CONSOLIDATION and stock-watering are two such prominent features in the development of the railroad system, and have attracted so much discussion, that they merit a separate consideration. Consolidation is one form of that tendency to combination which Stephenson referred to in his aphorism. Combination in some shape, — a union of forces under the influence of an outside pressure, — is one of the certain results of any active competition ; it is, in fact, a measure dictated by the instinct of self-preservation. The simple question always is whether the field in which the combination takes place is of a kind which will admit of the union of all the agencies at work in it. If it is, a close monopoly is almost sure to ensue. The laws of competition thus have play just in proportion as these agencies are too numerous for a perfectly united action. The possession of, or at least some small share in a monopoly is always very eagerly craved by the average man, while, on the other hand, the progress of civilization, by multiplying agencies, is continually increasing the difficulty of effecting a perfect combination of any kind. Yet the difficulty which surrounds the creation of a monopoly, and the resource and ingenuity with which the creation of monopolies is pursued, seem to move along with almost equal steps. The modern development of the area of competing industries, for instance, would seem to have rendered any combination of labor in general, to affect its share in the profits of production, a practical impossibility ; but, on the contrary, the facility of intercourse between all civilized countries seems to have developed the possibility of combination to an even greater extent. The consequence is that single associations claim that, from some central office, they will at no remote day be able to control the productions of skilled industry in conflict with capital from the Baltic to the Gulf of Mexico. So it is with transportation. The construction of as many channels of intercourse as mankind saw fit to build would seem to have made any monopoly of intercourse the dream of a visionary. Mankind has, however, at least proved equal to the effort. The operation of the natural law has not in this respect been allowed to pass unchallenged.
The control of the intercourse between the interior basin of the continent, drained by the St. Lawrence and the Mississippi with their affluents, and the sea-board has naturally been the great prize contended for among the railroads of America. Formerly it seemed as though the Erie Canal and the Mississippi River had insured a divided monopoly of this to the cities of New York and New Orleans. Then the railroads broke in upon the dispositions of nature, and, for a time, the monopoly was effectually destroyed. Mankind, however, very shortly rallied its energies, and the old struggle was renewed. Science had now, in a great degree, superseded nature, and the several artificial channels of intercourse and the men controlling them were brought into sharp conflict. Each interest became anxious to strengthen itself, and to secure every advantage over all others ; and thus, by degrees, there resulted a race of consolidation, until a very few little groups of men practically controlled the whole railroad system of the country.
There are four great thoroughfares connecting the several Atlantic seaports with the interior of the continent, — the New York Central, the Erie, the Pennsylvania, and the Baltimore and Ohio railroads. A sketch of the development and present position of two of these will afford a sufficiently vivid illustration of one phase, and unquestionably the most striking one in the progress of consolidation.
Eighteen years ago the New York Central Road, which forms the nucleus of the Vanderbilt combination, was not in existence as a corporation. In 1853 it was chartered, and eleven distinct corporations were merged into it. Five of these corporations, the longest of which could boast but of 76 miles of track, divided among them the 300 miles which separate Albany from Buffalo. The corporation created out of these elements was again, in its turn, merged in 1869 into the larger New York Central & Hudson River Railroad Company, which controls within the State of New York but little less than a thousand miles of track, and is represented by rather more than $100,000,000 of capital. The consolidation, so far, was perfect and had taken place under a State law and within State limits. Growth, however, did not stop here ; the combinations of capital simply adapted themselves to the forms of a political system. Beyond the limits of New York, the corporation held, in the eye of the law, no property ; it did not control a mile of track. At Buffalo, however, the Central connected with another company, itself made up of four separate primal links which had once connected Buffalo with Chicago, and which had united in obedience to the same law of development which had built up the Central. West of Chicago came yet other links in the trans-continental chain. Three lines competed to fill the gap which lay between Chicago and the eastern terminus of the Pacific Road, — the Northwestern, the Rock Island, and the Burlington & Missouri. In the autumn of 1869 the consolidation of the Central and the Hudson River took place. Immediately afterwards, at the annual election of the Lake Shore & Michigan Southern, the Vanderbilt interest took open possession of that corporation, controlling a majority of its stock. In May, 1870, it in like manner assumed control of the Rock Island and Chicago & Northwestern. The same parties in interest were now practically the owners of a connected line of road from New York to Omaha ; there was no consolidation as yet, but, so far as the public and competing roads were concerned, the close of 1870 found the six parties, which but a short time before had been in possession of the trans-continental thoroughfare, reduced to three. With out taking into consideration the immense influence which their position necessarily gave to them over other and less powerful members of the railroad system, here was a single combination of capital representing the control of at least 4,500 miles of road and not less than $250,000,000 of capital.
