Cronyism

CHAPTER 3

CARTELIZING THE RAILROADS

In 1884, Union Pacific president Charles Francis Adams Jr. explained to a congressman that an “efficient Board of Commissioners . . . depends upon the men, who, so to speak, are inside of it, and who are to make it work.”Adams was referring to how railroads could capture a government commission that regulated prices and output by getting the commissioners to raise rates and restrict the shipment of freight. The times were changing: the railroads, first favoring land grants and monetary subsidies, slowly but surely shifted their lobbying efforts to a new and highly important form of cronyism: regulatory commissions that promoted railroad collusion by weakening competitive pressures and blocking rate regulations proposed by rival shipper interests. Adams’s perspective, writes Gabriel Kolko, “suggested the whole course of subsequent big business attitudes towards federal regulation” and marked a significant step in the creation of the corporatist state.As Adams predicted, the railroads successfully lobbied for a regulatory commission and then lobbied its commissioners to interpret the mandate in their favor. They achieved short-term success in raising rates and restricting shipments.

Crippling Competition

Starting in the 1850s, the New York Central, Erie, and Pennsylvania Railroads—called the trunk lines because they connected the Midwest with the East Coast—competed with one another. The consequence of such market competition and desire for greater profits was lower rates, increased traffic, and improved service quality. However, frustrated by the constant rivalry, they wanted to mitigate competitive pressures by forming cartels—that is, by working together to reduce supply, raise prices, and increase profits. Railroads colluded through pools—agreements that fixed rates and allocated shares of rail traffic. Common law considered pools legal, but like the free market it did not provide government coercion to prevent members from revising or breaking their agreements. Without coercive force, pools tended to fail because one railroad would inevitably break ranks and provide secret price cuts to its shipper clients to gain a greater market share. One common secret price-cutting tool was discounting the list prices for the shipment of goods, also known as rebating. Rebates, in turn, led to retaliatory price cuts from other pool members, and rate wars ensued. In addition, new transportation companies entered the market and undercut the usefulness of pooling agreements. The resulting situation was highly unsatisfactory from the perspective of the New York Central, Pennsylvania, and Erie but beneficial for the public: consumers and businesses enjoyed lower rates and greater transportation options.

The Civil War dramatically strengthened the viability of the trunk lines’ pools. Lincoln needed railroads to transport troops and war materiel to the front. Desiring government-determined rates that fattened profits and reduced competitive pressures, railroads happily complied. They also understood the value of having the right personnel in charge. Lincoln’s first secretary of war, Simon Cameron, and his assistant Thomas Scott closely allied with the Pennsylvania Railroad. Scott, who would later become the “Pennsylvania Napoleon,” was vice president of the Pennsylvania at the time.He issued the government’s rate schedule and charged the military a 40 percent premium for his railroad’s services over what he charged other shippers. The Illinois Central Railroad maintained even better connections: its officials contacted President Lincoln directly and got him to waive the stipulation in the Compromise of 1850 that required the free delivery of military shipments.

Although higher prices caused by monetary expansion reduced railroads’ real profits during the war, the lack of rate wars inspired railroad cartelists, particularly Albert Fink of the Louisville & Nashville Railroad, to envision a system where the government sanctioned and enforced pool agreements. But the idea was premature for the postwar years. Railroads formed new pools, but market pressure and overbuilding from subsidies and credit expansion led to their downfall.

In the east, the trunk lines increasingly competed for refined oil shipments in western Pennsylvania and Ohio, especially after John D. Rockefeller established the Standard Oil Company of Ohio in 1870. Through Rockefeller’s entrepreneurial innovations in managerial accounting, mass production, cost cutting, and technological improvements, Standard Oil’s market share surged from 4 percent to 90 percent between 1870 and 1879. As a large shipper it earned substantial discounts for bulk deliveries. Standard Oil’s lower transportation costs from rebates increased the supply of kerosene products, resulting in lower consumer prices of fuel for lighting. Though consumers benefited from the 70 percent decline in refined oil prices during the decade, small oil shippers and the Pennsylvania Railroad grumbled under Standard’s competitive pressure.

To make matters worse, the trunk lines failed to cartelize traffic between Chicago and the East Coast. Instead, the three railroads fiercely competed for shipments from Chicago meatpackers and grain deliveries from the interior. The Panic of 1873 and the arrival of a new trunk line in Chicago the following year—the Baltimore & Ohio (B&O)—further increased competitive conditions. After a rate war caused an 85 percent fall in prices for eastbound freight traffic to New York City in 1876 and 1877, the four trunk lines organized a new pool, the Trunk Line Association, in 1877. The Joint Executive Committee was organized a year later to oversee it and other arrangements. Fink supervised both agreements. Notably, J. P. Morgan—a director of the New York Central, marketer of the Pennsylvania’s securities, and major stockholder and creditor of the B&O—played an increasingly prominent role in the trunk lines’ pooling attempts. But secret price cuts, new competition by yet another trunk line—the Grand Trunk Railway that traveled from Chicago to Boston through Canada—and the Panic of 1884 wrecked Morgan-engineered agreements. From 1880 to 1886 the price of shipping grain from Chicago to New York City declined 40 percent.

