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Early Twentieth Century Railroads


Early 1900s Railroad Laws
When it was no longer possible to run trains nationwide under a disorganized array of localized time zones, the standard time system was devised. Henceforth, all railroads set their station clocks to Greenwich Mean Time via telegraphic orders.
When it was no longer possible to run trains nationwide under a disorganized array of localized time zones, the standard time system was devised. Henceforth, all railroads set their station clocks to Greenwich Mean Time via telegraphic orders.
John B. Corns

As early as 1871, railroad regulation had been enacted within individual states, in response to agitation by farmers for rate controls. The first significant federal regulation -- the Interstate Commerce Act -- followed in 1887; even then, the railway industry had little to fear, since "supervision is almost entirely nominal," wrote Attorney General Richard S. Olney in 1892.

The following year, President Benjamin Harrison signed the Railroad Safety Appliance Act into law, requiring air brakes (replacing manual ones cranked down "at speed" by brakemen atop swaying railroad cars) and automatic couplers (replacing the infamous "link and pin" variety that was responsible for the crushing of dozens of brakemen each year, and the loss of thousands of their fingers) to be phased in on most locomotives and cars around the turn of the century.

Although the Interstate Commerce Commission was largely ineffectual prior to 1900, the onset of the Progressive Movement revived the issue of regulation. Most Americans were of the opinion that more stringent controls were needed to prevent abuses such as those perceived within the financial markets -- and which on occasion had led to great collapses of railroad systems, as well as the resultant loss of investor fortunes. It was obvious that something needed to be done to restore the public's confidence.

In this light, President Theodore Roosevelt in 1901 directed his attorney general to file suit -- under the provisions of the Sherman Anti-Trust Act -- against Northern Securities, a giant holding company formed by railroad consolidationists Edward H. Harriman and James J. Hill. The company was outlawed in 1904, and later that year Roosevelt was reelected to a second term. Before the year was out, Roosevelt asked Congress to increase the powers of the I.C.C. This was done overwhelmingly with passage of the Hepburn Act, which empowered the commission to establish "just and reasonable" maximum rates.

"Within two years of [the Hepburn Act's] passage, more rate complaints -- some 1,500 -- were made with the I.C.C. than had been filed in the two preceding decades," writes historian John F. Stover in his book "The Life and Decline of the American Railroad." A related bill strengthened the I.C.C.'s powers in 1910, requiring railroads to prove that any future rate hikes were reasonable and necessary. A related piece of legislation in 1913 provided for the regulatory agency to begin assessing the true value of each railroad, information that was needed if rates were to be established that would provide a fair return for investors.

Not unexpectedly, rate increases requested by the railroads were not always granted by the I.C.C. Rates between 1900 and 1916 dropped slightly, even though the nation's general price level increased by almost 30 percent.

Investment in railroads fell; maintenance standards went down; and new freight and passenger equipment was not ordered in sufficient quantities to keep up with the ongoing demands for replacement and modernization of railroad fleets. The nation had succeeded in regulating its railroads, but with unintended results.


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