Glock, Judge
A icle
In e changing pa s: P oduc i e ail oad coope a ion in
he nine een h and ea ly wen ie h cen u ies
Essays in Economic & Business His o y (EEBH)
P o ided in Coope a ion wi h:
Economic and Business His o y Socie y (EBHS)
Sugges ed Ci a ion: Glock, Judge (2024) : In e changing pa s: P oduc i e ail oad coope a ion in
he nine een h and ea ly wen ie h cen u ies, Essays in Economic & Business His o y (EEBH), ISSN
2376-9459, Economic and Business His o y Socie y (EBHS), Rock o d, MI, Vol. 42, Iss. 2, pp. 120-132
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Essays in Economic & Business His o y
2024, 42 (2): 120-132
Published June 18, 2024
In e changing Pa s: P oduc i e Rail oad Coope a ion in he
Nine een h and Ea ly Twen ie h Cen u ies
Judge Glock, Di ec o o Resea ch and Senio Fellow, Manha an Ins i u e,
[email p o ec ed]
Abs ac
Al hough many economic and business his o ians ha e examined how Ame ican ail oads
colluded o aise a es o limi se ice, hey ha e paid less a en ion o he many ways ail oads
coope a ed o exchange ca s and eigh be ween companies and build needed
in e connec ions. This a icle examines such p oduc i e coope a ion in h ee sphe es: i s , he
se ing o policies on “in e change”, o he exchange o ca s and eigh be ween ail oad lines;
second, he c ea ion o “ca se ice associa ions” o o ganize and pay o ca s sha ed be ween
oads; and hi d, he building o coope a i e in as uc u e such as bel ailways o union
s a ions. Finally, he a icle will examine how egula o y ba les o e in e change and
in e connec ion we e an unde app ecia ed pa o he s uggle o egula e ail oads.
JEL Classi ica ions: L22, L51, L92, N11, N71, N81, R40.
Key Wo ds: Regula ion, Rail oads, In e connec ion, Na u al Monopoly, Ne wo k Indus ies,
In e s a e Comme ce Commission, Aus ian Economics.
Glock: P oduc i e Rail oad Coope a ion
121
In oduc ion
When his o ians and economis s discuss examples o ail oad coope a ion, he uni e sal
ouchs ones a e he pools c ea ed du ing he la e nine een h cen u y. These pools o ganized
compe ing ail oad lines o keep a es high and p e en discoun s o shippe s. They spa ked
widesp ead poli ical opposi ion and we e an impe us o bo h he In e s a e Comme ce Ac o
1887 and he She man An i us Ac o 1890, which oge he e ec i ely banned hem. F om
he pe spec i e o economis s, hese pools we e also an a che ypal example o ho izon al
ag eemen s be ween compe ing companies, also known simply as ca els, which end o be
an i-compe i i e and an i-consume .
The cos s o consume s and o o e all ou pu o such pooling ag eemen s a e no he e
subjec o dispu e. Bu he ocus on pools and ca els igno es he many ways ha ail oads
coope a ed p oduc i ely in he nine een h and ea ly wen ie h cen u ies o u he access o a
na ional anspo a ion ne wo k, ensu e e icien and uni e sal s anda ds, and lowe cos s.
Like many indus ies ha sha e na u al monopoly o ne wo k cha ac e is ics, bu in which one
company does no ha e a monopoly o a ma ke , ail oads needed o in eg a e hei ne wo ks.
Thus ail oads c ea ed new con ac s, sys ems, and associa ions o in e connec ion, which
demons a es he abili y o companies o coope a e o inc ease, a he han educe, ou pu .
While mos economic heo ies emphasize compe i i e ma ke equilib iums, he Aus ian
adi ion has shown how economic agen s mus con inually e ol e new ma ke p ocesses,
including by building new ins i u ions o lowe ansac ion cos s (Pe e Boe ke 1989; Is ael
Ki zne 1973). Aus ians also ha e emphasized how di use g oups can c ea e new ypes o
eme gen o spon aneous o de s (Paul Lewis 2015).
