CHAPTER VI

THE RAILWAY AND SOCIETY

The aim of the present chapter is to trace from the utterances of congressmen and from congressional documents the development of ideas concerning the effect of railways upon society and government; and to give a general resumé of the relations which were assumed to exist between railways and the economics and politics of the country. Some of the facts to be presented have appeared in the preceding chapters, but they are now made the basis for conclusions of a different order.

We know that with the introduction of the railway there came a new factor into the life of the nation, and of the world, which radically affected all phases of that life. The railway is both quantitatively and qualitatively different from other and earlier means of conveyance and communication. But was this apparent to the men, and especially the congressmen, of the early nineteenth century? On the whole, it may be said that it was. Almost from the beginning it was quite generally recognized that the laws governing the operation of the railway were different in important repects from those applying to canals and turnpikes. This statement, however, needs qualification,1 and only after 1840 when the railway had superseded canals and roads in Congress, is its truth most clearly apparent.

RAILWAYS DIFFERENT FROM CANALS AND TURNPIKES IN SOCIAL AND ECONOMIC EFFECTS

The differences between canals and railways were brought out fully in the discussions of 1831 and 1832. At that time the

1 See below, pp. 248, 260 ff.

effects which these differences must have on social and economic2 conditions were discussed in Congress.

1. Facility of construction and wasteful competition.

In the first place, the relative facility with which railways could be constructed, and the fact that they were not so limited by topographical conditions made important differences. It was thought by some men that any farm or town that desired a railway would readily be accommodated, and that this would lead to a wasteful multiplication of routes that would cause loss to all. Thus, Josiah White, in a letter which was submitted by the Chesapeake & Ohio Canal Company in support of a memorial, said, "I think it rather fortunate for society, that railroads are not of equal value to the canals, for a railroad can be taken anywhere, and consequently, no improvement would be safe on this line, for the moment the improvement succeeded, it would be rivaled, so as to destroy both." White even expressed a fear that tenure or value of property would be rendered insecure as a result.

This less limited scope and difference in competitive nature, of course, made a distinction between railways and canals, rather than turnpikes. It should be observed that this idea of competition was but a speculation or prophecy, and that it was not based upon any existing condition of "cut-throat competition" among railroads. At the time White wrote there were only about 200 miles of railway in this country, and well down to the close of the first half of the century railway capital was relatively scarce and unproductive, so that such a state could not well exist.

Nor was it based on a supposed analogy between railways and roads, for such a degree of competition does not seem to have been prevalent among turnpikes.

2 It seems to the writer unfortunate that the adjective, economic, does not alone express the idea to be conveyed. It should do so. The German compound, socio-economic, might be used.

Exec. Docs., 1831-32, No. 18, p. 166 ff.

* 1832.

See Tanner, H. S., A Description of the Canals and Railroads of the United States (N. Y., 1840), p. 22 ff.

2. Railways "monopolistic."

But while some feared undue competition among different railways, it was commonly recognized that each railway formed a "close monopoly, and not a public highway." This seems to

be a contradiction of ideas. By a monopoly, however, was meant not one existing between different railroads, but one which consisted merely in the exclusive right to use the railway which the company owning it possessed. The charter of the Falmouth & Alexandria Railroad Company stated that "upon the rail-road hereby authorized the company shall have the exclusive right of transportation," other charters empowered the railway companies to prescribe time and manner in which transportation services should be performed, and others still provided that only such vehicles as the company might allow should operate upon its railway."

It was such conditions that caused Benjamin White, engineer, to write, in a letter appended to a congressional document, "I consider a long line of railroad passing from Baltimore over the mountains as being odious in this country as

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a monopoly of the carrying, which it necessarily must be;"10 and he observed that a canal was open to any man who built a boat to navigate it as he chose. It was this that Mr. Bouldin referred to when, in a debate on the re-organization of the Post Office, which occurred in the House in 1836, he said that he would vote for any check that could be put upon the monopoly of the railroads. In the same year Mr. Jackson represented the opponents of railways as crying, "A railroad is a monopoly !''11

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6.

The charter of the Baltimore & Ohio It indicates that in the transition to railways as being similar to turnpikes.

