On the thread about D&RG, this topic started up. Rather than have that thread turn astray from what was shaping up as an interesting topic, I thought maybe we could shift this tangent to it’s own thread?
Baloney. This is historically, absolutely, factually, wrong, and, notwithstanding isolated instances of the circumstance, it reflects neither historical experience nor the attitude of the industry. This is historical revisionism at its worst.
Prior to the enactment of the ICC Act, railroad rates were plummeting as a result of competition. Historian Gabriel Kolko, among others, has thoroughly documented the proposition that railroad rate regulation was the result of the railroads themselves attempting to mitigate the effects of true competition which was putting unacceptable downward pressure – to fat cats desiring to remain fat – on rail rates. The rail industry acted in concert to stop that process and to force rates to rise by political fiat, notwithstanding economic trends in the opposite direction – the normal result of a successful Capitalistic system. It was a raw exercise of political power to exempt the rail industry from the usual rules of economics. It enabled and perpetuated an attitude of entitled inefficiency that served the industry poorly when confronted by changes in the modern world, for which the industry has continued to blame: the modern world. The attitude has plagued the industry ever since.
That never changed. Even though railroad rates were at an all time high, railroads wanted them to go even higher and the primary impetus behind the Staggers Act was the perception, and the avowed complaint, that the ICC was not allowing sufficient increases in rail rates. There is abundant testimony in the re
Baloney. This is historically, absolutely, factually, wrong, and, notwithstanding isolated instances of the circumstance, it reflects neither historical experience nor the attitude of the industry. This is historical revisionism at its worst.
Prior to the enactment of the ICC Act, railroad rates were plummeting as a result of competition. Historian Gabriel Kolko, among others, has thoroughly documented the proposition that railroad rate regulation was the result of the railroads themselves attempting to mitigate the effects of true competition which was putting unacceptable downward pressure – to fat cats desiring to remain fat – on rail rates. The rail industry acted in concert to stop that process and to force rates to rise by political fiat, notwithstanding economic trends in the opposite direction – the normal result of a successful Capitalistic system. It was a raw exercise of political power to exempt the rail industry from the usual rules of economics. It enabled and perpetuated an attitude of entitled inefficiency that served the industry poorly when confronted by changes in the modern world, for which the industry has continued to blame: the modern world. The attitude has plagued the industry ever since.
That never changed. Even though railroad rates were at an all time high, railroads wanted them to go even higher and the primary impetus behind the Staggers Act was the perception, and the avowed complaint, that the ICC was not allowing sufficient increases in rail rates. There is abundant testimony in the record to this effect. The railroads wanted to raise rates, and fully intended to do so when deregulated. When rates were deregulated two things happened: railroad rates plummeted, just as they had been doing
Wouldn’t a more appropriate title for this thread be something along the lines of “Regulation and subsequent rate margins” or something like that?
It seems you have made a cheap shot at Mr. Sol by the erstwhile title of “MichaelSol thread”, since the thread is clearly not a bio on Mr. Sol, but a debate between Mr. Sol and one “greyhounds”.
I feel left out that there is no Paul Milenkovic thread.
Sort of like the time I told my pals, “OK, go to lunch without me so I can be the topic of conversation” to which the retort was, “what makes you think your name even came up?”
I suppose this has reference to the famous Big John hopper case with the Southern Railway trying to reduce their grain rates account the effeciencies of the large capacity hoppers while the rest of the industry was loath to allow that since they might be forced to reequip their covered hopper fleet in order to compete with the Southern.
There might be more interesting reading if one were to Google “yak fat” to see what pops up to support your case.
From what I’ve read, the creation of the ICC was made politically possible because in the East, the railroad “barons” had locked themselves into a ruinous price war, and in the West, the railroad was a stifling monopoly. (Thinking of “The Octopus” by Frank Norris regarding the West).
In time, the ICC itself became the all-powerful, to the public’s detriment.
Oh, I think the public got a pretty good deal out of it in general. Ultimately, it did end up doing by regulation what oligopoly does as a natural inclination. The “price wars” among Eastern roads were a bit of an artifact. Post-Civil war, the United States endured a long period, forty years or more, of deflation. America’s “first big business” [Alfred Chandler] – railroading-- was the first to invest massively, using debt, to build infrastructure, binding themselves to significant sums of ongoing bond and interest payments.
Deflation wreaks havoc on debt.
Each year, a dollar is worth more, and the railroad receives fewer of them in revenues – unless they build furiously to obtain new business. The dollar value of funded debt keeps increasing, even as the book value of the assets built declines. The debt load, relative to income, increases throughout the deflationary period. Add in even a minor competitive pressure on rates and the outcomes were inevitable for the industry without an ICC that could simply, without regard for competitive pressures or economic realities, mandate rates.
I have a high regard for Gabriel Kolko’s work in this area, but I think, as a “Progressive” Historian, he overemphasized the conspiratorial aspects of industry “cartelization” without a due recognition that the rail industry was really trapped by U.S. economic circumstances for a very long time – 1864-1907 – and a victim of it. If the industry was going to survive – conti
On the thread about D&RG, this topic started up. Rather than have that thread turn astray from what was shaping up as an interesting topic, I thought maybe we could shift this tangent to it’s own thread?
Baloney. This is historically, absolutely, factually, wrong, and, notwithstanding isolated instances of the circumstance, it reflects neither historical experience nor the attitude of the industry. This is historical revisionism at its worst.
Prior to the enactment of the ICC Act, railroad rates were plummeting as a result of competition. Historian Gabriel Kolko, among others, has thoroughly documented the proposition that railroad rate regulation was the result of the railroads themselves attempting to mitigate the effects of true competition which was putting unacceptable downward pressure – to fat cats desiring to remain fat – on rail rates. The rail industry acted in concert to stop that process and to force rates to rise by political fiat, notwithstanding economic trends in the opposite direction – the normal result of a successful Capitalistic system. It was a raw exercise of political power to exempt the rail industry from the usual rules of economics. It enabled and perpetuated an attitude of entitled inefficiency that served the industry poorly when confronted by changes in the modern world, for which the industry has continued to blame: the modern world. The attitude has plagued the industry ever since.
That never changed. Even though railroad rates were at an all time high, railroads wanted them to go even higher and the primary impetus behind the Staggers Act was the perception, and the avowed complaint, that the ICC was not allowing sufficient increases in rail rates. There is
Well, you are wrong, and there is a substantial body of economic literature that says so, and none that says otherwise. And I didn’t leave any parts out either but since you don’t read anything that contradicts your unique historical views, the comment is contained above:
“The Interstate Commerce Commission was the only means of doing that although its jurisdiction was relatively narrow at first, and it obtained a full measure of rate-setting powers just as, ironically, deflation as permanent fixture of post-Civil War America ended.”
As I specifically stated, this period ended about 1907 – the end of post-Civil War deflation --the first year of implementing the Hepb
You know fellas, the more I read these threads, the more I think we’d have a blast if we could meet for breakfast Sundays at a greasy spoon. I bet we’d have a whale of a time and get along like a house on fire. And part as fast friends.