Many things happened during the next twelve years to modify this demand. By 1886, according to the Cullom Committee, "the paramount evil chargeable against the operation of the transportation systems of the United States, as now conducted, is unjust discrimination between persons, places, commodities, or particular descriptions of traffic." Purely economic events had brought about this change of opinion. The rate wars of the seventies; a revival of general prosperity in 1879; and great mechanical improvements and economies in operation, had brought about the desired decline of freight rates.[525] For the time the bogey of extortionate charges was laid at rest. The Act of 1887, elaborate as it was in form, seems not to have been intended to deal with rates in any general way. It was in the main aimed at the prevention of specific abuses. "The practice of discrimination in one form or another is the principal cause of complaint." Consequently, the long succession of bills introduced in the House of Representatives year after year for more than a decade by Judge Reagan of Texas and others, made no attempt to provide administrative machinery by which to fix rates in general; but sought merely to prohibit these specific abuses by statute.[526] The proposition for a permanent commission to deal with rates in a more comprehensive way, seems, as we shall see, to have emanated from the Senate at a later time. But this more statesman-like proposition from the upper chamber was essentially different from the response in the House of Representatives to popular feeling against discriminatory practices, which slowly gathered force during more than a decade of agitation and debate.
What now were some of the specific "discriminations" which these various bills in Congress aimed to prevent? And why did the movement come to a head in 1887? The evidence is conclusive that personal favoritism as between rival shippers took first place. The indiscriminate and cut-throat competition of the carriers, particularly in connection with the trunk line rate wars, offered a golden opportunity to those in search of secret and preferential rates.[527] The chief offender, of course, was the Standard Oil Company under the direction of John D. Rockefeller. The Cassatt revelations in 1877 as to exclusive contracts with the great trunk lines for the carriage of oil, greatly stirred public opinion. Congressional attention had been directed to the subject some years before by complaints from the Pennsylvania field. But the abortive results of the investigation of 1875 demonstrated nothing beyond the shameful impudence of the chief offenders. According to the New York (Hepburn) Committee investigation in 1879, few shippers had ever seen printed tariffs. The Assistant General Freight Agent of the New York Central testified that one-half the business out of New York, and nine-tenths out of Syracuse went on special rates. At this time there was also unrest in the anthracite coal trade. Moreover, the activity of the "eveners" in the cattle business in 1875-1879[528] had laid the foundation for still other monopolies built up by means of rebates. But the constant irritant in the public eye was the Standard Oil Company.[529] The Lake Shore case, fought through every Ohio court and then on appeal up to the Supreme Court of the United States in 1886, widely advertised the discriminatory practices of the railroads. But the most spectacular disclosures of all took place in 1885-1888 in the George Rice cases in Ohio. The Cullom Committee in recommending publicity of rates as its primary remedy for the evils of the time, specifically cites "this most impudent and outrageous" proceeding.[530] In the protracted struggle in conference committee upon the provisions of the act, elimination of rebates was the only subject upon which both House and Senate conferees were in thorough accord from the start. Whatever the commercial crimes chargeable to the founder of the Standard Oil Company, he should, at least, be credited with the performance of a great public service in finally crystallising public opinion in 1887 in favor of railroad legislation for the prevention of rebating.
Distrust of monopoly has always loomed up large in the public eye. The dread of it is voiced in every public document of the time. The Windom Committee in 1874, as we have seen, looked to the stimulation of railway competition as its chief remedy against high rates. Five years later, the Hepburn Committee in New York vehemently denounced railroad monopoly as an evil to be sternly repressed. But, in the meantime, the carriers, almost prostrated by the excesses of their rate wars, were slowly learning how to coöperate for the maintenance of more stable charges. Railroad pools and traffic agreements, first essayed about 1875, were gradually elaborated; until by 1886 nearly all parts of the country were covered by them.[531] From small beginnings in 1877, the Trunk Line Association under Albert Fink was in its heyday of activity. The Southern Railway Association was restoring order out of chaos, south of the Ohio river. By 1886 all competitive traffic north and west of Chicago was pooled. This was especially true of the highly competitive business between the Missouri and Mississippi rivers. Even in remoter regions, such agreements threatened to deprive the public of the benefits of rival railroad construction. In Colorado and New Mexico public sentiment was deeply aroused over the tripartite division of territory between the carriers then in the field.[532] The helplessness of independent railroads was made evident in connection with the attempt of the (now) Colorado & Southern road to gain a foothold. Its suits in both state and Federal courts, and the attempted remedial legislation by Colorado in 1885, disclosed the great power of monopoly over the public welfare in that region. In Texas, the Gould-Huntington apportionment of the field between the two systems in 1881,[533] was doubtless perceived as to its results, even if its precise terms were secret. The Texas Traffic Association, also, organized in 1875, embraced all the lines in that vicinity. May it not well be that the final inclusion in the Act of 1887 of the prohibition of pooling, upon direct insistence of the Texas representative in Congress against the protest of the Senate, had some connection with these events? It seems clear that the marked interest of the railways in eliminating competition all over the country at this critical time, carried great weight with Congress in shaping the law.
