of railroad management. The nature, extent and practical results of governmental regulation of the railroads are also involved in the study of these historic facts.

The year 1830 very nearly marks the genesis of railroad transportation in the United States and in England. It was evident at the very beginning that in so far as relates to carriers it is impossible to apply all the timehonored rules of the free highway to an avenue of commerce whose pathway is no wider than the wheel of the vehicle which moves upon it. It also became apparent that considerations of economy, of safety, and of commercial efficiency require that the entire railroad establishment, including roadway and equipment, must be placed under one central ownership and control, and that the management of the traffic interest of each railroad must be subjected to one central authority. This gave to railroads at the very beginning a decided but absolutely unavoidable aspect of monopoly. Preconceived ideas in regard to the freedom of the highway at first caused the civilized world to stand amazed at this conclusion. In order to meet public prejudices thus aroused it was proposed that railroad transportation should be made a public function. Accordingly the experiment of state ownership and management was tried in this country under conditions much simpler and much more favorable to success than those which exist to-day. Six States of the Union attempted the experi ment, namely the States of Massachusetts, Michigan, Pennsylvania, Illinois, Indiana and Georgia. Each one of these experiments resulted in absolute failure. sequently and for a period of about sixty years the people of this country have acquiesced in railroads corporate management and control. The results of this system have been grand beyond the dreams of even the most sanguine railroad projector. There have been constructed in

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this country 247,532 miles of railroad track. More than half a continent has been reclaimed from a wilderness, the habitation of wild beasts and of savages, and converted into homes of an enlightened and progressive people mainly through the facilities of transportation afforded by railroads.

There has also been built up an internal commerce the value of which is fully twenty times that of our foreign commerce. The facilities of direct trade to the remotest parts of this country have thus been abundantly provided for. Besides constant improvements in the mechanical features of roadway and equipment, increased facilities, advanced methods of administration and innumerable and ingeniously devised economies have so reduced the cost of transportation in this country that the average rate by rail is to-day only about one-third what it was even thirty years ago.

This enormous increase in the commerce of the country, and this wonderful reduction in the cost of internal transportation led to an ever-tightening grasp of competition in all the productive industries, and caused an uncontrollable tendency toward a parity of values in all parts of the country. This in turn has become the most effective cause of the reduction in transportation charges. Instead, therefore, of restricting competition, as at the beginning was feared might be the result of a railroad system of transportation under corporate ownership and control, there has been created a fiercer and a vastly more extended and potential competition than was ever before seen. The competition thus created is between rival towns and cities, between different sections of the country, and between mines and manufactures and markets. To state the matter from the transportation point of view, it was found to be vital to the financial success of each railroad company that the

management of its traffic interests should always be loyal to its particular sources of traffic, and especially its local traffic. The inevitable result, therefore, has been that through the facilities of railroad transportation there has been developed an extended and forceful competition in both commercial and transportation affairs. For its intensity and the extent of its potentialities such competition is unprecedented in history. Ever-improving facilities, economies and administrative measures have so reduced the time and charges of transportation by rail as largely to divert commerce from water lines for the carriage of passengers, the mails, express goods, fast freights and perishable goods.

From the year 1830, until about the year 1850, each railroad in the United States was, as a rule, operated independently of all other railroads. Different track gauges were adopted in many instances for the express purpose of preventing "the carriage of freights from being, and being treated as one continuous carriage from the place of shipment to the place of destination,”* a practice now interdicted by the Interstate Commerce Act as a public offence.

But a great change came. The social, commercial and postal necessities of the age, and the military exigencies of the late civil war brushed aside all obstacles to the formation of that great American railroad system which is to-day unto the traveler and shipper as one instrumentality of transportation, embracing 247,532 miles of track, administered and operated as though by one central authority. This wonderful organic unity involves connected rails, a common track gauge, union depots, joint rates, the uniform classification of commodities, rate agreements, through tickets, related time schedules, the unimpeded passage of freight, passenger, * See Act to Regulate Commerce, section 7

express and postal cars and locomotives over the tracks of different companies, and to a considerable extent the employment of operatives in the pay of one company upon the lines of other companies. Each company has thus become in many ways the agent of other companies, and each railroad has become a national railroad.

This practical unification of the great work of transportation by rail came about not as the result of design or forecast on the part of the companies, but as the outcome of an evolution responsive to the demands of the public interests. Objections to the juncture of lines and the combination of traffic interests, at first strenuously urged, were swept aside by an imperious force of circumstance. All this constituted a renaissance of transportation facilities in the United States.

At last a consensus of the social, political, military and commercial forces of the country led to a statutory enactment by the national government which ratified the combination of railroad interests just described. I refer to the Act of Congress approved June 15, 1866. This act reads as follows:

"An act to facilitate commercial, postal, and military communication among the States.

"Whereas the Constitution of the United States confers upon Congress, in express terms, the power to regulate commerce among the several States, to establish post-roads and to raise and support armies; therefore

"Be it enacted by the Senate and House of Representatives of the United States in Congress assembled, That every railroad company in the United States whose road is operated by steam, its successors and assigns, be, and is hereby, authorized to carry upon and over its road, boats, bridges and ferries all passengers, troops, Government supplies, mails, freight and property on their way from any State to another State, and to receive compensation therefor, and to connect with roads of other States, so as to form continuous lines for the transportation of the same to the place of its destination."

This act, in form and substance, is permissive and clearly in the nature of a grant of power. It expresses

an implied contract, viz., a duty to be performed in consideration of a privilege granted. Therefore it may properly be regarded as The Cha ter of The American Railroad System. It also fully and explicitly authorizes all the railroad combinations and co-operative arrangements which I have just described; for a continuous line for the transportation of passengers, the mails, merchandise and munitions of war, necessarily implies a co-operative unity.

Moreover the act of June 15, 1866, fulfills the true conception of regulation. Without meddling with the natural and inevitable interaction of the agencies of transportation, it is protective, enabling and nationalizing. It was a fitting sequel to the war for the preservation of the Union, toward the prosecution of which the railroads had contributed help of inestimable importance.

The historic fact now stands out unmistakably that the firmly united and deftly articulated American Railroad System had its origin in acknowledged public needs and in a coercive public sentiment which remains unchanged to this day. It is a form of combination which subserves the interests of every person on this continent and it is prejudicial to the interests of none. Besides it is to-day, and will remain for all time, a strong physical bond of our political unity.

ADMINISTRATIVE DIFFICULTIES OVERCOME.

In the course of time, the extension of the facilities of joint railroad traffic placed the companies under a stress of competition and begat administrative difficulties which for years threatened the financial existence of every railroad corporation in the country. It was also demoralizing to the commerce of the country. This was the inevitable outcome of a great