The Railroad Question / A historical and practical treatise on railroads, and remedies for their abuses

by William Larrabee

Defeated in the courts, the railroad managers now endeavored to make odious the new law which deprived them of the power to manipulate railroad interests to their personal advantage. By complying with only part of its letter and none of its spirit, they contrived to create hardships for certain interests and localities. Instead of charging in all cases reasonable rates, as the spirit of the law demanded, they would frequently charge the maximum rates permitted under the law, and when they by this practice succeeded in damaging certain interests, they would point to the Granger law as the source of all existing railroad evils. So, likewise, when they were asked by their patrons to reduce a high rate, they would plead the legislative schedule in excuse of their failure to comply with the request. When the legislature of 1878 convened, the railroad managers appeared before it and pleaded submissively for a repeal of the Granger law and the establishment of a commissioner system. They claimed that they were ready and willing to submit to all reasonable regulation, but that a maximum tariff law was prejudicial both to the best interests of the roads and those of the public. They further asserted that the people had grown tired of this manner of regulating railroad charges and earnestly desired a change of policy; that the interference of the State with the railroad business had injuriously affected certain industrial interests and had greatly retarded railroad construction by driving capital and promoters of railroad enterprises from the State. These statements would indeed have argued strongly in favor of a repeal of the law if they had been based on facts. There had been, however, no expression of public dissatisfaction during the campaign preceding the session of the General Assembly. There were doubtless individuals and even communities to whom the law had been made so odious that they felt they had but little to lose by a change, but the masses of the people believed that the law was based upon just principles and desired its perfection rather than its repeal. As to the claim that railroad construction had been checked by hostile legislation, statistics prove that during the five years following the great panic of 1873 Iowa fared no worse in this respect than her sister States east, west or south.

The arguments produced by the railroad managers no doubt influenced some members of the General Assembly; by far the greater number of them, however, realised that the failure of the law to bring the expected relief was not due so much to its own imperfections as to the absence of a power to enforce it. The writer, with others, was convinced that a strong and conscientious commission would be a much more potent agency to secure reasonable rates for the shipper than a maximum tariff law without proper provisions for its efficient enforcement; they, in short, preferred a commission without a tariff law to a tariff law without a commission. The question became the subject of many animated debates in both houses of the General Assembly, but the commissioner system at last prevailed. The act establishing a Board of Railroad Commissioners, and defining their duties, was approved on the 23rd of March, 1878, and went into force a few days later. The act empowered the commission to exercise a general supervision over all railroads operated in the State, to inquire into any neglect or violation of the laws of the State by any railroad corporation or its officers or employes, to examine the books and documents of any corporation, to investigate complaints of shippers that unreasonable charges had been made by railroad companies, and to modify any charge which they might deem unreasonable. It was also made the commissioners' duty to make an annual report to the Governor disclosing the working of the railroad system in the State, the officers of each company being required to make annual returns to the board for this purpose.

Though the enactment of this law was a surprise to the people, they accepted it in good cheer, and determined to give it an honest trial. The law was extensive in its scope and stringent for that time, and, if strictly enforced in letter and in spirit, promised to be, and would have been, entirely sufficient for the thorough control of railroad corporations.

Nevertheless, in the course of time it became apparent that either the law had not lodged sufficient authority in the commission or the commission did not make use of the authority which the law had given them. In spite of the commission, the railroad companies maintained pools and charged extortionate and discriminating rates, in direct violation of the law. It is true the commissioners righted many a wrong. In investigating the complaints of shippers against railroad companies they often rendered valuable services to those who had neither the means nor the inclination to prosecute their rights in the courts of law; but as they held that they could only pass upon individual charges, and did not have the power to revise the companies' tariffs, the companies were virtually in a position to become guilty of more extortions in one day than the commission could investigate in a year. Moreover, the railroad company might be ordered by the commission to return an overcharge to a certain shipper, but this did not prevent it from continuing the excessive charge. If the overcharged shipper again wanted relief it was his privilege to again apply to the commission, and to continue this tedious process until either his or the commissioners' patience became exhausted. The people soon found that the new system of control was almost as inadequate as that which it had displaced. Some attributed the weakness of the commission to its personnel, others to the law. There is no doubt that the commission might have accomplished more than it did.