1
The ail oads’ coope a i e con ac s and
ins i u ions a e p ime examples o such eme gen o de s ha lowe ed ansac ion cos s and
inc eased ou pu . They we e an essen ial pa o he p ocess ha inc eased eigh on-miles
on measu ed ail oads by en old in he 35 yea s a e he Ci il Wa , e en while e enue pe
on-mile d opped by mo e han hal (Fede al Rese e Bank o S . Louis FRED Da abase).
This a icle will look a he h ee main ways ail oads coope a ed p oduc i ely in he
nine een h cen u y, which coope a ion has been la gely igno ed by p e ious economic and
business his o ians (see, o example, Alb o Ma in 1992; Richa d O si 2007; Robe Po e
1983; Richa d Whi e 2011; Ch is ian Wolma 2012).
2
I will examine, i s , ules o
in e connec ion o “in e change”, namely, he sha ing o cha ges, ou es, and olling s ock
be ween di e en companies; second, he c ea ion o “ca se ice associa ions” o o ganize
and dis ibu e ca s and cos s ac oss di e en ail oad lines; and hi d, he o ganiza ion o bel
lines and union s a ions o connec di e en lines. The a icle will hen look a he poli ical
ba les o e egula ing in e connec ions, which we e an impo an pa o he mo emen o
egula e ail oads, bu which ha e ecei ed scan a en ion in he ex ensi e his o y o ail oad
egula ion (Callen 2016; Samuel DeCanio 2015; James Ely 2001; Ma k Kanazawa and Roge
Noll 1994; Gab iel Kolko 1963, 1965; Ma in 1971). Finally, he a icle will discuss wha hese
ea ly examples o in e connec ed ne wo ks can each us abou mode n ne wo k indus ies.
1
O cou se, he Indus ial O ganiza ion li e a u e and he New Ins i u ional Economics li e a u e
also discuss di e en ypes o economic o de ing ou side o pu e compe i i e ma ke s. See, o example,
Oli e Williamson (2002).
2
Some wo ks desc ibed below discuss one o ano he ype o in e connec ion policy, bu a ely
as pa o a discussion o ail oad coope a ion. One classic wo k which does ocus on in e connec ions
is Geo ge Roge s Taylo and I ene D. Neu (2003 [1956]), bu i s almos singula ocus is he
s anda diza ion o gauges. The e is ela ed li e a u e ha desc ibes he po en ial bene i s o ca els o
high ixed-cos indus ies in his pe iod, al hough i is no ocused on ail oads. See Geo ge Bi lingmaye
(1982); J.R. Kingho n (1996).
Essays in Economic & Business His o y 42 (2) 2024
122
In e change
The e a e wo posi i e examples o ail oad coope a ion ha a e s ill epea ed in mos his o y
ex books. Fi s , ail oads conce ned abou di e gen schedules o ganized a Gene al Time
Con en ion o decide on a single ime sys em o No h Ame ica. On he noon o Sunday,
No embe 18, 1883, he ail oads implemen ed a sys em o ou Ame ican ime zones
designed by he con en ion (wi h a i h c ea ed in he Canadian Ma i ime p o inces) ha s ill
unde gi ds mode n imekeeping (Ian Ba ky 1983). The second example conce ns ail oads’
once dis inc ack gauges, which mean ains o en could no a el on di e en companies’
acks, especially hose ha c ossed om No h o Sou h. To acili a e exchange, he Sou he n
ail oads changed 13,000 miles o ail oad ack o e he days o May 31 and June 1, 1886 o
i wi h he No he n 4ˈ 8 ½ˈˈ s anda d. This emains he s anda d US ail oad gauge (Daniel
G oss 2016).
3
Ye discussions o hese e en s igno e ha ime and gauge s anda diza ion would b ing
no bene i s i ail oads did no allow a el ac oss each o he ’s acks. The issue o
“in e change”, o he ules o ans e ing ca s and olling s ock ac oss di e en companies’
lines, was one o he mos con en ious and equen ly deba ed issues in ail oad his o y, ye i
has a ac ed li le his o ical a en ion.
In he ea ly yea s, s a es o e ed indi idual cha e s o e e y ail oad company, o en
speci ying he exac loca ion o hei acks, and hei laws kep hese companies’ sys ems
sepa a e. This was signi ican ba ie o ade, since, e en in 1880, he e we e s ill o e 1,100
di e en ail oad companies managing o e 90,000 miles o ack (Census Bu eau 1960,
Se ies Q 15-22; E.R. Wicke 1960, 505). In he immedia e pos -Ci il Wa yea s, many
companies’ olling s ock s opped a hei own acks and eigh and passenge s had o be
anspo ed o new ains wi h new ca s.