The situation was similar in the West. In 1870 the Chicago, Burlington & Quincy formed the Iowa Pool with other midwestern railroads to control traffic from Chicago to the Union Pacific terminus in Omaha and Council Bluffs. But internal cheating remained a pervasive problem, and the Pacific Mail Steamship Company competed on the seas by increasing its shipments between the coasts. Transcontinental monopolies also failed, thanks to new competition. In 1881 the Union Pacific and the Central Pacific route was the only one to the Pacific, but by the mid-1880s, the Northern Pacific; Southern Pacific; Atlantic & Pacific; Atchison, Topeka & Santa Fe; and Canadian Pacific had weakened its monopoly. The early 1890s witnessed further competition for West Coast traffic from the Great Northern.

In the face of such pervasive rate slashing and railroad building, Fink concluded that whether “cooperation can be secured by voluntary action of the transportation companies is doubtful.”

It was time, then, for the railroads to turn to state-level regulatory commissions to reduce price-cutting. The goal of government intervention would be to restrict transportation services to below the market-determined output and raise rates above market levels. While the railroads would profit, the public would suffer from costlier and less optimal rail service. Enter Charles Francis Adams Jr. After the Civil War this grandson of President John Quincy Adams was a railroad economist and leader in the American Social Science Association. Adams made exceptions to his overall laissez-faire outlook by advocating a civil-service bureaucracy and railroad regulation. Fittingly, in 1869 he drafted the bill for the Massachusetts Board of Railroad Commissioners, the first modern regulatory agency. Eager to put his law into practice, Adams served as one of the board’s three commissioners. On Adams’s regulatory board, the commissioners possessed discretionary powers in interpreting the legislative mandate. In particular, the commissioners could require railroads to provide rates and other information about their business practices “at all times on demand,” which they could publicize if a railroad was secretly cheating on agreements by cutting rates.This publicity would make it harder for railroads to compete, thereby facilitating cartelization. Though lacking enforcement power, the commissioners could also make rate recommendations, which railroads followed to avoid harsher regulations.

By the end of Adams’s tenure in 1879, he concluded that “a properly regulated combination of railroad companies, for the avowed purpose of controlling competition, might prove a most useful public agency.” Criticizing the notion that “so far as transportation is concerned, prosperity is to be secured through a succession of temporary local advantages,—an unending cutting of rates,” Adams bemoaned the “present competitive chaos.” Adams personified what came to be known as the revolving door between bureaucrats and businesses: his next job was to work with Fink at the Trunk Line Association before becoming president of the Union Pacific in 1884.

While Adams supported commissions to strengthen pools, shippers wanted commissions to artificially lower rates. With each passing year mercantile, agrarian, and industrial shippers grew more numerous and politically influential. The Grangers complained that railroads’ rate cutting often led to proportionately lower rates for long-distance shipping (e.g., New York City to Chicago) than for shorter distances (e.g., New York City to Buffalo). They conveniently overlooked how this price discrimination resulted from businesses shipping in bulk or operating in cities with intense railroad competition and how these economic conditions translated into lower prices for consumers. Railroads, for their part, also complained about the lower rates on long hauls, but they wanted to equalize rates not by lowering rates for short hauls but by raising the rates charged for longer distances.

Most prominently, Illinois merchants in the Chicago Board of Trade lobbied for a state railroad commission in the early 1870s. The legislature armed it with the power to lower short-haul rates to equalize them with long hauls, much to the dismay of the Illinois Central. When railroads challenged the commission’s legality in Munn v. Illinois (1877) the Supreme Court upheld states’ abilities to regulate rates.

However, the Grangers’ commissions failed to satisfy merchants and farmers because railroads often responded to the equal-rate provisions not by lowering short-haul rates but by raising long-haul rates. In some cases they simply stopped shorthaul service to small towns altogether. The consequence of both responses was higher prices of goods or no goods shipped at all, both of which ultimately hurt the public.

By the late 1870s, the stage was set for shippers and railroads to push for federal regulation. Par for the course in the Great Barbecue, the fight between the different interests promised to be filled with intense offensive and defensive lobbying. In 1876, Democratic congressman James Hopkins of Pennsylvania introduced a bill in the House Interstate Commerce Committee to outlaw rebates. Purportedly written by the attorney for the anti–Standard Oil Philadelphia & Reading Railroad, the bill would assist small shippers and the trunk lines against Standard’s growing market share. But Standard Oil lobbied the committee to kill it.