This, however, is but the result of a loose alliance between men notorious for their feuds and their selfishness ; the combination is temporary, depending perhaps upon the continued life of one who lacks little of being an octogenarian. The men who control it not infrequently evince talents of a very high order, and their course is made continually interesting by episodes of dramatic surprise. They lack, however, the greatest and most indispensable element of permanent success, — some underlying, indissoluble bond of union. In this respect they differ entirely from the great combination which has gradually taken shape in the neighboring State of Pennsylvania. What is commonly known as the Pennsylvania Central Railroad Company is probably to-day the most powerful corporation in the world, as, indeed, it owns and operates one of the oldest of railroads. Its organization, as compared with that of its great rival, the New York Central, bears the relation of a republic to an empire. Cæsarism is the principle of the Vanderbilt group ; the corporation is the essence of the Pennsylvania system. The marked degree in which the character of the people have given an insensible direction to the management of their corporations in these two States is well deserving of notice. In New York politics the individual leader has ever been the centre ; in Pennsylvania, always the party. The people of this last State are not marked by intelligence ; they are, in fact, dull, uninteresting, very slow and very persevering. These are qualities, however, which they hold in common with the ancient Romans, and they possess, also, in a marked degree, one other characteristic of that classic race, the power of organization, and through it of command. They have always decided our Presidential elections ; they have always, in their dull, heavy fashion, regulated our economical policy. Not open to argument, not receptive of ideas, not given to flashes of brilliant execution, this State none the less knows well what it wants, and knows equally well how to organize to secure it. Its great railroad affords a striking illustration in point. It is probably the most thoroughly organized corporation, that in which each individual is most entirely absorbed in the corporate whole, now in existence. With its president and its four vice-presidents, each of whom devotes his whole soul to his peculiar province, whether it be to fight a rival line, to develop an inchoate traffic, to manipulate the legislature, or to operate the road, — with this perfect machinery and subordination there is no reason why the corporation should not assume absolute control of all the railroads of Pennsylvania.
Such is this great corporation, high in credit in the money-markets of the world, careful withal of its outward repute, apparently unbounded in its resources. Organized so long ago as 1831, it had thirty miles of road ready for operation in the succeeding year. Not until 1854, however, was the Pennsylvania Railroad proper completed. It then controlled the line from Harrisburg to Pittsburg, 210 miles, which had cost a little less than $17,000,000, and was represented by about $12,000,000 of stock and $7,000,000 of indebtedness. This might be considered the starting-point ; $3,500,000 of annual gross earnings on a capital a little less than $20,000,000. For many years its growth was confined to Pennsylvania. In 1869, however, its policy in this respect underwent a change, and it burst through State limits, extending its field of operations over the vast region lying between the great lakes and the Ohio upon the north and south, and the Missouri on the west. This sudden development was, as usual, the immediate result of competition, and was almost forced upon the corporation in spite of itself, as a measure of defence. The secret history of the railway intrigues and legislative manipulations of 1869 would make a very singular narrative could the whole of it be disclosed. That year was, in fact, a turning-point in our railway progress. The Erie management had then fallen into confessed discredit, and was beginning its remarkable attempt under Messrs. Gould and Fisk to carry on a great commercial enterprise in absolute disregard of every principle of good faith, commonly supposed to be at the basis of civilized transactions. Those managing this thoroughfare were desperately thrusting out in every direction, contracting, buying, and leasing all adjoining roads with a rashness only surpassed by their easy disregard of the obligations thus contracted. Early in 1869 they sought to cut off the connections of the Pennsylvania road and to shut it up within the limits of that State. For a brief time the battle seemed to go in their favor, but suddenly the tide turned. The result showed that they were no match for the powerful antagonist they had provoked ; — their overthrow was so effectual as to have in it some elements of the ludicrous. Bills in the interest of the Pennsylvania company, which it was doubtful if it were in the power of any legislature to pass, were pushed through their various stages, and received executive approval, with a speed unprecedented ; contracts, arranged with the Erie managers by boards of directors, were unexpectedly rejected in meetings of stockholders ; and for a time this irresistible power even threatened to wrest from the Erie road its own peculiar and long-established connections. The result of these operations was that the Pennsylvania Central soon controlled by perpetual lease a whole system of roads radiating to all points in the West and Southwest. By one it reached Chicago, by another St. Louis, and by a third Cincinnati. At Indianapolis it had absorbed a network of routes ; at Chicago and St. Louis it had formed close connections looking directly towards the Pacific. Here for a time it rested, declaring that its policy did not look to any expansion beyond the Mississippi. The corporation rested, perhaps, but not the ambitious men who controlled it ; their individual operations now commenced. They obtained the control of roads endowed with vast land grants in Michigan and in Minnesota ; they were the directors of the Northern Pacific ; and when the men who had constructed the Union Pacific broke down under the multiplicity of their engagements, the first vice-president of the Pennsylvania road appeared as the new president of that road also. The very land grants belonging to the companies these men now controlled amounted to 80,000 square miles, or an area equivalent to the aggregate possessions of four of the existing kingdoms of Europe.