Exp ess companies like Wells Fa go a ose o anspo eigh ac oss di e en lines, and
some ail oad companies o med hei own exp ess companies o do he same.
4
S a ing in
1866, se e al ail oads o med “coope a i e as - eigh lines”, managed by o he wise
compe ing ail oads, which could use “ h ough bills o lading” o a single bill wi h a single p ice
o a shippe owa ds a inal des ina ion, e en i i c ossed se e al lines.
5
Such eigh lines
managed hei own ca s, some imes pain ing hem dis inc colo s, gi ing he g oups names
such as “Red Line” o “Blue Line” (William Chandle 1979 [1889]; Geo ge Den eld 1921;
Joseph Nimmo 1877). These coope a i e lines g adually wound down as ail oads ook on
hei own a ic managemen a he end o he nine een h cen u y.
Rail oads hemsel es encou aged h ough bills o lading o waybills, allowing a single
shipmen o be se wi h a single cha ge ac oss mo e han one line, which equi ed nego ia ion
be ween ail oads o se such “ h ough” o “join ” a es oge he , and o spli he income om
hem. The gene al ule was o he o igina ing line o ecei e he p ice cha ged o he cus ome ,
while i in u n paid each subsequen ail oad a mileage ee, o en 1.5 cen s pe ca -pe -mile
(Chandle 1977, 128; Den eld 1921, 127). One unde app ecia ed job o he pools was making
decisions on such h ough a es. The i s majo ail oad pool, he Sou he n Rail oad and
S eamship Associa ion, o mally o ganized and headed by Albe Fink in 1875, helped di e en
3
G oss (2016) ep esen s he mos de ailed s udy o p oduc i e ail oad coope a ion, al hough i
is ocused on a commonly discussed posi i e example o such coope a ion. See ypical men ion o bo h
ime zone and gauge s anda diza ion amids a ocus on ail oads pools in Whi e (2017, 582).
4
Independen exp ess companies ounded hei own ca el which educed ou pu and aised
p ices o o e hal a cen u y. Bu , simila o he ail oads, he companies also o ganized ules on wha
was known as he “ ansshipmen ” o packages h ough di e en companies (Pe e G ossman 1996).
5
Besides Taylo and Neu’s discussions o as - eigh companies, Al ed Chandle (1977, 124-
137, 535) discusses hese, bu he says ha much o his wo k came om Taylo and Neu. The e is also
some discussion o “ h ough bills o lading” and he new “ai lines” uni ing se e al independen ail oads
in Sco Reynolds Nelson (1999, 58-64).
Glock: P oduc i e Rail oad Coope a ion
123
companies nego ia e such a es in i s Ra e Commi ee. Al hough he In e s a e Comme ce Ac
banned pooling on p ices cha ged o shippe s, one ail oad expe said ha e en a e he
In e s a e Comme ce Ac , “ he h ough a es we e, in he main, discussed and a anged as
be o e by he Ra e Commi ee o he [Sou he n] Associa ion”. The Associa ion i sel was
ecognized by he In e s a e Comme ce Commission (ICC) o his pu pose, and se e al imes
i p o ided he Commission e idence abou a es (Hen y Hudson 1890, 91). Th ee o he majo
pools also o ganized a “Join Ra e Commi ee” o nego ia e abou join a es and con inued o
do so up h ough he end o he cen u y (J.W. Midgley 1902, 18, 123).
Rail oads es ablished a “clea ing house” o collec and dis ibu e a ic cha ges om
di e en lines. The Cen al Railway Clea ing House, o med in 1899 in Bu alo, New Yo k
clea ed and ne ed ou accoun s be ween di e en ailways, jus as i s mo e amous banking
cousins did in hei sphe e. I had 220 employees wi hin wo yea s o i s opening, which
demons a es he la ge, bu p e iously un apped, bene i s o coo dina ion. In e s a e
Comme ce Commissione Ma in Knapp a gued ha he clea ing house sys em was a
wonde ul example o p oduc i e coope a ion, which should be adop ed by all Ame ican
ail oads (Indus ial Commission 1901, 719-730).