Two years later, Democratic Congressman John Reagan of Texas—the former postmaster general of the Confederacy, an ally of Scott and his Pennsylvania Railroad and Texas & Pacific Railway, and the new chair of the committee—introduced a different bill. Reagan’s bill prohibited rebates, publicized rate schedules to eliminate cheating, made pooling agreements illegal, and forbade short-haul discrimination. Since the Reagan bill prohibited rebates in interstate commerce, it favored the Pennsylvania Railroad at the expense of the New York Central and the Erie: the Pennsylvania’s route did not have to travel across state lines when carrying Standard Oil shipments to Pittsburgh or Philadelphia. George Blanchard, vice president of the Erie, complained that the Pennsylvania would be “exempt from the operations of this law.”Although the New York Central, the Erie, and Standard Oil opposed the Reagan bill, antipooling shippers lobbied hard to get it passed in the House.

Railroads possessed greater strength in the Senate, which quickly defeated the Reagan bill. In testimony, Fink made it clear that while railroads favored publicizing rates and prohibiting rebates, they wanted government-backed pools. Adams embodied their demands by writing the Henderson bill, which proposed a regulatory commission. Adams’s commission would secure crony privileges to railroads in the form of government-enforced pooling agreements while denying the Reagan bill’s privileges to shippers. In the words of Blanchard, “A national railway commission” would aid railroads by providing “conservative protection against radical assaults; and their co-operative traffic federations.” Reagan, on the other hand, favored enforcement by the courts because he feared that with a commission “the railroad interests [would] combine their power to control the appointment of commissioners in their own interest.”Railroad critics pointed to the prorailroad men that Grover Cleveland, recently elected governor of New York, picked for his state’s newly created railroad commission in 1883.

By the mid-1880s Congress had clearly deadlocked on federal regulation. Against the Reagan bill, railroads supported the legislation written by Senator Shelby Cullom, who became chair of the Senate Interstate Commerce Committee. Cullom, a former Republican governor of Illinois who appointed that state’s first railroad commissioners, had fallen under the influence of Adams’s views. Adams, now president of the besieged Union Pacific, especially fretted over threatening legislation. After drafting his bill, Cullom carefully consulted with Fink and Blanchard for suggestions. His final bill created a commission, gave discretion to the commissioners to decide what constituted illegal rebating and short-haul discrimination, and, most importantly of all, remained vague on pooling—an opening wedge for explicitly government-enforced cartels in the future.

In late 1886, the Supreme Court drastically weakened state-level commissions in Wabash v. Illinois by holding that only the federal government could regulate interstate commerce under the Constitution. The federal government would fill the void with an even more expansive regulatory net. Reagan and Cullom reached a compromise on their bills, agreeing to prohibit pooling in return for a five-man commission. In early 1887 Congress passed the Interstate Commerce Act, with most of the support coming from southern and western politicians. The law created a five-man commission, prohibited pooling, required publicized rates, forbade rebating, and prevented discrimination against short hauls under certain vague conditions. The nation’s railroads waited for the next steps.

Capturing the Commission

The legislative provisions of the Interstate Commerce Commission (ICC) could deliver crony rewards to either railroads or shippers. It was up to the personnel to decide what interests to privilege. To the railroads’ delight, the commissioners would end up interpreting their mandate in a prorailroad fashion, supporting indirect forms of pooling and cutting down on secretive rebating. This resulted in a temporary strengthening of railroad cartelization, to the detriment of the firms using the railroads’ services.

Given the railroad lobby’s declining power and the growing influence of shippers to secure restrictions against railroads’ rate and pooling policies, the Interstate Commerce Act at first worried the railroads. Railroad leaders fumed at how the law banned pooling, and Albert Fink considered it a “dangerous experiment.”Echoing these sentiments, the Atchison, Topeka & Santa Fe and the Chicago, Burlington & Quincy hired corporate lawyer Richard Olney to lobby against the act. Bankers also voiced negative assessments, especially in the Commercial & Financial Chronicle. J. P. Morgan’s father, Junius, an investment banker in London, blasted the legislation as “a disturbing cause . . . imposed by the National Will, a case of force majeure.”

But some saw potential and believed that despite its antipooling provisions, the new commission could indirectly stabilize railroad cartels reorganized under different forms. Adams remained optimistic because the rebate prohibitions would deal with the “canker eating into the very vitals of railroad prosperity.”According to one J. P. Morgan biographer, the foremost advocate of pools “was prepared to do his part to see that [the new law] was enforced.”Ultimately, these railroad hopefuls realized that the ability of the railroads to capture the ICC depended on the specific personnel administering the policy. The vague clauses, an optimistic Adams noted, meant that “there is much labor cut out for the commission.”

