![]() ![]() The current controversy about the monopolistic power of internet service providers echoes those concerns from the first Gilded Age. But profitable railroads opposed it tooth and nail, and skeptical reformers did not want the government to buy derelict and unprofitable railroads. ![]() Turning them into a publicly owned network, like today’s interstate highway system, would give the government the responsibility to create clear, fair rules for private companies wishing to use them. ![]() The simplest solution, advanced by the Populist party and others, was the most difficult politically: nationalize the railroad routes. And even the best bookkeepers had a hard time unraveling railway accounts. But the calculations were complex: Charges by the mile ignored the fact that most costs came not from transport but rather from loading, unloading and transferring freight. Some reformers suggested accepting monopolies, so long as their rates were carefully regulated. Newcomers and small enterprises were left out. Rockefeller of Standard Oil, for example, could guarantee large shipments and provide his own tank cars – so he got special rates and rebates. Large customers also got benefits: John D. The technologies of railroads inherently gave large operators advantages of efficiency and profitability. The solution was no clearer then than it is now. But Congress ran into a problem: If an even, competitive playing field depended on regulation, the marketplace wasn’t truly open or free. The consensus was that the railroads needed the federal government to enforce the rules, bringing greater efficiency and ultimately lower rates. As Charles Francis Adams put it, his own industry’s “ method of doing business is founded upon lying, cheating, and stealing: all bad things.” Their efforts at cooperation had failed because railroads treated each other no better than they did their customers. By the late 1880s, some railroad executives were starting to agree. ![]() To achieve equality, anti-monopolists wanted more government regulation and enforcement. Senate Select Committee on Interstate Commerce agreed, stating clearly that the “ great desideratum is to secure equality.” Turning to regulators for help In an 1886 report on the railroad industry, the U.S. Monopolies were intrinsically wrong because they unfairly influenced businesses’ likelihood of success or failure. All he could do was ask if they wanted to buy his company.įor anti-monopolists, Dodge’s dilemma went to the heart of the issue. The new rates left Dodge unable to compete with the rival Montana Improvement Company, reputedly owned by Northern Pacific executives and investors. For example, in 1883 the Northern Pacific Railway raised the rates it charged O.A. Congress enacted the first national railroad safety legislation that year because the companies had insisted it was too expensive to put automatic braking systems and couplers on freight trains.īut a monopoly’s great economic and societal danger was its ability to decide who succeeded in business and who failed. For instance, the death toll was enormous: In 1893, 1,567 trainmen died and 18,877 were injured on the rails. Railroad companies made decisions on innovation based on the effects on their bottom line, not societal values. Their political contributions and favors secured them supporters in legislatures, Congress and the courts.Īs stronger railroads bought up weaker companies and divided up markets with the remaining competitors, the dangers of monopoly became more and more apparent. They got subsidies of land, loans, bonds and other financial aid from federal, state and local governments. Railroads had the ability to condemn land to build their routes. Monopolies as unfairly subsidizedĪnti-monopolists who opposed the railroads’ power argued that monopolies originated not as a result of efficient investment strategies, but rather from special privileges afforded by the government. These agreements effectively established monopolies, even if more than one company was involved. And then his own railroad built new tracks into western Kansas, too.Īfter ruinous bouts of competition like this, rival railroad companies would agree to cooperate, pooling the business in certain areas and setting common rates. Charles Francis Adams, president of the Union Pacific Railroad, called this redundancy the “ maddest specimen of railroad construction of which” he had ever heard. The tracks ran parallel to each other, about two miles apart. In 1886 the Atchison, Topeka and Santa Fe Railway and the Missouri Pacific Railroad both built railroad tracks heading west from the Great Bend of the Arkansas River in Kansas to Greeley County on the western border, roughly 200 miles away. ![]()
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