In e change, howe e , also led o con inuous ques ions abou liabili y o damages o
he ca s, and abou ail oads’ abili y o inspec ca s coming o and om di e en lines. To sol e
his p oblem, he Mas e Ca -Builde s’ Associa ion o ganized a s anda d es o examining
and inspec ing ca s as hey c ossed each ail oad junc ion, o make su e ail oads we e no
cha ged o any damages ha occu ed on a p e ious line. One ailway mechanic no ed ha
a mos la ge in e change poin s, e e y ca was sen o a special ecei ing ya d o inspec ion
based on he Associa ion ules. Damages we e me wi h “M.C.B. De ec Ca ds” (H. Bou e
1911).
By he u n o he wen ie h cen u y, e en a e he o mal dissolu ion o he a e pooling
sys em, he ail oads had c ea ed nume ous ules and associa ions o in e change a ic
ac oss each o he ’s lines. Unlike he es ic i e pools, bo h he goal and he esul o hese
was an inc ease in a ic ac oss acks ha migh o he wise only compe e.
6
Ca Se ice Associa ions
Once ail oads began in e changing ail oad ca s, hey aced he p oblem o how o manage
and keep abs on expensi e olling s ock a eling ac oss di e en lines. They also deal wi h
he p oblem o shippe s who kep ca s o ex ended pe iods wi hou e u ning hem. The
ail oads had long cha ged ees, known as “demu age”, on shippe s holding ca s o ex ended
pe iods. Bu di e en a es and “ ee ime” pe iods le bo h shippe s and a ic manage s
con used, and led o ex ended delays in e u ning ca s, especially when hey mo ed ac oss
di e en lines. New England in pa icula , wi h i s con usion o small lines, was known as “ he
g a eya d o ca s” (Midgley 1902, 21). One ail oad p esiden old he Railway Associa ion o
Ame ica in 1873 ha one o he mos impo an issues in ail oading was “how o secu e ull
wo k o ai pay and ai ea men o ca s unning o e o eign oads a om home and long
absen ” (Midgely 1902, 15). The Associa ion c ea ed a special Commi ee on In e change o
Ca s o acili a e such ai ea men and se s anda dized ules (Midgley 1902, 15).
Rail oad companies ha had e mini in Omaha, Neb aska ook a u he s ep o co alling
“ o eign ca s” on Oc obe 1, 1887, jus mon hs a e he passage o he In e s a e Comme ce
6
Some mode n li e a u e sugges s he high in e connec ion cha ges in ne wo k indus ies can be
used o allow incumben s o main ain hei posi ion—see, o example, Michael Ca e and Julian W igh
(1999). Al hough some in e change and h ough a es could ha e been used o ad an age one ail oad
o e ano he , o o collude agains some shippe s, he ac ha a es we e ecip ocal o ag eeing lines,
and ha mos ail oad laws in he la e nine een h cen u y p e en ed disc imina ion be ween simila ly
si ua ed cus ome s, limi ed he use o hese associa ions o colluding agains he public o compe i o s.
Essays in Economic & Business His o y 42 (2) 2024
124
Ac , when hey o med he i s “Ca Se ice Associa ion” o manage ca s c ossing each o he ’s
lines, a model soon adop ed elsewhe e. Ca se ice associa ions o ca se ice bu eaus kep
hei own ca s, wi h hei own ma kings, kep accoun s on he use o ca s, and collec ed ees
on hem. They gene ally se a ule o 48 hou s ee ime o shippe s o he loading and
unloading o ca s, ollowed by a se daily cha ge a e he ee ime pe iod was o e , usually
$1 a day (H.V. Ellio 1907; Nimmo 1893, 34). Wi hin h ee yea s, he e was a Na ional
Associa ion o Ca Se ice Manage s, which ied o se s anda dized managemen p ac ices
ac oss di e en lines. By he u n o he cen u y he e we e 36 local ca se ice associa ions
(Midgley 1902, 15). Soon a e he o ma ion o ca se ice associa ions, he a e age ime o
ca s held by shippe s d opped om abou 6 o 1.5 days (Nimmo 1893, 34).