The focus shifted to whom the Democratic president Grover Cleveland would appoint. Unlike the many agrarian Democrats who voted for the law, Cleveland was a Bourbon Democrat who championed limited government. But the president frequently maintained a prorailroad position and sympathized with their anticompetitive efforts. Such affinity for the railroads was common among the Bourbons and undermined their otherwise anticrony stance. For instance, the Democrats’ 1876 presidential candidate, the Bourbon Samuel Tilden, had established himself as a political reformer turned governor of New York, but he had also been a wealthy railroad lawyer and served on the boards of at least four railroads before his presidential run.

Cleveland, too, had served as an attorney for several railroads, which gave him insight into their point of view. Most notably, in the early 1870s Cleveland’s law partnership, Laning, Cleveland & Folsom, had worked for the New York Central Railroad, and in 1881 the railroad’s vice president Chauncey Depew asked Cleveland to be one of its chief counsels. Though Cleveland refused, he deliberated heavily on the offer and did try some cases for the railroad. Then, after he became governor of New York in 1883 and appointed railroad men to the state railroad commission, Cleveland listened to Drexel, Morgan & Co. and vetoed a bill regulating passenger rates. The erstwhile Republican Morgan even crossed party lines to vote for him in the presidential election of 1884. As president, Cleveland appointed railroad lawyers and directors to his cabinet. “It is clear,” writes Philip Burch, that the first Cleveland administration was dominated by “pro-business, and more specifically pro-railroad, leaders—to a greater extent, in fact, than some of the preceding Republican regimes.”While the transcontinentals’ previous gorging at the taxpayers’ expense disgusted Cleveland, he was not above ruling in their favor, as the lobbying battle between James J. Hill and the Northern Pacific demonstrated.

If the railroads were to secure any special privileges in the ICC they would come through Cleveland. The president did not disappoint. Although the administration remained absent from the legislative drive, the president carefully considered which commissioners to nominate for the relatively prorailroad Senate to confirm. Based on Senator Cullom’s recommendation Cleveland chose as the ICC’s chairman the jurist Thomas Cooley, who worked with Fink as an administrator for the Joint Executive Committee. Like Cleveland, Cooley excluded railroad policy from his laissez-faire scruples. Other appointments also benefited the railroads, particularly Aldace Walker, a future chairman of the board of the Atchison, Topeka & Santa Fe.

According to the New York Times, “President Cleveland’s selections were almost uniformly approved” by Wall Street and affiliated railroads. Fink, for one, thought “very highly” of Cooley, and Depew, now president of the New York Central, commended “the wise work of President Cleveland.”The Commercial & Financial Chronicle stated that Cleveland’s “appointments, under the circumstances, could not have been better.”Cooley would “cause general satisfaction in the mercantile community [because he] has had experience in railroad matters” and would “conserve both industrial and railroad interests.”

The new commissioners’ rulings pleased the railroads. Cooley interpreted the vague provision that prohibited discrimination against short hauls in a way that enabled them to raise rates on long hauls. Walker wrote that this ruling, “as a prevention of rate wars[,] . . . is already recognized by intelligent railroad men as better than the pool” because most rate wars began with cuts in long-haul rates.The trunk lines used Cooley’s ruling to attack competition and market efficiency: when the New York Central accused the Grand Trunk Railway of setting lower rates on traffic from Boston to Detroit than from Boston to Vermont, the ICC agreed and ruled against the Grand Trunk. The ICC further weakened competition by mandating a single rate for all railroads shipping grain from Chicago to an East Coast city. Furthermore, it reduced Standard Oil’s ability to obtain lower transportation costs by preventing railroads from reducing rates for full carloads without reducing rates for less-than-full carloads. The Detroit and Indianapolis Boards of Trade, along with the Nebraska Farmers’ Alliance, criticized the ICC’s prorailroad interpretations of its mandate.

The ICC’s rulings especially benefited the eastern railroads. They managed to skirt the pooling prohibition by creating a rate association that only fixed rates without allocating traffic shares, meaning that it was technically not a pool. With Fink as commissioner, the reorganized Trunk Line Association pledged to “aid in the enforcement of the provisions of the Interstate Commerce Law.”Between the act’s passage in early 1887 and winter 1893 the rates to ship eastbound grain stabilized, a sharp contrast to the rate wars of the mid-1880s. The trunk lines’ profits from freight transportation grew markedly. For example, the New York Central’s net receipts from shipments increased 44 percent and its stock price rose 36 percent.

