The Great Railroad Revolution

by Christian Wolmar

  It was not, though, the workers who were to attract the most sympathy in their battles with the railroads, but the farmers, who were by far the best-organized group of railroad opponents; even though their case was at times tenuous, they ran a highly effective lobbying campaign that would force the railroads on the defensive. The railroads changed the nature of farming. In the prerailroad days, markets were still local enough for the farmer to transport his produce there with his horse and cart, and the use of any possible transportation system, such as a river or a railroad, was entirely optional. If it were cheap and convenient enough, then he might use it, but otherwise not. The railroads were sensitive to this, as they were mostly local concerns, and therefore ensured their rates were tailored to the farmers’ needs. However, as the West became settled, and large farms created out of the land given to the railroads began to emerge in the 1870s, the situation became very different. In states such as Nebraska or Iowa, farmers were no longer self-reliant producers, but, as John Stover puts it, “had no choice but to use rail facilities offered at the rates ordained by a largely absentee ownership.” There simply was no local market. The farmers were growing cash crops that had to be transported long distances to the east or for export, and “it was the rare western farmer who had the choice of two rail routes to market.”40 The farmers were consequently at the mercy of the railroads, and they perceived the cost of transportation as an unavoidable tax.

  Not only were the farmers tied inexorably to the railroads, but in some cases they had even helped finance them by raising mortgages on their farms. Now, though, they were in a powerless position, as the railroads imposed what the farmers felt were punitive rates. According to Stover, “The farmer’s transition from railroad proponent to railroad antagonist came earlier along the eastern prairie than it did farther west.”41 The standard complaint was simple: why did the railroads charge more per mile for shorter journeys than for longer ones, which seemed to put local farmers at a disadvantage? There were, in fact, understandable reasons, since much of the cost of a journey occurs in the loading and unloading at each end, but this argument was dismissed by the farmers. They blamed the low margins they could earn on their produce on high freight charges. Even when rates began to fall in the 1880s, there was continued resentment because of the railroads’ dominant position as the sole viable means of transportation. Probably apocryphal stories spread through the Midwest about the Illinois farmer who returned from selling his load of grain with the amount it had cost him to buy a pair of shoes for his son, or the similar tale from Iowa of a smallholder who burned his corn for fuel as, at fifteen cents a bushel— compared with the dollar he would have received in the East—it was cheaper than coal. In fact, there were bigger forces at work that affected the farmers. Much of the land in the West was in areas with poor rainfall, and yields were not as good as promised; also, partly thanks to the opening up of vast swaths of land in the United States and Canada as a result of the spread of the railroads, worldwide prices for grain were falling.

  No matter. The railroads were an easy target. The weather and global prices could not be influenced by pressure from the farmers. The railroads and the state legislatures could, and consequently the railroads became the great symbol of grasping capitalists who were responsible for all the farmers’ ills. Helped by the antipathy to the barons, the farmers captured the zeitgeist and became the first organized force against the power of the railroads. The railroads were perceived as having destroyed the traditional American way of life, a feeling encapsulated by Henry George in an 1868 essay: “[The railroad] kills little towns and builds up great cities, and in the same way kills little businesses and builds up great ones.”42 The hostility started in Illinois at the back end of the 1860s, whereas in Nebraska, farther west, it did not emerge until the deprivations in the depression following the panic of 1873. Although the farmers’ complaints were hardly new or even noteworthy, they were given added strength because they were backed by a curious but effective organization, the Patrons of Husbandry, better known as the Grange. It was created by a brilliant orator and organizer, Oliver Kelley, a Minnesota farmer who had decided that farmers needed an association to press for their interests. He used the model of the Masonic order, creating a series of local Granges and a structure based on “degrees,” as members rose through the ranks. Unlike the Masons, women were admitted on the basis that they would be crucial in winning over their menfolk. After a slow start, as Kelley toured first his own state and later neighboring ones giving rousing speeches with the aim of setting up local groups, the movement blossomed and by 1875 had eight hundred thousand members in twenty thousand local Granges.

