The Online Library of Liberty

A project of Liberty Fund, Inc.

• William Graham Sumner (1895)
• Prefatory Note
• Preface
• Sketch of William Graham Sumner
• The Challenge of Facts
• Reply to a Socialist
• What Makes the Rich Richer and the Poor Poorer?
• The Concentration of Wealth: Its Economic Justification
• Industrial Law
• A Parable
• The Demand For Men
• The Significance of the Demand For Men
• What the “social Question” Is
• What Emancipates
• Power and Progress
• Consequences of Increased Social Power
• What Is the “proletariat”?
• Who Win By Progress?
• Federal Legislation On Railroads
• Legislation By Clamor
• The Shifting of Responsibility
• The State As an “ethical Person”
• The New Social Issue
• Speculative Legislation
• Republican Government
• Democracy and Responsible Government
• Advancing Social and Political Organization In the United States
• Memorial Day Address
• For President?
• Foreword to “lynch-law”
• Foreword to “the Anthracite Coal Industry”
• Introductory Lecture to Courses In Political and Social Science
• Sociology As a College Subject
• The Predicament of Sociological Study
• Memorial Addresses
• Address of Otto T. Bannard, Yale, 1876
• Address By Henry De Forest Baldwin, Yale, 1885
• Address By Albert Galloway Keller, Yale, 1896

FEDERAL LEGISLATION ON RAILROADS

FEDERAL LEGISLATION ON RAILROADS

Daniel Webster once said: “A strong conviction that something must be done is the parent of many bad measures.” He made the observation early in his career; but it was a sign of his statesmanlike power to detect the common element in heterogeneous incidents of public life that he should have made it; scarcely a year passes which does not give us a new illustration of its truth. The next instance of headlong legislation with which this country is threatened is an act regulating railroads.

Two fallacies are of constant repetition in propositions for more government regulation. The first and widest is to argue that competition is not perfect in its action and does not satisfactorily solve the problem; it is inferred that we must have some form of government regulation. Plainly this inference is a non sequitur, unless it can be shown that government regulation will produce perfect and satisfactory results; or that regulation, although imperfect, will just complement and make up for the imperfections of competition. The second fallacy is illustrated when, after trying for a long time to solve a problem of the social order without success, we declare, in despair, that the state will have to take it in hand and legislate about it. This is a worse non sequitur than the other.

Both these fallacies are involved in the current arguments for the proposed legislation about railroads. Railroads are still new and still in their infancy. It seems reasonable to believe that they are capable of great development beyond what any one can now foresee; new inventions are reasonably sure to cause transformations in railroad business and methods. We have only just reached the point where a few men are competent to manage great lines of railroad on their technical side; we have only just begun to educate men for the railroad business as a profession. Railroad men do not seem yet to have any code of right behavior or right management between themselves — people often deride the professional code of lawyers or doctors, but the value of such a code is seen ff we take a case like the one before us, where a new profession has not yet developed a code. The social and economic questions raised by railroads and about railroads are extremely difficult and complicated; we have not, so far, accomplished much of anything toward solving them by experience or theory. The discussion, so far as it has yet gone, has shown only that we have the task yet before us and that, so far, all has been a struggle of various interests to use railroads for their own advantage. The true solution of the only proper legislative problem, viz., how to adjust all the interests so that no one of them can encroach upon the others, has scarcely been furthered at all. It is only necessary to take up a volume of the evidence taken by one of the Congressional committees on this subject, or any debate about it which has arisen in Congress, to see how true it is that conflicting interests are struggling for advantage over each other.

The railroad question is far wider than the scope of any proposed legislation with regard to it; it is so wide that in any period of five or ten years new phases of it come to the front and occupy public attention. Just now the prominent phase is the effect of competition on a weak market; for the time being, the means of transportation seem to have been multiplied in excess of the demand. The railroad monopoly is in the position of any monopoly which has overproduced its market. Pooling would be the mode of applying combination and restriction of production to this business; that pooling would suit the condition of things just at this moment, and would be a corrective for the evils which just now command public attention, is very probable. But the country is undoubtedly destined to enter on a new period of expanding a hitherto unknown prosperity, and what would be the effects of pooling on a strong and rising market under great demand for transportation? If a law is passed it becomes a rigid and unavoidable constraint. It is not, however, my purpose to argue that pooling is a good thing or a bad thing; the arguments upon that point are so strong upon either side that a case is made out for neither. Under such circumstances, to legislate is to decide, and to commit the interests at stake to a decision which is immature and is founded on nothing but the notion that something must be done. Competition has borne not only upon the rates but also upon the quality of cars and stations, upon speed and punctuality, upon parlor car and other conveniences. What would be the effect of strict pooling upon these?