The western railroads were less conforming. Fierce competition between the Union Pacific; the Northern Pacific; the Atchison, Topeka & Santa Fe; and the Southern Pacific had led to repeated rate wars in the West. By December of 1888, Adams was criticizing “the dishonest methods of rate-cutting, the secret systems of rebates, [and] the indirect and hidden payments made to influence the course of traffic.”Still desiring government-enforced pools, Adams wanted to use “the power of the bankers against recalcitrants and . . . the machinery of the Interstate Commerce Act against every violator of law.” J. P. Morgan thoroughly agreed, eager to make railroads realize that they should stop competing and “no longer take the law into their own hands.”

Morgan and other bankers hammered out an agreement with presidents of ten western railroads. In early 1889, after getting approval from Cooley, Walker, and another ICC commissioner, Adams organized the Interstate Commerce Railway Association to engage in the “maintenance of rates and enforcement of all the provisions of the Inter-State Law.”Like the remodeled Trunk Line Association the Interstate Commerce Railway Association was technically not a pool because it did not allocate traffic among railroads. To lead it Adams recommended Walker, who promptly resigned from the ICC to take the new post.

Everything appeared promising for the western lines. Despite the commission’s blessing, however, they failed to successfully cartelize because cheating and external competition persisted. By the end of the year secret rate cuts reappeared in various forms, including deliberately false classifications and the underestimation of freight weights. Moreover, the Great Northern did not join the association, and according to Julius Grodinsky, “there appeared to be little hope of inducing Hill to adopt a policy of rate stabilization.”Frustrated by the Interstate Commerce Railway Association and other failures, the Union Pacific forced Adams out in November 1890.

Adams’s ousting was followed by the good times ending for even the eastern railroads. In 1891 Cooley resigned from the ICC on grounds of poor health. Without Walker and Cooley the commission became less supportive of railroads. Matters took a turn for the worse when the Panic of 1893 sent 192 railroads—a fourth of the entire rail system—into various stages of bankruptcy. By mid-1894 eastbound grain rates plummeted and New York Central president Depew bemoaned “the present demoralization.” Finally, as the killing blow, in a series of cases the Supreme Court crippled the ICC’s ability to regulate rate discrimination and railroads’ ability to create rate associations. According to Paul MacAvoy, this “nullified all of the gains of regulation and cartelization over the structure and level of rates.”

Thus, as Murray Rothbard argues, by 1896 the railroads realized “that the existing Interstate Commerce Act was not sufficiently powerful to act as a successful cartelizer of the railroad industry.”Notables of the New York Central, the Pennsylvania, and the Baltimore & Ohio resumed lobbying efforts for a stronger ICC to support pooling agreements. One example, the Gorman bill, was written by the attorney for the B&O. He demanded “the intervention of the Commission. We do not want an agreement to go into effect without their approval.”Congressmen, however, were preoccupied with the economic depression, and their inaction impeded big-business advocates of federal cartelization.

After the panic, Morgan, in charge of the new J. P. Morgan & Co. formed in 1895, reorganized the Erie, the Philadelphia & Reading, the Northern Pacific, and many other railroads that fell into bankruptcy. With his “morganization” of the railroads, he started to devise new ways of controlling competition.In particular, Morgan wanted to informally merge the nation’s railroads into regional communities of interest, such as Hill’s Great Northern and the Northern Pacific, through shared stock ownership and overlapping boards of directors. Morgan’s plan would undeniably improve efficiency through greater economies of scale and better oversight by the owners. However, at the large size Morgan envisioned, the communities of interest could only succeed if a friendly government cracked down on secret rebates.

Equally important, the election of 1896 preoccupied Morgan and the railroads. That summer the Populist wing of the Democratic Party wrested control from the Bourbons. William Jennings Bryan became the presidential candidate and advocated a more antirailroad ICC. Union interest groups, such as the Big Four railroad unions of skilled engineers, conductors, firemen, and trainmen, backed his candidacy. Although the Chinese Exclusion Act of 1882 blocked out Chinese labor competition, new European immigrants and southern blacks still undercut the wages of Anglo-Saxon unions. The Pullman strike of 1894 failed partially because of such competition. Railroad unions especially worried about black labor, and in 1896 the Locomotive Firemen’s Magazine warned that the black strikebreaker was only “in his ‘infancy’ as a competitor in the labor market.”Unions wanted Bryan to disincentivize railroads from hiring their rivals. Such legislation, in combination with proshipper rate regulation, threatened to raise railroads’ labor costs and lower revenue. To implement their plans, then, Morgan and the railroad leaders had to defeat Bryan and elect the probusiness Republican William McKinley.

