The Great Railroad Revolution (48 page)

Yet favoring large clients was standard business practice in other industries. Moreover, in reality, the last quarter of the nineteenth century was a period of intense competition during which freight rates fell dramatically, from 1.88 cents per ton mile in 1870 to 0.73 cents in 1900. At various times, fierce rate wars broke out between competing railroads, and the large number of bankruptcies following the panic of 1893 suggested that this was
not
an industry where monopolists were constantly exploiting their customers. And the railroads could not be accused of a lack of innovation. One key development in the 1880s was the widespread introduction of the refrigerated boxcar. Although there had been earlier attempts to use refrigeration to keep cars cool, it was only in the 1880s that satisfactory methods were developed. The new refrigerated cars revolutionized the transportation of beef, since the animals could now be slaughtered locally before being transported to the Chicago stockyards; as a result, these yards grew to enormous proportions, eventually employing forty thousand people in the 1920s and processing nearly all of America's meat. The expansion of the Chicago yards, which also continued to deal with live meat, was another indirect consequence of the network of railroads that had concentrated in and around Chicago.

Nevertheless, with so many factors running against them, the railroads were ripe for a good kicking. The farmers might have been the best- organized force opposing them, but there was no shortage of popular criticism of the huge railroad companies, thanks to the activities of the barons.
Safety concerns, too, had not gone away. As we have seen, it took considerable efforts for the railroads to take safety matters seriously, and, despite the gradual improvements, there were still several major crashes in the last twenty years of the nineteenth century. The years 1887 and 1888 were particularly bad ones for rail safety, with a series of high-profile accidents, several of which were caused by bridge failures. The worst was the Great Chatsworth train wreck in Illinois, which took place on the night of August 10, 1887, when a trainload of Pullman sleepers and coaches, bound for Niagara Falls, was derailed by the failure of a wooden trestle underneath it, resulting in 84 deaths and around 280 injuries. The following year, in October, another accident with a high death toll attracted particular attention because it involved a train chartered by the Catholic Total Abstinence Society, returning from a meeting of the organization at Hazleton in the Appalachian Mountains on the Lehigh Valley Railroad. Two of the eight special trains collided with one another at Mud Run Station, Pennsylvania, resulting in 66 deaths in the flimsy wooden coaches used for the excursion services, yet another example of a disaster occurring on a special train.

The opposition to the Granger laws had resulted in a series of court cases, and though the states largely won these, it was becoming obvious that federal, rather than state, legislation was needed. In the 1880s, therefore, interest in railroad regulation passed from the states to the federal government in Washington. As early as 1871, there had been moves in Congress to create some kind of regulatory body, and the consolidation of the railroads into bigger companies increased the pressure. This was helped by the almost universal adoption of the standard gauge of four feet and eight and a half inches, as described in the last chapter. In the 1880s, 425 railroad companies, nearly a quarter of the total, came under the control of other lines through mergers or leasing arrangements, and the network was expanding rapidly through new construction, with nearly seventy thousand miles being built during the decade. It became clear to Washington politicians that these huge organizations, which crossed numerous state boundaries and had become the most powerful companies in the land, could not be controlled by state legislatures.

Two events in 1886 forced the issue. A committee set up by the Senate to investigate the railroad industry headed by Shelby Cullom, a former
governor of Illinois, uncovered the whole gamut of bad practices outlined above, from stock watering and discriminatory pricing to secret rebates and illegal kickbacks. Not surprisingly, it recommended the establishment of a commission to regulate the nation's railroads. That became inevitable after a Supreme Court decision in the same year involving the Wabash, St. Louis & Pacific (the use of
& Pacific
lingered on!) found that the state could not regulate rates on shipments that traveled beyond its borders.
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That made federal regulation inevitable.

By the mid-1880s, the Granger movement was on the wane, but it had been supplanted by the even more vociferous Farmers' Alliance, which later joined together with a number of other groups to form the Populist movement and was equally hostile to the railroads' power. There was, too, growing support beyond agriculture for regulating the railroads. The increasingly important oil companies, who were entirely dependent on the railroads for transportation, together with the powerful merchant interests in New York, had joined the Grangers in seeking legislation. Many railroad owners, too, had recognized that legislation was unavoidable, and they preferred, for the most part, the simpler option of having one federal system rather than a series of different rules in each state. Indeed, the increasingly fierce rate wars in the mid-1880s led several railroad magnates to welcome the notion of regulation in order to stop their rivals from carrying goods at rates below cost and to deter them from building tracks parallel to profitable lines in order to poach the business. As a Chicago newspaper reported just before the legislation was passed, “Perhaps the strongest argument that can be presented in favour of the passage of this bill is found in the fact that many of the leading railroad managers admit the justice of its terms and join in the demand for its passage.”
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Many of their successors, however, would have cause to regret the support given to the bill by the industry. Nevertheless, in early 1887, the bill was passed, creating the rather confusingly named Interstate Commerce Commission, which, faced with a difficult and complex task, would ultimately have a disastrous effect on the railroad industry.

The creation of the Interstate Commerce Commission was a response to the growing power of the railroads and fears that they would exploit their monopoly position. The commission, though, proved rather toothless in its early years, losing a series of challenges from the railroad companies, and could only watch as the consolidation of the railroads into bigger corporations intensified. This process was hastened by the panic of 1893, which pushed many rail companies into bankruptcy, facilitating their takeover by solvent rivals. This consolidation had, as Stover suggests, “been accompanied by financial manipulations so unscrupulous that they would have excited the envy of [Jay] Gould, Drew or Commodore Vanderbilt.”
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The result was that by the middle of the first decade of the twentieth century, two-thirds of the total mileage of the railroads, which had reached more than 225,000 miles, was in the control of just seven large corporations. The biggest was the Harriman group centered on the Union Pacific, with 25,000 route miles, but all of these conglomerates had more than 15,000 miles, and names like Gould (Jay's son George), Morgan, and Vanderbilt remained prominent.