The second point which seems now to occupy attention is the effect of railroads upon natural distances; it is assumed that it must be wrong that railroads should make a place which is near further off than one which is remote. It is a matter of familiar experience that railroads do invert relations of distance and make places which are two hundred miles off economically nearer than places one hundred miles off; and in doing this they also invert the interests of a great many people. It is a rash and mischievous undertaking to try to offset or correct this by arbitrary legislation. It is not possible to draft an intelligible and workable regulation to do it. The short-haul clause in the bill now before the Senate is already a subject of disputed interpretation, and whenever the courts come to act upon it they will interpret it as its language seems to require, not as anybody now says that it is intended to mean. The interests of the extreme West constantly demand that the full power of railroads to annihilate distance and time shall be exerted in their favor; during the last summer, Senator Edmunds pointed out to his Vermont constituents their grievance, in the fact that railroads pour into the Eastern market, in competition with them, all the products of the West — i.e., do just what the West demands. Cheap freights westward benefit Eastern manufacturers and Western consumers while they injure Western manufacturers; cheap freights eastward favor Western farmers and cattle raisers and Eastern consumers while they injure Eastern farmers. How can the legislator meddle in this great complex of interests without doing harm to everybody, especially when he goes about it without any theoretical or practical principles to guide him, with nothing but the conviction that many things in the existing order are not as we should like them to be and that something must be done?

The railroad question, properly speaking, I repeat, goes far beyond the points which are now attracting attention. The railroad company has relations to its employees, to the state which taxes its property, to the municipalities whose streets its line crosses, to adjoining real-estate owners, to the legislators and editors who want free passes, etc., etc. In all these relations there are two parties, for even a railroad company has rights. Competing lines have relations to each other, and these often raise questions in which there is no simple “justice”—the competing lines may not be subject to the same legislative regulations. A country three thousand miles in extent is not much troubled by the extra prejudice which is imported into the question of long and short haul when it seems to include favor to foreigners at the expense of citizens; but if there is anything real in the latter grievance it is difficult to see why it should not also exist in a concealed form here. Finally, it cannot be forgotten that the railroad issue includes the question as to how those who have contributed the capital to build the road are to obtain their remuneration. If the state undertakes to regulate all the rest, it will see itself forced at last to regulate this also. Hitherto the stockholders have been left to get their remuneration out of their own enterprise if they could; if they could not, they have been left to make the best of it. If, however, the state interferes with the whole management of their enterprise, how will it at last escape the justice of the demand that it compensate them or secure them a return on their investment?

In the present state of the case it behooves us to remember that, in the varying phases of the industrial world of our time, first one interest gets a chance and then another; it is not in human wit to stand over this system and correct or adjust it so as to offset all the special combinations of industrial advantage and disadvantage. It is no question whether we like living in an age of steam or not; the steam-engine was invented in the course of time, just when all the antecedents which were necessary for it had been provided; it has come to stay and we must learn to live with it. We have sung a great many paeans over it, but it may be doubted whether we have found out yet what an uncomfortable social comrade it may prove to be when it is full grown. Many of its workings are very capricious in the chances which they throw in the way of one man or which they take away from another. Can we do anything wiser than to take the good chances and the ill chances over a period of years and make the best of them?

What we need most in regard to all social problems, if we want to solve them either by voluntary action or by legislation, is knowledge. If we could have a commission to study railroads, if its powers were only such as are required to enable it to get information and to investigate cases, and if its personnel were such as to inspire confidence that it was capable of conducting the investigation and that it would conduct it disinterestedly from the standpoint of justice to all interests, the commission might be very useful. It is very probable that legislation might ultimately prove necessary or expedient, but it would not then be an embodiment of anybody's whim or view of the matter but would be guided by experience and observation. Blundering experiments in legislation cannot be simply abandoned if they do not work well; even if they are set aside, they leave their effects behind; and they create vested interests which make it difficult to set them aside.