The railroad industry during the Great Barbecue is the definitive illustration of how businesses lobby for cronyism. Constant infighting combined with attacks by other interest groups surrounded the railroads’ search for favors. First, promoters fought bitterly over which companies would receive federal subsidies to build a transcontinental route. Then, once the Union Pacific and Central Pacific offensively lobbied to receive government loans and land grants, they defensively lobbied to deny the same privileges to other railroads. As the decades progressed, more transcontinentals lobbied to receive the same favors, while shippers emerged to seek privileges at the railroads’ expense. Besieged on all sides, the railroads sought to protect themselves, achieving partial success by lobbying for a commission that enforced pooling agreements by another name. Even with the guiding hand of Morgan and other investment bankers, too many railroads had different goals, with some favoring price-cutting and competition over cartelization. The ICC failed to promote the desired and purported stability. Instead of shifting gears and advocating less government intervention, however, railroads doubled down and sought a stronger regulatory commission to suppress market forces.

The railroad industry was not alone in lobbying for government handouts during and in the decades following the Civil War. Lincoln and the Republican Party ushered in a new American System, with government support for internal improvements favored by the railroads and protective tariffs chosen by the nation’s manufacturing interests. The same decades that saw railroad subsidies and restrictions on railroad competition featured similar crony forces at work to protect manufacturers from market forces.

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Charles Francis Adams Jr. to John Long, March 1, 1884, quoted in Gabriel Kolko, Railroads and Regulation, 1877–1916 (Princeton, NJ: Princeton University Press, 1965), 37.

Kolko, Railroads, 37.

David Lavender, The Great Persuader: The Biography of Collis P. Huntington (New York: Doubleday, 1970), 299.

Stuart D. Brandes, Warhogs: A History of War Profits in America (Lexington: University of Kentucky Press, 1997), 75–77; Philip H. Burch Jr., Elites in American History, vol. 2, The Civil War to the New Deal (New York: Holmes and Meier, 1981), 22, 53, 55; Kurt A. Carlson, “Backing the Boys in the Civil War: Chicago’s Home Front Supports the Troops—and Grows in the Process,” Journal of the Illinois State Historical Society 104, no. 1–2 (Spring–Summer 2011): 151–53; Alfred D. Chandler Jr., The Visible Hand: The Managerial Revolution in American Business (Cambridge, MA: Harvard University Press, 1977), 134–36; Albert J. Churella, The Pennsylvania Railroad, vol. 1, Building an Empire, 1846–1917 (Philadelphia: University of Pennsylvania Press, 2013), 189, 202–4, 286, 288, 290, 292, 301; Edward C. Kirkland, Industry Comes of Age: Business, Labor, and Public Policy, 1860–1897 (New York: Holt, Rinehart and Winston, 1961), 77; Murray N. Rothbard, The Progressive Era, ed. Patrick Newman (Auburn, AL: Mises Institute, 2017), 52–53, 79; and Richard White, Railroaded: The Transcontinentals and the Making of Modern America (New York: W. W. Norton, 2011), 3–8, 161, 175–76.

Churella, Pennsylvania, 1:301, 361–62, 461; Samuel DeCanio, Democracy and the Origins of the American Regulatory State (New Haven, CT: Yale University Press, 2015), 156–57, 163–65; Thomas J. DiLorenzo, How Capitalism Saved America: The Untold History of Our Country, from the Pilgrims to the Present (New York: Crown Forum, 2004), 121–30; Elizabeth Granitz and Benjamin Klein, “Monopolization by ‘Raising Rivals’ Costs’: The Standard Oil Case,” Journal of Law and Economics 39, no. 1 (April 1996): 1–2, 4–9, 30; and Charles R. Morris, The Tycoons: How Andrew Carnegie, John D. Rockefeller, Jay Gould, and J. P. Morgan Invented the American Supereconomy (New York: Henry Holt, 2005), 345, 359.

Vincent P. Carosso, The Morgans: Private International Bankers, 1854–1913 (Cambridge, MA: Harvard University Press, 1987), 248, 254, 257; Churella, Pennsylvania, 1:463; Robert H. Porter, “A Study of Cartel Stability: The Joint Executive Committee, 1880–1886,” Bell Journal of Economics 14, no. 2 (Autumn 1983): 311; Rothbard, Progressive, 55–56, 61–66; and Jean Strouse, Morgan: American Financier (New York: Harper Perennial, 2000), 246–49.

Albro Martin, James J. Hill and the Opening of the Northwest (Minneapolis: Minnesota Historical Society Press, 1991), 396; Rothbard, Progressive, 59–61; and White, Railroaded, 203–4.

Albert Fink to Joseph Nimmo Jr., May 1, 1876, quoted in D. T. Gilchrist, “Albert Fink and the Pooling System,” Business History Review 34, no. 1 (Spring 1960): 32–33.