  The feelings of the farmers toward the railroads were evoked powerfully in a series of books and pamphlets on the Mussel Slough tragedy of May 1880 in California’s San Joaquin Valley, in which seven men died in a shoot-out between local settlers fearing eviction by the Southern Pacific Railroad and a marshal and his three associates who, it was thought, had been sent in to clear the land. The most famous was Frank Norris’s 1901 novel The Octopus, which describes the railroad as that “great monster, iron-hearted, relentless, infinitely powerful.” On this occasion, the issue was not freight rates, but, rather, the railroad was accused of misleading the settlers about the rent levels they had to pay on their land and was portrayed as callous in trying to evict them. The Southern Pacific was victorious in various court decisions, helped by sympathetic judges, but the widespread publicity given to the incident ensured public support for the settlers, which in turn helped stimulate wider feelings of antagonism toward the railroad companies. The understandable failure of the public to comprehend the historic role of the railroads in light of their oppressive behavior is brilliantly encapsulated by railroad historian Richard Saunders Jr.: “[The Southern Pacific] made enemies in California even though, probably more than any other institution, it also made modern California possible.”43

  The farmers pressed for the states to bring in legislation controlling railroad rates. It was no coincidence that it was the states where the Grange was most active that became the first to control freight charges. Minnesota, the birthplace of Kelley’s movement, passed a law fixing railroad rates and providing for a railroad commissioner in 1871. Two years later, similar legislation was introduced in Illinois, where many Granges had also been formed. Iowa and Wisconsin followed suit the next year, and by the end of the decade another four states, including California, had passed laws restricting the freedom of the railroad companies to set rates. The railroads, however, did not stand meekly by, accepting their fate. Quite the opposite. Their lawyers challenged the legislation in the courts, arguing that the states did not have the power to set rates. Here, another railroad practice that had attracted widespread criticism came into play, the issuing of passes to prominent people, such as judges, sheriffs, both local and national politicians, and, of course, journalists, allowing them free travel on request on the railroad. Favoring the great and the good with free travel might seem like a rather trivial matter given the other ways in which the railroads had made themselves unpopular, but it had widespread resonance. It was seen as yet another abuse of railroad power, and paying passengers hated sitting near the “deadheads,” as they were termed, who did not have to contribute to the railroad company’s coffers. The benefits of having politicians on their side were all too obvious to the railroads. Giving a pass to a town assessor, for instance, might well result in a lower tax bill; alternatively, the railroads were not averse to withdrawing passes from politicians or officials who did not do their bidding. The scale of this crude PR can be gauged by the fact that by 1897, the railroads of North Carolina alone were giving out passes for no fewer than one hundred thousand journeys per year, costing them more than three hundred thousand dollars in revenue foregone. The public’s interest in these concessionary arrangements was so strong that legislation banning the practice became law in 1906.

  Legislators and even judges could also be influen
ced by the issuing of these passes, and even when battles in the courts were lost, the railroads at times simply ignored the legislation. It was not easy. The question of what was a fair rate for freight, and how it could be enforced, was far from straightforward. Some legislatures tried to control passenger fares, too, and the railroads played a nasty game of trying to make the journey of passengers on these regulated services as unpleasant as possible, using old stock and introducing timetables with longer journey times. The balance of interest in the court cases was neatly poised, as Stover aptly suggests: “The Grangers had votes; the railroads possessed money.”44 It was not only high rates that angered the farmers and, indeed, other shippers. The railroads tended to favor big shippers and granted them substantial rebates. The pricing arrangements with these larger clients were secret, and this lack of transparency was seen as masking the railroads’ preference for dealing with fellow big corporations to the detriment of the little guy. Worse, on many routes, the railroads simply pooled their income and operated jointly in order to prevent uneconomic competition, which was seen as operating an unfair cartel.

  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.45 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.”46 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.

  9

  ALL KINDS OF TRAIN

  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.”1 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.”2 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.