The consolidation had been a way of clearing out dead wood and writing off unpayable debts. As Albro Martin suggests, before the depression that followed the 1893 panic, the railroads were “overbuilt, financially under-nourished, divided into hundreds of poorly integrated corporate entities, and riddled with rate wars which reduced the profits of the best-situated roads drastically and drove the weaker ones to the wall of bankruptcy.”
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In truth, the railroad network was still very uneven. A map of the railroads in 1900 shows the eastern half of the country covered in a tangle of spaghetti,
whereas the West remains almost bare, with just a few strands stretching across the huge plains and deserts. But that was as much a reflection of the pattern of settlement as the development of the railroads. The western lines were, for the most part, a separate system, with actually few people and not many goods making the full transcontinental coast-to-coast journey. The South, too, had fewer railroads, but now, thanks to J. P. Morgan, who melded its network together, they were better connected with the North, and indeed, apart from the seasonal vacationers, their main purpose was in carrying the raw materials such as coal, wood, and cotton required by the industrialized North.

The shakeout caused by the 1893 panic and the subsequent consolidation resulted in the growing power of these seven groups and entailed a reduction in competition, as the existence of the commission failed to prevent considerable, but mostly tacit, cooperation between rival railroads on many routes. The industry was changing from one ruled solely by raw competition to one where the value of cooperation was recognized. One sign of this was the growing number of “union” depots or stations that housed trains of several companies, although only very few, such as Los Angeles and Washington, DC, ever put all their trains in one station. The period running up to the First World War was the heyday for the building of union stations in imitation of European railroads, which had been constructing such palaces since the middle of the nineteenth century. Union Station in the capital, opened in 1907, is probably the most famous of these celebrations of the power and affluence of the railroads, with its triumphal arch entrance, grand high-ceilinged lobby, and eclectic classical style leavened with a hint of modernism. The equally classic and enormous Pennsylvania Station in New York City, opened in September 1910 and covering twenty-eight acres, was another product of the prewar period, but has subsequently been demolished, with the trains and concourse now hidden beneath the city streets. It was not only on the East Coast that these massive structures sprang up. The largest outside New York was in Kansas City, Missouri, which, tucked away in the deepest Midwest and built in the beaux arts style favored by the French, would not have been out of place on a Parisian boulevard. Completed in 1914, it was a genuine “union” station, housing no fewer than a dozen railroad companies and with thousands of passengers
daily crossing the vastness of its cathedral-like concourse. It survives today, after a period of decline and disuse, having been restored as a “Science City,” and offers a mere trio of Amtrak services daily, serving just 400 passengers. At St. Louis, on the other side of Missouri, one of the earliest union stations was built in a style variously described as “Romanesque, Norman Revival, and Chateau”—perhaps “eclectic” would have done the job. The busiest station of the period was the art nouveau–style South Station in Boston, a terminus for many suburban services that was used by 1 million people per week when it opened in 1900.

Another benefit for passengers of the consolidation of the railroads into bigger networks was that they were able to run longer continuous services, making it possible, for example, to travel between Maine in the far-northeastern corner of the country down to Florida in the South without changing trains. With such grand schemes and even bigger ambitions, it was, on the face of it, a good time to be in the railroad business. The automobile was not yet threatening rail's hegemony, and the airplane was just a funny idea dreamed up by a couple of innovative brothers from the Midwest working in a barn in North Carolina. Moreover, America's economy, after the postpanic depression, was growing again, and the population, boosted by the arrival of immigrants, was expanding rapidly too, reaching 100 million just before the outbreak of the First World War.

Consequently, between 1896 and 1916, it was boom time on the tracks. The core network was complete, though the construction of secondary lines
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continued until mileage reached its peak of 254,000 miles at the point the United States entered the war in 1917. This reduction in construction activity by the railroads allowed them to devote more capital investment to making improvements, such as reducing curves and gradients, and four-tracking busy sections, rather than the far more expensive process of having to carve out new lines. The healthy state of the industry can be gauged by the generosity of the Pennsylvania Railroad, which only a few years earlier had tried to cut wages but now, in 1902, raised the pay for its 100,000 workers by 10 percent. This was because, according to the company president, Alexander Cassatt—a particularly forward-looking railroad manager—the cost of living had risen by about a quarter since the depression of the mid-1890s, and “we have more business than we can handle and can't see our
way out of that difficulty unless we keep our men loyal to the company and help them when they help us.” This enlightened attitude was by no means universal, but the other trunk railroads mostly followed suit. In fact, while pressure from the unions and shortages of skilled workers resulted in a sharp increase in labor costs during the prewar period, the high rate of inflation meant that real wages barely increased at all. The growing strength of the unions, now far better organized, meant the railroad companies were inclined to settle disputes through arbitration often under the auspices of the Interstate Commerce Commission, in contrast to their previous obduracy. There were consequently only a few local strikes, with no national action on the scale of the Pullman conflict. The unions even managed to make some progress on the length of the working day, which was still routinely twelve hours, managing to reduce it to a maximum of ten. The proliferation of unions, representing different skills and groups of workers, led to a series of demarcation disputes that would dog the industry for decades. By 1910 labor issues were never far from the surface: “Demands from one railroad union or another were almost continuously before the railroads. As technological changes revolutionized railroading, they added to labor problems.”
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Indeed, for much of the twentieth century, industrial relations topped the list of problems for railroad managements.