well as the evils which have resulted from their operations.
In attempting to regulate the activities of these corporations most states have passed special laws and established special commissions. In consequence, the newspapers are full of accounts of prosecutions under these laws and by these commissions and the student should be encouraged to read them. The national government, too, has passed at least one law, the famous Sherman Anti-Trust Act of 1890, with a view to regulating these great corporations. More recently still, the Bureau of Corporations was established, while at the present time new legislation on this subject is pending in Congress. Yet with all the agitation and with all the legislation, it cannot be said that the problem is even on the verge of being settled. That will take, in all probability, at least another generation.
The Literature of the Subject.
To recommend one or two, or even half a dozen books on this period of American history is impossible. Most of the discussion is evanescent, and books are antiquated almost before they have been printed. For much of the subject matter to be discussed the student should be sent to such manuals as (1) the American Annual Cyclopedia, and (2) the Statesman’s Year Book. Much valuable material can also be gleaned from (3) the annual almanacs published by many of the larger daily papers. For statutes and government regulations, the student should consult (4) MacDonald’s “Select Statutes,” 1861-1898.