Meanwhile the Pennsylvania Railroad Company, distinct from its individual directors, now owned or held by lease 400 miles of road in Pennsylvania, and directly controlled 450 miles more, almost entirely within the same State ; beyond its limits it leased and operated nearly two thousand miles in addition, holding the stock and bonds of railroads, canals, towns, and cities, like some vast Credit Mobilier ; it had, indeed, no less than $20,000,000 standing on its books as represented by these investments. In the sixteen years its own capital and indebtedness had swollen from $20,000,000 to $65,000,000, with a liberty secured to increase them to nearly $100,000,000 ; at the same time the system of roads which it held in its hands returned a yearly income of hardly less than $40,000,000, of which about $10,000,000 was claimed as net profit.
If, however, as its direction had officially declared, the corporation had no distinct interests to push west of the Mississippi, the same could not be said of the region east of the Susquehanna. In the closing days of 1870 New York was suddenly startled by the announcement that the Pennsylvania Railroad had effected a perpetual lease of the whole famous railroad monopoly known as the United Companies of New Jersey. The rumor proved true, and some 450 miles of additional track, besides 65 miles of canals and some 30 steamers, in all some $35,000,000 of property was by this transaction added to the vast consolidation, and brought it to the shores of New York Harbor.
It is unnecessary to consider how much further this combination will carry its operations, or in what they will result. The Pennsylvania road now controls directly and as itself owner or proprietor, and wholly distinct from its directors, more than 3,000 miles of track, claiming to represent $175,000,000 of securities, and returning a gross income of at least $40,000,000 per annum. It is far from impossible that this combination may from its very magnitude lead to its own downfall. The leasing of roads has not generally proved a source of profit, and there are indications that the Pennsylvania Railroad Company will not find its own case an exception to this rule. Upon the leases of four roads, which netted a gross income of over $15,000,000 in 1870, the returns seemed to indicate a profit to the leasing corporation of only $128,000 ; while, estimated upon the returns of the year previous to that in which the lease was made, the New Jersey contract would seem to involve a heavy annual payment in excess of net receipts. For years a general crash in the American railroad system has been very commonly predicted. Those are not wanting who now confidently insist that the shadow of the United States Bank rests heavily upon the Pennsylvania Railway, and that the closing pages in the histories of the two institutions will not be dissimilar. Should this apprehension prove true, the crash, when it comes, will probably be coincident with the fall of the Pennsylvania consolidation.
Meanwhile, whatever the future may bring forth, it is impossible to repress a feeling of admiration, mixed with vague alarm, at the steady massive growth of this corporation. Its method of procedure is so silent, so organized, and so sure, that it has already cast a spell over the mind and conscience of the State which created it. Compared with the magnitude and order of its proceedings, the results achieved by the other combinations seem but the freaks of stock-jobbers. The Pennsylvanians are reducing consolidation to a science and mastering the whole subject of transportation, while their various rivals are dabbling in railroads and amassing individual fortunes. As between the two combinations the growth of which has here been sketched, it would seem not unsafe to predict that the solidity of the latter company is almost certain ultimately to overcome the élan of the former.
Only one phase of consolidation is as yet presented in the great east and west thoroughfares, — the consolidation brought about through the stress of competition. No consolidation of the competing thoroughfares has hitherto been effected, though several times it has been attempted. Instances of this on a smaller scale are, however, by no means wanting, and perhaps no combination in the whole history of the railroad system, has ever been more suggestive than that effected in the winter of 1870-71 among the anthracite coal-roads of Pennsylvania ; it illustrated in almost every possible way both the fallacies of railroad competition and the inefficiency of the attempts hitherto made to secure the railroad monopoly from abuse through legislation.