Massachusetts Acts and Resolves, Chap. 408 (1869), 699–703, quoted in Thomas K. McCraw, Prophets of Regulation (Cambridge, MA: Harvard University Press, 1984), 19.

Charles Francis Adams Jr., “The Railroad Problem (1879),” in The Transformation of American Society, 1870–1890, ed. John Garraty (Columbia: University of South Carolina Press, 1968), 71–72.

An Act to Establish a Board of Railroad Commissioners, 1869 Mass. Acts 699; DeCanio, Democracy, 187; Joseph Dorfman, The Economic Mind in American Civilization, vol. 3, 1865–1918 (New York: Augustus M. Kelley, 1969), 23–26, 90–91; McCraw, Prophets, 1, 7, 17–35, 49–52; Marc-William Palen, The “Conspiracy” of Free Trade: The Anglo-American Struggle over Empire and Economic Globalization, 1846–1896 (New York: Cambridge University Press, 2016), 139; Rothbard, Progressive, 68–69; Edward T. Silva and Sheila A. Slaughter, Serving Power: The Making of the Academic Social Science Expert (Westport, CT: Greenwood Press, 1984), 49–51, 54–57; and White, Railroaded, 175.

Lee Benson, Merchants, Farmers, and Railroads: Railroad Regulation and New York Politics, 1850–1887 (Cambridge, MA: Harvard University Press, 1955), 25–27; Churella, Pennsylvania, 1:543; Morris, Tycoons, 116; James W. Neilson, Shelby M. Cullom: Prairie State Republican (Urbana: University of Illinois Press, 1962), 61–64; and Rothbard, Progressive, 49–56.

George Blanchard, Argument before the Committee on Commerce of the Senate of the United States, Tuesday, February 11, 1879 (New York: Martin B. Brown, Printer and Stationer, 1879), 13, quoted in DeCanio, Democracy, 168.

George Blanchard, Traffic Unity, Popularly Called “Railway Pools” (New York, 1884), 30, 34, quoted in Kolko, Railroads, 38.

17th Congressional Record 7283 (1886), quoted in Jed Handelsman Shugerman, “The Dependent Origins of Independent Agencies: The Interstate Commerce Commission, the Tenure of Office Act, and the Rise of Modern Campaign Finance,” Journal of Law and Politics 31, no. 139 (Fall 2015): 170.

Benson, Merchants, 187–88, 192–94; Churella, Pennsylvania, 1:420; DeCanio, Democracy, 154, 158–59, 167–70, 173–74; Kazuyuki Matsuo, “Congressional Struggle for the First American Regulatory Agency: The Formation of the Interstate Commerce Commission as a Prelude to Modern America,” Journal of American and Canadian Studies no. 17 (1999): 32–34; Rothbard, Progressive, 69–73; Elizabeth Sanders, Roots of Reform: Farmers, Workers, and the American State, 1877–1917 (Chicago: University of Chicago Press, 1999), 185–90; and Shugerman, “Dependent,” 167, 170.

Churella, Pennsylvania, 1:543, 545; Shelby M. Cullom, Fifty Years of Public Service (Chicago: A. C. McClurg, 1911), 307–8, 318–19; DeCanio, Democracy, 192; Kolko, Railroads, 42–43; Rothbard, Progressive, 73, 80; and Sanders, Roots, 188–94.

Albert Fink, quoted in Railway Review, December 18, 1886, 586, quoted in Alan Jones, “Thomas M. Cooley and the Interstate Commerce Commission: Continuity and Change in the Doctrine of Equal Rights,” Political Science Quarterly 81, no. 4 (December 1966): 612.

Junius Morgan to Drexel, Morgan & Co., December 12, 1888, quoted in Strouse, Morgan, 257.

Charles Francis Adams Jr., quoted in White, Railroaded, 359.

Carosso, Morgans, 257.

Charles Francis Adams Jr., quoted in Travelers Official Railway Guide for the United States and Canada, 19th year, no. 11 (April 1887): 1½, quoted in White, Railroaded, 358. Burch, Elites, 2:98; Carosso, Morgans, 289, 364; Thomas W. Gilligan, William J. Marshall, and Barry R. Weingast, “Regulation and the Theory of Legislative Choice: The Interstate Commerce Act of 1887,” Journal of Law and Economics 32, no. 1 (April 1989): 59–61; Edward A. Purcell Jr., “Ideas and Interests: Businessmen and the Interstate Commerce Act,” Journal of American History 54, no. 3 (December 1967): 572–77; Sanders, Roots, 193, 458; and White, Railroaded, 358–59.

Burch, Elites, 2:91.