7
To u he he e icien use o ca s, ca se ice o icials ad oca ed ha no jus shippe s
bu ail oads be cha ged a uni o m pe diem agains holding ca s. The pe diem would be in
addi ion o he usual in e change mileage ee, which did no c ea e su icien incen i e agains
ail oads holding on o non-mo ing ca s (Midgley 1902, 82-86). The Ap il 1902 mee ing o he
Ame ican Railway Associa ion c ea ed a “Pe Diem Rules Ag eemen ” o collec uni o m pe
diem cha ges agains ail oads, in e ec , a p oduc i e ax agains hemsel es (Ame ican
Railway Associa ion 1921, 9). The ax became impo an du ing a na ional “ca amine” o ca
sho age o 1906 and 1907, caused by an unp eceden ed amoun o onnage c ossing he
na ion’s acks du ing an economic boom. To alle ia e he amine and encou age as e
u no e o ca s, he Associa ion inc eased i s pe diem cha ge om 25 cen s o 50 cen s. I
d opped he a e back down again a e he sho age had ended (Na ional Associa ion o
Railway Commissione s 1909, 130-131).
Many ecognized he se ices p o ided by he ca se ice associa ions in c ea ing a
na ional ailway ne wo k and allowing easy in e change. As ea ly as 1893, ail oad expe
Joseph Nimmo a gued ha “I canno ail o make special men ion o he ines imable se ice
pe o med by he ca -se ice associa ions o he Uni ed S a es” in c ea ing uni ied ail
anspo . “Pe haps he e is no o he ea u e o he co-ope a i e ela ionships which ha e
sp ung up among he ail oads o he coun y which so s ikingly illus a es he o ganic uni y
o he Ame ican ail oad sys em as he wo k pe o med by ca -se ice associa ions” (Nimmo
1893, 34-35).
Bel Rail oads and Union S a ions
Rail oads could no use in e change o ca se ice ules unless hei acks physically
connec ed wi h each o he . Al hough occasional small ya ds and sidings a junc ions allowed
such in e connec ions, in la ge ci ies ail oads o en had o coope a e o c ea e subs an ial
in as uc u e o swi ching and exchanging olling s ock. The wo mos impo an ypes o such
in as uc u e we e bel oads and union s a ions ( o a desc ip ion o New Yo k Ci y
in e connec ion in as uc u e, see Jameson Doig 2002, 1-96; Kei h Re ell 2005, 15-98).
In many ci ies, ail oads ecognized he need o a uni ied bel ail oad a ound a ci y,
which would bo h bypass conges ion down own and ease he dis ibu ion o olling s ock
ac oss di e en lines. In 1882 i e Chicago ail oads o med he Chicago and Wes e n Indiana
Rail oad o connec hei dispa a e acks ou side o Chicago’s down own. The company
leased i s line o hese companies, bu was open o o he ail oads, and soon se en o he
ail oads began leasing (Union Paci ic Unda ed). In 1912 hese companies eo ganized a
coope a i ely-owned Bel Railway Company, wi h $5 million in capi al, o sell s ock a pa o
cash o he se en addi ional oads. All companies we e cha ged by “wheelage”, o a cha ge
7
In his case, he quicke u no e o ca s could ex ac he consume bene i s o a shippe holding
ca s o ex ended pe iod. E en i such cha ges made he o e all ail oad sys em mo e “p oduc i e”, i
could ha e educed consume su plus.
Glock: P oduc i e Rail oad Coope a ion
125
based on he numbe o ca s using he oad and ecei ed income om hei Bel Railway s ock.
The Bel Railway also did epai s on locomo i es and eigh ca s and had a clea ing ya d o
o ganize ou going ains (Bel Railway Company o Chicago 1913, 5-6). The company oday
emains coope a i ely owned by six ail oads and p o ides se ices o many mo e. I s clea ing
ya d alone con ains 265 miles o ack on o e 650 ac es.
8
Simila o bel ail oads, and occasionally a ached o hem, we e b idge companies
owned by se e al o he wise compe ing lines. Fo ins ance, se e al ail oads and businesses
o ganized he Louis ille B idge Company o cons uc a $2.3 million b idge ac oss he Ohio
Ri e a Louis ille, which was inished in 1872. They se olls o connec ing ail oads o ensu e
a semi-annual 6 pe cen di idend on he s ock and pay down he bonds used o inance
cons uc ion. In i sel he b idge was no supposed o be a money-making p oposi ion, since
he olls would be educed e e y yea as he bonds we e paid down. Soon e en he di idends
we e educed (In e s a e Comme ce Commission 1889a, 162-228).
