government in 1830, and in the attempt had fallen into disrepute. The pressure for improvements became stronger as the country developed. Their construction had been taken out of the hands of the federal government. The state governments had failed. And now there was but one alternative, - not to build them at all, or to leave internal improvements to private corporations. The latter policy was chosen. Jackson's Jackson's "monster" had now gained the ascendency. The period following 1837 marks the decline of the states as economic agents and the rise of private corporations. Considering the temper of the American people and the prevailing industrial conditions, this issue was probably the best under the circumstances, although the gross disregard of public rights connected with the history of many railway companies will always remain a blot in our industrial evolution. It resulted in a certain drifting apart of public and private interests, while the memory of early abuses seems ever ready to stimulate drastic legislation.

CHAPTER IV

ECONOMIC ADJUSTMENTS 1

IN the opening sentence of the first chapter it was said that the world was born again with the introduction of railways. Many changes in industrial, commercial, social, and political relations followed, and have continued to come, so that every succeeding day brings us a new world with its changed relations, calling for continual readjustment to these new conditions. In this process of readjustment there takes place a conflict of diverse and antagonistic interests, the weaker or less important yielding to the stronger or more important. The assertion that the interests of the railways and of the public are harmonious and identical cannot prevent conflicts, for neither the entire public nor every railway manager will view the situation in this light. There certainly exist elements of harmony in the interests represented by the railways on the one hand and by the public on the other. For instance, a railway company extends its system into new and remote territory, thereby increasing the value of the lands and other

1The contents of this chapter appeared in the Annals of the American Academy of Political and Social Science for January, 1902, under the head of " Advisory Councils in Railway Administration."

property in that territory. A new source of supply has been tapped and the traffic of the road is proportionately increased. With the increase in traffic and the rise in value of other property in that territory the railway property becomes more valuable, and thus increases the sources of public revenue. Up to this point there exists harmony; but the possibilities of a conflict of interests must not be overlooked. The railway property having become very valuable, the authorities of the state may assess this property to a degree which the railway authorities regard excessive; or the railway company may levy a transportation charge which the public considers excessive, or it may give preferences to one industry or place or productive area over another industry, place, or

area.

This lack of harmony between the two great parties may be due to a lack of mutual appreciation of each other's rights and privileges; it may be due to ignorance, to unscrupulousness, to intrinsically irreconcilable points of view, to extraneous factors over which neither can exercise control, or to numerous other contingencies. Whatever the cause, the possibility of a conflict usually exists in those elements of railway transportation which are not embraced in that part of the business representing purely harmonious and identical interests. This chapter will be devoted to suggestions for arriving at a better understanding of questions in dispute and for facilitating the exchange of views

and conciliation of interests on the part of all the factors involved in railway problems.

Before entering upon a discussion of these suggestions, three propositions will be stated, which the writer regards incontrovertible, but which he will not discuss in this connection, although he is prepared to support them with ample evidence and without fear of successful contradiction. These propositions are:

1. That the present situation with respect to railway affairs in the United States is untenable and indefensible.

2. That the great majority of the railway managers and other railway officials are sincerely desirous of administering, to the best of their abilities, the properties under their control in the most efficient manner, having due regard for the interests of both the stockholders and the public; but that all the various interests affected by their action are not represented in proportion to their importance, if at all; and that consequently injustice may be done.

3. That there is nothing in the present statutory and administrative regulation of railways to prevent the arbitrary and harmful action of the weak or unscrupulous manager from defeating the desires of the majority of the officials who would voluntarily pursue a more beneficent course.

In the Annual Report for 1898, the Interstate Commerce Commission said: "The situation has become intolerable, both from the standpoint of

the public and the carriers. Tariffs are disregarded, discriminations constantly occur, the price at which transportation can be obtained is fluctuating and uncertain. Railroad managers are distrustful of each other and shippers all the while in doubt as to the rates secured by their competitors. Enormous sums are spent in purchasing business and secret rates accorded far below the standard published charges. The general public gets little benefit from the reductions, for concessions are mainly confined to the heavier shippers." That the situation here described is as oppressive to the railways as it is odious to shippers no one will doubt. In view of this prevailing demoralization, the Commission called conferences with railway presidents during the following year which appear to have accomplished considerable good. At a time when published tariffs constitute little more than “ a basis from which to calculate concessions and discriminations" anything which is likely to assist in reëstablishing order must be approved.

The Commission chose a plan which is of wider application and which is of importance in its bearing upon the subject of advisory councils; for what were these conferences but modifications of the advisory council system? In extending invitations to officials, neither existing nor former railway associations were taken into consideration. "The selection in each case was made with reference to the territory in which different connecting and