The production of anthracite coal had increased, under the influence of an artificial stimulus, from one million tons in 1842, up to nearly seventeen millions in 1870. The country did not really require such a production, and the usual severe struggle ensued as supply and demand sought the same level. There were four parties in the field, — the consumers, the miners, the coal companies, and the railroads. The consumers alone could not combine ; all others could and did. The miners combined for an increase of wages, and refused to produce ; the coal companies combined against excessive freights, and refused to forward ; the railroad corporations combined to raise freights, and refused to carry. The inevitable results ensued ; coal in the same market fluctuated many hundred per cent ; the miners starved, the coal companies failed, and the railroads became unprofitable. There was but one way out of the difficulty, — a closer combination between two of the contending parties to secure a mastery over the third. The coal companies and the railroads accordingly combined, and the railroads became the largest owners of mines.
The contest was now a simple one between labor and capital. Between 1867 and 1870 the struggles and consequent fluctuations were incessant ; there was a constant recurrence of strikes, resumptions under agreement, violations of agreement, and suspensions of production. The parties then resorted to amicable arrangements, by which strikes were pretended, and surplus coal was sold off to consumers at panic prices under the fear of an impending scarcity. This, however, was a trick which would not bear frequent repetition, and when, at last, in 1870 it became evident that production was again in excess of consumption, and that a glut was impending, the two parties drew together their forces for a decisive conflict. The miners struck for what they considered a remunerative basis for their labor, and the companies combined to starve them out. They not only ceased to produce from their own mines, but they trebled their freights, and thus put a stop to production by all others. The result was not only great inconvenience and suffering throughout the country, but a violent disturbance of industry, and, in Pennsylvania, there resulted almost a condition of civil war.
So far the efficacy of railroad competition alone was illustrated, — but in Pennsylvania, as elsewhere, legislation had sought to make good all possible deficiencies in the working of natural laws. Recourse was had to the statute-book, and the charters of the corporations were eagerly examined. The corporations, it will be remembered, not only insisted upon stopping all production from their own mines, but they also, through prohibitory tariffs, put a practical stop to production from all other mines. As transporters of a commodity they once for all undertook to regulate both demand and supply as regarded that commodity. A long conflict before the legislature ensued, and the effect of the law was discussed. It was found that, in the charters of the roads, the amounts which could be charged as “tolls” were alone limited. The courts had held long before, and when the question had come up in a different connection, that “tolls” were a mere charge on the passage of a person or article over a road or through a canal, where no service in aid of such passage beyond furnishing the thoroughfare were included ; where the party owning the thoroughfare likewise furnished the means of transportation a further sum as freight could be charged, no limit to which had been assigned by law. In other words the law provided only for the use of the road, and not for services as a common carrier.
The railroad combination was thus left master of the field, and it only remained for the courts, after slow process, to reaffirm or reverse their former decision. For the time being the combined companies had carried the day. It would be futile, however, to suppose that this is the end of the difficulty in Pennsylvania. At the present time the question as to the intent of the law is again before the courts. The carrying it there was a very dangerous move on the part of the railroad companies, for whatever the result may be it may safely be predicted that they have pushed their reserved rights too far. The difficulty lies beyond the reach of any court of law ; it will be found to be nothing less than the breaking down of the guarantees hitherto relied upon to protect the community against the abuse of great powers by private monopolies. It required just such a combination of circumstances as exists in Pennsylvania to raise this question. Elsewhere it has only threatened ; here it must now be confronted. The examples of combination hitherto discussed have been those of a more elementary nature, — those which would naturally be looked for in the earlier and less complex days of a system. It is extremely unlikely, however, that this process will stop with the permanent consolidation of certain connecting lines, as in the case of the Pennsylvania Central, or in the temporary combination of certain competing lines, as in the case of the anthracite coal railroads. Indications are not wanting that the forms of concentration hitherto described are but one, and not the most significant, phase of the working of general law. It is the one which most effectively and dramatically presents itself to the public, but it is not improbable that a more important revolution is now in rapid progress. Properly to understand the origin and possible scope of this movement, a retrospect is necessary.