Finally, many ail oads ecognized he need o cen al s a ions o ans e ains
be ween compe ing lines di ec ly in la ge ci ies. Some majo s a ions, such as Pennsyl ania
S a ion in New Yo k Ci y, we e owned by one ail oad company.
9
A o he imes, compe ing
lines c ea ed new companies o build single “union” s a ions. No su p isingly, Chicago, he
ci y wi h he mos ail oad connec ions, bi hed one o he i s union s a ions in 1874 unded
by i e sepa a e ail oads. In 1913, a e he s a ion p o ed inadequa e o deal wi h inc easing
a ic, i e ail oads c ea ed a new Chicago Union S a ion Company, which ook as i s
inspi a ion a chi ec Daniel Bu nham’s amous Plan o Chicago om ou yea s ea lie , and
which used Bu nham’s i m o design he s a ion. The company inished he neoclassical
building, one o he g andes in he Uni ed S a es, in 1925 (a chi e. oday 2013; P ese a ion
Chicago 2018). Following a simila ajec o y, se e al ail oads o med a Kansas Ci y Union
Depo Company, wi h he depo inished in 1878, and a Kansas Ci y Bel Railway Company,
wi h he companies’ boa ds o di ec o s composed o o icials o he ail oads ha used he
e minal. Wi hin wo decades, he desi e o a “ h ough s a ion”, whe e engines could keep
a eling in he same di ec ion a e d opping o eigh o passenge s, led he ail oads o
me ge he companies in o a Kansas Ci y Te minal Railway Company and cons uc a g and
neoclassical s a ion, which opened o he public in 1914 (William Wilson 1994, 193-212).
These union s a ions and o he s, which a e oday some o he mos belo ed public spaces in
Ame ica, a e a p eeminen example o p oduc i e ail oad coope a ion.
The Regula o y Response o In e connec ion
In he ea lies yea s o ail oading, many s a e go e nmen s had no in e es in acili a ing
in e connec ions. Many ea ly s a e laws we e designed o p e en in e connec ion. Local
me chan s a ail oad e mini desi ed he bene i s o b eak bulk o wagon anspo be ween
di e en s a ions, and ea ed local a ic being di e ed o a -o lines. Thus, many ea ly
cha e s o bid in e connec ions, o es ablished di e en gauges explici ly o p e en he
in e connec ion o s a e ail oad lines wi h “ o eign” ones (Taylo and Neu 2003). G adually,
howe e , mo e cha e s and gene al ail oad laws au ho ized connec ions. The ede al
8
“When i wo ks, he Bel is a model o coope a ion be ween ie cely compe i i e ail oads” (Bob
Ti a 2015; also, see, P og essi e Rail oading 2006).
9
I onically, Louis B andeis, as he ICC’s counsel in he amous Eas e n Ra e Case o 1910, used
Pennsyl ania S a ion, which he Pennsyl ania Rail oad P esiden admi ed b ough li le ex a e u ns
o he company i sel , as an example o was e ul spending, and as a eason o limi ing ail oad a es in
gene al (Re ell 2005, 63-67).
Essays in Economic & Business His o y 42 (2) 2024
126
go e nmen i sel passed a law in 1866 ha au ho ized in e s a e ail oads o ca y o he
companies’ eigh and passenge s, and o o m con inuous h ough lines.
10
Despi e he g owing in e connec ions o ail oads desc ibed abo e, many smalle
ail oads complained abou lack o access o b oade ne wo ks. Some imes oo, ail oads ha
we e in e es ed in in e connec ions could no come o ag eemen on e ms. Game heo y
eaches ha when wo companies nego ia e in a bila e al monopoly si ua ion, he inal p ice is
de e mined by each company’s ba gaining powe , which i sel can be de e mined by each
i ms’ pa ience (Joel Wa son 2008, 203-211). Such si ua ions can lead o ex ended denials o
se ice o ailu e o come o ag eemen , which can inspi e demands o go e nmen ac ion.