It was hoped by some that as the commission gained in experience it would gain in influence, and that railroad evils would gradually diminish. But they were disappointed in their expectations. Every year seemed to add to the grievances of the public. Success greatly emboldened the railway companies. Discriminations seemed to increase in number and gravity. At many points in the western part of the State freight rates to Chicago were from 50 to 75 per cent. higher than from points in Kansas and Nebraska. A car of wheat hauled only across the State paid twice as much freight as another hauled twice the distance from its point of origin to Chicago. Minnesota flour was hauled a distance of 300 miles for a less rate than Iowa flour was carried 100 miles. Certain merchants received from the railroad companies a discount of 50 per cent. on all their freights and were thus enabled to undersell all their competitors. The rate on coal in carload lots from Cleveland, Lucas County, to Glenwood was $1.80 per ton, and from the same point to Council Bluffs only $1.25, although the latter was about thirty miles longer haul. Innumerable cases of this kind could be cited. There was not a town or interest in the State that did not feel the influence of these unjust practices. Many of the rates complained against, it is true, were beyond the direct control of the State commission, but there was an impression among well-informed shippers that if the commission had the power to fix local rates and exercised it judiciously, the railroad companies would soon find it to their interest to be as reasonable in making through rates for Iowans as they expected the commission, to be in prescribing local tariffs.

The demand of the people for more equitable rates and a more thorough control of the railroad business increased from year to year. Repeated attempts were made in the General Assembly to secure the passage of an act looking to that end, but, owing to shrewd manipulations on the part of the railroad lobby, every attempt was defeated. There always was, of course, a large number of members who represented districts not well supplied with railroad facilities. These, as a rule, honestly opposed restrictive legislation, believing that such legislation would check building, and that, on the other hand, competition could be relied upon to correct abuses. Of those members who had less positive convictions many were retained as railroad attorneys and were thus made serviceable to the companies. Other members with political ambition were nattered or intimidated into subjection, and bribes in disguise, such as passes and special rates, were not unfrequently resorted to to strengthen the railroad following in both houses of the General Assembly.

Railroad corruption did not pause here. It is a notorious fact that large sums of money were paid to venal papers of both parties in consideration of an agreement on their part to defend transportation abuses and exert their influence against progressive railroad legislation. The vilest means were often resorted to by these sheets to obtain their end. Public men who had the courage to avow their opposition to existing railroad abuses or to favor a more perfect system of State control of railways were misrepresented, ridiculed, traduced and denounced as demagogues and socialists by hypocritical editors, who prostituted their political influence as long as they enjoyed railroad stipends, and who at intervals became converts to the cause of the people for the purpose of extorting from the railroad companies a new and increased subsidy. But truth can not long be suppressed. The masses of the people may be imposed upon for a time, but even the shrewdest rogue will eventually be compelled to surrender. In time even rather unsophisticated voters learned to place a true estimate upon the motives of the editors, whose policy, as one of them expressed it in the author's presence, was "controlled by the counting-room."

Railroad politicians gradually lost their influence, and the symptoms of public discontent greatly increased. In the political campaign of 1887 State control of railroads became one of the main issues. Both of the great political parties in their platforms had declared themselves very emphatically in favor of such legislation as would bring railroad corporations under complete State control, and with very few exceptions the various legislative districts had nominated only such men as candidates for legislative offices as were known to be in thorough accord with the masses of the people upon the railroad question.

The election resulted in an even more complete defeat of the railroad forces than had been generally anticipated. Yet no hasty step was taken when the General Assembly convened. A large number of bills contemplating railroad reforms in various ways were introduced, but the material presented was carefully sifted by the railroad committees and a committee bill was framed which incorporated the best features of them all. The committees listened patiently for weeks to the arguments of the representatives of both the railroads and the shippers.

Never before had so formidable a railroad lobby assembled at the State Capitol. The danger signal had been raised, and not only were the great political manipulators of the State called into requisition, but experts from adjoining States joined them in besieging the legislature. The dogs of war were let loose from all quarters. A legion of hirelings were zealous to show their servility and loyalty to their lords. The daily and weekly papers of the State in the service of railroad companies teemed with arguments from the pens of railroad attorneys, and their columns were profusely supplemented with editorials copied from prominent corporation papers like the New York Tribune, New York Times, New York World, Albany Evening Argus, Boston Advertiser, and others from various parts of the country.