11 Cong. Debates, 1835-36, H. of R., p. 4495. The following extract from a western paper is typical: nor do we wish to see our Legislature rush headlong into the granting of monoplies (i. e., R. R. charters), which would embarrass Wisconsin in her future Internal Improvement operations, and paralyze the efforts of her people. We wish to see the utility of chartered monopolies before they receive our sanction." Milwaukee Advertiser, Sept. 15, 1836. See Meyer, B. H., Hist. of Early R. R. Legislation in Wis., in Wis. Hist. Coll., XIV,

There is ground for an argument that effective competition was not expected to exist between railways, or between railways and other means of transportation. Early railway charters in England did not fix maximum rates for the conveyance of passengers, and this has been taken to indicate a belief on the part of Parliament that competition would keep rates down.12 Now, quite commonly the early charters in the United States fix such maximum rates, and the act of Congress authorizing a branch of the Baltimore & Ohio to Washington did so. This, at a time when such was not the practice in England, would seem to indicate an early belief that competition among railways would not be effective.

In any case, it is clear that, while many conceived that there would be competition as between different railways, it was accepted that there would be monopoly on any one railway, and this fact made a profound difference between the railway and canals or roads. To us it seems very commonplace, but to those who were familiar with no other means of transportation than canals and roads, upon either of which any individual might, with few restrictions, place his own vehicle and use his own motive power, the change was highly significant.

That in practice the railway could not be a common carrier in the sense that waterways and highways were common carriers was realized almost from the beginning, and this involved a different attitude. Toward railways the people and their representatives would be more hostile, or more suspicious, to say the least; they would be more apt to control. A tendency toward regulation soon arose, as will appear in a later section.

RAILWAY MONOPOLY IN NEW JERSEY*

At the first session of the thirtieth Congress there was presented the memorial of a large number of merchants of New

12 See Acworth, The Elements of Railway Economics, pp. 108-110, for a convenient reference on this point.

The Camden and Amboy furnishes a classical example of monopoly in the field of railway transportation. In 1830 the Camden and Amboy Transportation

York City asking relief from the evil effects of a railway monopoly.13 The Camden and Amboy Railroad Company, together with the Delaware and Raritan Canal Company, had, it seems, been granted exclusive transportation rights in New Jersey by the legislature of that state, and as the road occupied the direct route between New York and Philadelphia it was in a position to work much harm to the commercial interests of those communities. The memorialists prayed that Congress interfere for their relief. They stated that in 1832 a grant had been made giving the above mentioned companies the "exclusive right of transporting passengers and goods through the state of New Jersey," for which right the state was given a bonus of a number of shares of the company's stock and in addition was to receive 10 cents for every passenger and 8 cents for every ton of commodities conveyed by it through the state. An annual tax amounting to some $30,000 was imposed.

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In 1837, so the memorial runs, the companies were authorized to charge a $4 fare for transporting a passenger across the state by day, and $5 if by night, the state to receive one-half the amount left after deducting $3 from the fare. The distance being about eighty-five miles, the average fare thus authorized was nearly 5.3 cents per mile. This rate, however, was not uniform, for the companies were restricted from demanding

Co. and the Delaware and Raritan Canal Co. were chartered. The outlook 1or the canal company was poor, but under cover of an amendment to its charter empowering it to widen its canal the company got the right to build a railway, and so forced the Camden and Amboy to consolidate. The United Company of New Jersey was thus formed. Another line was started between Philadelphia and Jersey City via Trenton, but in 1836 this rival project was nipped in the bud by securing control of the line from Philadelphia to Trenton. The system also came to control steamboat and ferry lines. By using undue influence it escaped payment of a large part of its obligations to the state, and secured renewals of its charter, till in 1871 it became a part of the Pennsylvania system. This railway was one of the few that was profitable in the early days. Its net gain in 1840 amounted to $427,286.28. In 1855 it paid a 12 per cent. dividend. Its abuses were attacked by the economist, H. C. Carey, in 1848, but, though Le made a clear case, the agitation brought no result.

See Tanner. H. S., Canals and Railways of the U. S., index.

See Larrabee, The Railroad Question, p. 102 ff.

See Ringwalt, Develop. of Systems of Trans. in the U. S., index.

13 Cong. Globe, 1847-48, XVIII, 823.