Many s a es began manda ing in e connec ions be ween ail oad lines and allowing hei
go e nmen s o decide on e ms i he ail oads could no ag ee. S a es also o med some o
he ea lies Ame ican egula o y sys ems o a bi a e in e connec ions. In 1842, Maine
es ablished a special ibunal, ou side o he no mal cou and legisla i e sys em, o de e mine
he “ e ms o connec ion” and he “ a es a which passenge s and me chandise coming om
he one [ oad] shall be anspo ed o e he o he ” i he in e connec ing ail oad companies
ailed o ag ee on e ms. This may ep esen one o he ea lies egula o y commissions in he
Uni ed S a es. Beginning in 1870, some s a es, such as Michigan and Pennsyl ania, pu
ail oad in e change ules in hei cons i u ions (Sup eme Cou 1884).
11
Al hough mos o he discussion o he In e s a e Comme ce Ac o 1887 ocused on
ede al supe ision o eigh and passenge a es, and especially on he ban on a es decided
by pools, o he pa s o he Ac ac ually demanded ail oads wo k oge he on he issue o
in e change. Sec ion h ee manda ed ha all ail oads p o ide “ easonable, p ope , and equal
acili ies o he in e change o a ic”.
12
The 1906 Hepbu n Ac expanded his manda e and
allowed he ICC o es ablish h ough ou es and a es on i s own au ho i y (William Ripley
1913, 547-548). Fo decades, a signi ican p opo ion o s a e and ede al egula o y decisions
deal wi h he e ms o and acili ies o ail oad in e connec ion (In e s a e Comme ce
Commission 1889b, 81-82, 152; Rail oad Commission o Louisiana 1920, 151-153).
Some s a es also began egula ing ca se ice associa ions, bu in his case o coun e
he associa ions’ e o s. S a e laws ex ended he ime shippe s had o ill o unload ca s,
slowing down he a emp o ca se ice bu eaus o inc ease shipping speeds. A e he 1906
ca amine, wen y s a es enac ed “ ecip ocal demu age” laws, which o ced ail oads o
deli e shippe s’ ca s in se imes a e a shippe s’ eques (Na ional Associa ion o Railway
Commissione s 1909, 133-138; Rail oad Commission o Louisiana 1920). Bu he Hepbu n
Ac o bid s a es he powe o egula e he deli e y o ca s o in e s a e shipmen s (Na ional
10
Al hough he law was only pe missi e, no manda o y, and said such connec ions could no be
au ho ized wi hou s a e sanc ion, some claimed i es ablished a de ac o policy o a na ional ail oad
ne wo k: “This ac may p ope ly be ega ded as he cha e o he Ame ican ail oad sys em, o i is
clea ly in he na u e o a g an o powe ” (US Sena e 1897, 121).
11
Fo ea ly bank egula o y commissions a abou he same ime, see Glock (2018). Fo
discussion o commission powe on in e change in he 1890s, see C a s (1893). New Yo k laws
demanded each ail oad allow in e change “ ai ly and impa ially” om 1847 and allowed empo a y
commissione s o be appoin ed o na iga e dispu es, bu hese decisions we e no delega ed o a
con inuous commission un il yea s la e (New Yo k Rail oad Commission 1886, 497).
12
Fo a e men ion o his clause du ing he deba e leading o he law, see 18 Cong essional
Reco d 841, Janua y 20, 1887. Sena o Shelby Cullom, pe haps he mos impo an au ho o he Ac ,
did no unde s and he impo ance o he clause o p e en a “’ eezing ou ’” o connec ing lines (17
Cong essional Reco d 3472, Ap il 14, 1886). Many u ged ha his be s eng hened in he Hepbu n Ac
o 1906 (39 Cong essional Reco d 2077, 3421). Cha les F ancis Adams, one o he p emie ail oad
expe s o he e a, decla ed ha in e connec ion was he whole pu pose o he English egula o y
commission, which “was in ac designed o insu e o he communi y an easy and equi able in e change
o a ic o e i s ail oad lines” (Adams 1878, 92). See a simila accoun o he English commission in
Nimmo (1879, 144).
