Abstract: Per Diem, "The Graveyard of Freight Cars," and the Problem of the New Haven Railroad: The Perils of Private Regulation in the Progressive Era

Scott E. Randolph

Abstract

My paper examines the complexities of negotiating rules, formulating regulations, and enforcing agreements within trade groups. For the American Railway Association, this was a daunting task, one that was necessary for the smooth functioning of the integrated national rail network. However, any railway organization in the early twentieth century had to function without raising the ire of regulators, wary of any action that resembled collusion. The ARA's by-laws served as de facto national regulations covering many aspects of operations, the most important of which was interchange. Interchange encompassed everything from requirements for the installation of safety apparatus to the rents railroads paid to use the cars of other carriers, the last practice essential to the smooth transit of cargo around the country. Yet, because these rules were not a matter of law but rather of private contract, enforcement was difficult, and the intransigence of one member could threaten the existence of the entire system. My paper will examine the case of the New Haven Railroad and its 1907 threat to leave the ARA over the issue of freight car rental charges. Its withdrawal would likely have led to the organization's dissolution and a chaotic collapse of the delicately balanced interchange system. The industry's efforts to both pacify and cajole this wayward member while staying clear of any violations of the anti-trust law illuminates an evolution in managerial thinking about the utility of public regulation.