Benson, Merchants, 181–82, 187–94; Burch, Elites, 2:73–74, 86–91, 112, 118; Horace Samuel Merrill, Bourbon Leader: Grover Cleveland and the Democratic Party (Boston: Little, Brown, 1957), 6, 47, 50–51, 81; George F. Parker, Recollections of Grover Cleveland (New York: Century, 1909), 37–38; Rothbard, Progressive, 75; Strouse, Morgan, 241; and Richard E. Welch Jr., The Presidencies of Grover Cleveland (Lawrence: University Press of Kansas, 1988), 79.

“The Railway Commission, Mr. Cleveland’s Task Well Performed,” New York Times, March 24, 1887, 1.

“The Financial Situation,” Commercial & Financial Chronicle, March 26, 1887, 380.

“The Financial Situation,” Commercial & Financial Chronicle, April 2, 1887, 410–11. Burch, Elites, 2:91; Allan Nevins, Grover Cleveland, a Study in Courage (New York: Dodd, Mead, 1964), 355–56; Rothbard, Progressive, 75–76; and Sanders, Roots, 458.

Aldace Walker to Joseph Nimmo Jr., November 22, 1887, quoted in Kolko, Railroads, 52.

Articles of Association of the Trunk Lines—Copy of Trunk Line Contract of February 20th, 1889 (Philadelphia, 1894), 7, quoted in Kolko, Railroads, 61.

Ari Hoogenboom and Olive Hoogenboom, A History of the ICC: From Panacea to Palliative (New York: W. W. Norton, 1976), 21–24; Kolko, Railroads, 50–53, 61; Paul W. MacAvoy, The Economic Effects of Regulation: The Trunk-Line Railroad Cartels and the Interstate Commerce Commission before 1900 (Cambridge, MA: MIT Press, 1965), 116–19, 193–94, 197, 203–4; and Rothbard, Progressive, 76–77.

“Hot Shot from a Friend: Charles Francis Adams on Railroad Management,” New York Times, December 16, 1888, 9.

Charles Francis Adams Jr., quoted in Maury Klein, Union Pacific, vol. 1, 1862–1893 (Minneapolis: University of Minnesota Press, 2006), 589.

J. P. Morgan, quoted in Carl Hovey, The Life Story of J. Pierpont Morgan (New York, 1911), 139.

Proceedings of the Conferences between Presidents of Railroad Lines West of Chicago and St. Louis and Representatives of Banking Houses, January 8th and 10th, 1889 (New York, 1889), 2, 10, quoted in Kolko, Railroads, 60.

Julius Grodinsky, Transcontinental Railway Strategy, 1869–1893: A Study of Businessmen (Philadelphia: University of Pennsylvania Press, 1962), 348.

Carosso, Morgans, 257–59; Klein, Union, 1:589–93; Rothbard, Progressive, 77–78, 81; and White, Railroaded, 360–65, 372–78, 385–91.

“Mr. Depew on Rate Cutting,” New York Times, March 25, 1894, 3.

MacAvoy, Economic, 153. Hoogenboom and Hoogenboom, History, 35–37; Kolko, Railroads, 68–71; MacAvoy, Economic, 164–65, 186–87, 194; Morris, Tycoons, 236; and Rothbard, Progressive, 78–79.

Rothbard, Progressive, 80.

Senate Document No. 39, 55:1, 57–58, quoted in Kolko, Railroads, 77.

Ron Chernow, The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance (New York: Simon and Schuster, 1990), 67.

Carosso, Morgans, 363–90; Chernow, Morgan, 67–69; Churella, Pennsylvania, 1:625; and Kolko, Railroads, 75–78.

“The Negro and the Labor Question,” Locomotive Firemen’s Magazine, July 1896, 4.

Eric Arnesen, Brotherhoods of Color: Black Railroad Workers and the Struggle for Equality (Cambridge, MA: Harvard University Press, 2001), 25–30; Eric Arnesen, “‘Like Banquo’s Ghost, It Will Not Down’: The Race Question and the American Railroad Brotherhoods, 1880–1920,” American Historical Review 99, no. 5 (December 1994): 1609, 1612–19; David E. Bernstein, Only One Place of Redress: African Americans, Labor Regulations, and the Courts from Reconstruction to the New Deal (Durham, NC: Duke University Press, 2001), 45–48; Merrill, Bourbon, 204–8; Gwendolyn Mink, Old Labor and New Immigrants in American Political Development: Union, Party, and State, 1875–1920 (Ithaca, NY: Cornell University Press, 1986), 129–48; Linan Peng, “The Political Economy of the Anti-Chinese Movement in California in the Nineteenth Century,” Journal of Economics, Race, and Policy 5, no. 1 (March 2022): 13–24; Paul Michel Taillon, Good, Reliable, White Men: Railroad Brotherhoods, 1877–1917 (Chicago: University of Illinois Press, 2009), 178; and White, Railroaded, 293–314, 429–50.