Glock: P oduc i e Rail oad Coope a ion
127
Associa ion o Railway Commissione s 1910; Sup eme Cou 1913). Many ou side he
shipping communi y opposed he new s a e equi emen s. The New Yo k Times (1908)
poin ed ou ha ecip ocal demu age was di e en om he usual demu age cha ged by
ail oads agains shippe s and could mo e easily be analogized o ining shippe s o e using
o p o ide eigh o ail oads when ca s we e eady.
Some o he ea lies s a e laws inhibi ed bel and union s a ions as well. Rail oad expe
Joseph Nimmo said in 1894 ha “[m]any o us can emembe when a union ail oad depo
was a phenomenom. Fo yea s ail oad mange s ega ded join a ic as an en angling
alliance, and he cou s ea ed such a ic as in he na u e o a pa ne ship be ween
co po a ions and as such ul a i es” (US Sena e 1897, 120-121) Bu g adually, he s a es
began au ho izing ail oad companies o in es in o he companies, which could include join
in as uc u e companies. Ea ly egula o s soon ied o manda e he use and e ms o exis ing
in as uc u e, by equi ing se cha ges o he use o b idges o s a ions (see discussion in
Re ell 2005, 82-92). S a e and ede al commissions also manda ed cons uc ion o he new
in as uc u e, including side acks and in e connec ions o new lines, al hough he Sup eme
Cou said ha such o de s a leas equi ed a hea ing be o e implemen a ion (S a u es a
La ge 1906, 585-586; Sup eme Cou 1910; Yale Law Jou nal 1911). Finally, some s a es
began building hei own bel lines o connec ing oads, such as San F ancisco’s S a e Bel
Railway, c ea ed by he S a e Boa d o Ha bo Commissione s in 1890 o mo e a ic along
he wa e on (Na ional Pa k Se ice 2015). Wi h exis ing in o ma ion, howe e , we canno be
su e i manda es on he use o p i a e in as uc u e educed he e u n on i , and hus inhibi ed
i s cons uc ion, o i he public cons uc ion was mo e cos ly han p i a e al e na i es.
Regula o s cemen ed hei con ol o ail oads’ in e connec ions and in as uc u e
du ing Wo ld Wa One, when he go e nmen na ionalized he ail oad companies. The
subsequen 1920 T anspo a ion Ac , which e u ned he ail oads o semi-p i a e s a us,
manda ed ha he ICC o ganize hem in o na ional ne wo ks. P e ious coope a i e
associa ions became a subsidia y pa o his new sys em, since he Ac demanded ha he
ICC gi e ecogni ion o “such a e g oups o e i o ies as he Commission may om ime o
ime designa e” (Edga J. Rich 1920, 516). Al hough many o he ail oads’ independen
o ganiza ions su i ed and con inued o ad ise on e ms o in e connec ion, hey los s a u e
ela i e o ede al egula o s.
13
Conclusion
In he ea ly 1890s, despi e he o mal aboli ion o he pooling sys ems, he e we e a leas 87
di e en associa ions o ail oad o icials wo king ac oss company lines, in e e y hing om
es ablishing join a es o he s anda diza ion o he inspec ion o ca s (US Sena e 1897, 127).
Only la e we e many o hese s anda ds, such as hose in ol ing au oma ic ca couplings by
he Mas e Ca -Builde s’ Associa ion, adop ed by he go e nmen (Ame ican Socie y o
Mechanical Enginee s 2023). Some o hese p i a e associa ions su i e in o he p esen .
Railinc Co po a ion, o ins ance, is a o -p o i subsidia y o he Associa ion o Ame ican
Rail oads, which acks ca s ac oss o he companies’ lines and has a clea inghouse o
se lemen sys em o ne e enue ac oss hem (Railinc).
14
13
One w i e no ed he 1920 Ac ’s powe o e ca se ice and in e change and said ha while
his “ ecei ed li le public a en ion” i was “some o he mos a - eaching and impo an powe s which
ha e e e been con e ed upon he commission” (Rich 1920, 521-523). Bu go e nmen s ill elied on
he p i a e Ca Se ice Di ision o he Ame ican Railway Associa ion (Ame ican Railway Associa ion
1921, 54-62, 103).
14
Fo con inuing egula o y deba es abou issues such as “ ecip ocal swi ching” see Ma ha
Moo e (2019).
