"Wrangling with the Iron Horse: Railroad Regulation Within, Without, and between the State"

In late 1905, Southern Railway President Sam Spencer equated plans to strengthen the Interstate Commerce Commission to the statutory “enforcement of commercial lynch law.” Speaking for all railroads, Spencer argued that additional regulation was necessary, but the proposed legislation was unfair, worse even than government ownership. At least then the government would be compelled to take “responsibility for the necessary expenses and risks of conducting the business” and not simply impose on the corporations’ earning capacity through rate regulation. The true evil, Spencer insisted, was not extortionate rates but the secret rebates railroads provided to shippers. According to Spencer, the primary role of the state was not to mediate between railroads and the public but to enforce fair competition between corporations. Only then could corporations flexibly regulate themselves and thereby fulfill their function of serving the public.
Spencer’s speech exemplified the paradoxical complexities involved in regulating privately-owned public service corporations. Regulators were tasked with balancing the real and imagined interests of a public expecting protection, corporations expecting a free hand, and investors expecting a return. More importantly, regulation occurred both within, without, and between the state. At the same time state regulators attempted to curb monopoly power, railroads formed associations of their own to curb the excesses of competition. Meanwhile, shippers, localities, and states sought to regulate against other shippers, localities, and states. In short, regulation was a form of competition, and the pliable concept of fairness became a justification for further discrimination. Torn between capitalists, consumers, and producers, regulators could fully serve none of them. Building on Cedric Robinson’s contention that the essential tendency of capitalism is “not to homogenize but to differentiate,” I argue that regulators, tasked with “fairly” discriminating between competing and contradictory interests, effectively became capitalism’s chief enforcers.