The years since the Civil War had witnessed an ever increasing volume of speculation and fraud in railway affairs, which reached its climax in the frenzied construction period of the eighties.[534] Jay Gould, "Jim" Fisk and their successors who contributed to the "railway panic" of 1884, had done their work well in arousing public hostility to the railroads. The Hepburn Committee Report in New York is symptomatic of the state of feeling in its vehement denunciation of these practices.[535] The Windom Committee, five years earlier, had officially registered its opinion that of all the abuses of the time, "none have contributed so much to the general discontent and indignation as the increase of railway capital by stock watering and capitalization of surplus earnings. The murmurs of discontent have swollen into a storm of popular indignation. Your committee believe the evil to be of such magnitude as to justify and require for its prevention the coöperation of both Congress and the States."[536] Nor is the Cullom Committee less emphatic in 1886; although its condemnation is shifted from the trunk lines, particularly the New York Central and the Erie, to the newly constructed "unnecessary roads." "This practice (of stock watering) has unquestionably done more to create and keep alive a popular feeling of hostility against the railroads of the United States than any other one cause."[537] All were agreed that the remedy must be applied by the states, from which the companies derived their charters. But a powerful impulse toward publicity of accounts and operating details as well as of rates, to be enforced by the hand of the Federal government, was unquestionably imparted by the financial scandals of the time. It was hoped that fraudulent construction concerns, subsidiary companies for "milking" the main corporation, unnecessary paralleling of existing lines for purposes of blackmail, speculative bankruptcies and all similar practices of the period might be restrained in part by letting in the light of day upon their affairs.
Then again, there were the discriminations in rates, so vehemently denounced, against the small towns and local business, in favor of the large cities mainly interested in long distance traffic. Such jealousies and rivalries of course antedate the railroad. They are almost as old as trade. And yet the course of affairs since the panic of 1873, had lent peculiar force to them by the middle of the eighties. It had been a period of ruinous railroad competition all over the land, but especially in trunk line territory. Through rates had fallen tremendously; without any corresponding change in local charges.[538] The great western cities and the remote farmers were the immediate beneficiaries, of course. But there were the older communities of the East to be reckoned with,[539]—the farmers of New England and Middle New York and the secondary cities which had once been terminal points but were now become way stations. In the South, new towns were springing up, anxious to divide distributive trade with the older cotton concentration points. Nashville, soon to take first place in a celebrated case, was being built up by a favoring railway; and Atlanta, a purely railroad town, was in rapid growth at the expense of older rivals. The separate states had long sought to deal with this ancient evil of local discrimination in rates by means of long and short haul clauses; but to little effect. What wonder that the Cullom Committee in 1886, heads its long list of "complaints against the railroad system of the United States" by two forms of this alleged evil!
In brief, the contemporary evidence all goes to show that,—quite aside from evil intent,—the railroad business of the United States in the middle of the eighties, was in a highly disorganized state. Phenomenal economic development since the resumption of specie payments in 1879, had perhaps outstripped the capacity of managements to scientifically order their affairs. Collateral evidence as to this is the extraordinary wastefulness, of operation which prevailed. Competition had run mad. All of the tricks and vagaries of roundabout routing of freight found place.[540] To keep pace with mere operating demands was a heavy enough task,—to say nothing of constructing well-ordered tariffs, keeping straight accounts, and providing adequate funds for growth. And out of this unsettled condition of affairs there had sprung the usual mushroom crop of speculation, fraud and corruption which is bound to flourish at such times.
And then, finally, in seeking to understand the economic situation in 1887, the intolerable arrogance of great railway managers must be kept in mind. Honorable exceptions there must have been, to be sure. But the "Public be damned" attitude of the old Commodore Vanderbilt was evidently a general, although perhaps a somewhat exaggerated one. It is certain that there was no well-defined sense of responsibility to the public. All attempts at investigation or reform were treated as "interference with private business." The rising tide of popular feeling was increased by evidence of corrupt political practices, as well as of mere crude contempt for the rights of patrons. Read the congressional debates upon the Camden and Amboy monopoly in New Jersey; the special laws "jammed" through the state legislature by the New York Central Railroad;[541] and the revelations as to corruption in the Credit Mobilier and other proceedings in Congress.[542] Such things added fuel to the flames in the East, kindled and kept alive in the West by the Granger movement. The time for an attempt to curb the second great manifestation of corporate power in the United States was indeed at hand. The only question was as to the form which it should assume.
The congressional history of the Act of 1887 extends over a period of nearly fifteen years. The first general bill to pass the House of Representatives in 1874, had for its object a reduction of rates; but the movement for the elimination of discriminatory practices did not begin until two years later. Then in 1877, came the first of the long series of bills which finally led up to the statute in its final form, prepared by Representative Reagan of Texas. But it was not until 1884 that the Senate, ever tardy in its response to public sentiment, began to take the matter seriously. Its earlier interest in reduced rates had dissipated, ten years before, with the Windom Committee Report. Now, however, under the leadership of the Senator from Illinois, the Cullom Committee brought in a bill, the distinctive feature of which was provision for a permanent administrative commission. The various House bills, in their distrust of executive appointments and authority, had favored leaving the elimination of abuses, once clearly defined by law, to the Federal courts. A legislative deadlock between the two chambers resulted upon this point; as well as concerning the status of pooling. For the House sought to prohibit all traffic agreements; while the Senate would permit them under proper administrative supervision.
At this critical juncture the Supreme Court decision in the Wabash, St. Louis, and Pacific Railway case[543] was handed down. It specifically denied to the individual states, power to regulate the ever-increasing volume of interstate traffic. This decision put the match to the long train of influences making for action. The Senate and House bills were therefore taken up in conference committee, with the usual outcome of give and take. The Senate gained its point of administrative, rather than judicial, control. A commission was provided; but the courts were accorded power to entertain appeals. On the other hand, the House conferees insisted upon the prohibition of pooling and a more stringent long and short haul clause. All were agreed in respect to the publicity features. The series of votes at different times with steadily growing majorities, leading up finally to the passage of this compromise statute by both houses, is significant of the progress of public opinion upon the matter.