What is known as the express system of America is a very peculiar and convenient, though expensive, organization, wholly the creation of this country and of the present generation. The men who have since given their names to immense companies, wielding millions of capital, began their brilliant careers in a very modest way. To the Harndens belongs the credit of originating the business. They began operations in 1839, passing to and fro between Boston and New York, carpet-bag in hand ; but that carpet-bag was big with the express system of America. At first they undertook little more than to carry money, letters, and valuables, to make collections, and to see to the delivery of very small parcels between the two cities ; but the carpet-bag soon expanded into a trunk ; the trunk developed into a crate, and each new crate contained more and more cubic feet until at last they became freight-cars, and the managers grasped at the internal carrying trade. For several years the receipts of the route between Boston and New York hardly exceeded fifty dollars a day, out of which fares, salaries, office-rent, wages, and costs of delivery had to be paid. The machinery, however, was needed ; new lines were organized, opposition started up, and, when Harnden died in 1845, only thirty-three years old, the business was practically as fully developed as it is to-day. In 1868 there were over 3,000 licensed express carriers and agents in the country, paying an Internal Revenue tax on more than $22,000,000 of gross receipts. Even as early as 1845 the organization had brought about a division of the carriage of freight. The most valuable and remunerative part of it, the carrying of all small and valuable packages, which demand little room and pay heavy rates, had passed out of the hands of the railroads into those of the express companies. At one time the system seemed likely to monopolize, by means of its despatch lines, the whole business of “time freights,” and to draw to itself the carriage of all articles, no matter how bulky, on which persons were willing to pay the price necessary to insure speedy delivery. The wealth of the companies was so great, and their influence ramified so far, that the management of railroads in a great degree passed under their control. Officers of the latter corporations suddenly found themselves considerable holders of express stocks, or openly received bribes. The result was that some of these officials observed with indifference, or even connived at, the great inroads which the express system was making on the legitimate freighting business of their lines, and nothing was practically done to check the rapid growth of the express companies, until the system of “time freights” was inaugurated by the railroads themselves, in 1858. This was the first step taken by them towards the resumption of their legitimate business, and this was forced upon the roads by the strenuous exertions of business men. The system of time freights once inaugurated, the attention of railroad managers was soon aroused to the possible profits to be derived from its development. Naturally, this development took the form of a job. Certain men, controlling great through lines, conceived the idea of forming a company which should be nothing more than an immense freight express line, owning its own cars and charging its own prices, while the railroads were to supply only road-beds and motive power, and charge tolls for drawing cars over their lines. The system of moving freights by canal, in accordance with which all the original railroad charters were drawn, was in fact revived and applied to railroads. This scheme promised to carry to the last possible point of development the express system. The business of carrying freights in their own interest was to be surrendered by the railroad companies, who were henceforth to devote themselves to the transportation of passengers and the dragging of freight-cars. If properly instituted, and regulated with thorough impartiality, with a view to a perfectly free competition between firms engaged in the shipping business, such a system would not be without its advantages. It would create a division of labor, and, if favoritism were excluded, would tend to stimulate competition. It was, however, brought forward with no such views. The men who devised it controlled the roads over which it was to be put in operation. Competition was the last thing they had in view ; on the contrary, they proposed to monopolize in their private hands the whole lucrative business of time freights. It was an immense job. The credit of defeating this ingenious plan belongs, it is said, to the president of a leading New England road. His concurrence in the enterprise was essential to its success ; but, when the plan was submitted to him, he refused to have anything to do with it, except in his official capacity and in the interest of his road. He saw at once the great importance of the scheme, and how profitable it might be made, but he insisted that the roads, and not individuals, should be the parties to it, and that to them all the profits should accrue. This action on his part ultimately led to the formation of the earliest of what are known as the “colored lines.” It was organized in 1865, and was substantially a corporation within a corporation. Certain contracting roads between the west and tide-water combined in contributing a number of cars, all of which were to be distinguished by a uniform color. These were to transport freights, under special conditions, from any point of reception to any point of delivery on the connecting roads. The machinery for the collection and disbursement of money was the simplest possible. A clearing-house was established, the duties of which were confined to keeping a record of the miles run by the cars of the various roads in the combination, and to striking, accordingly, a balance of credit or debit each month. A small percentage upon the amount invested was then charged for wear and tear, and a balance sheet forwarded to each company. All transactions in regard to freights were settled in cash when they took place, and no receipts were returned to the clearing-house. A business involving millions each month could thus be done on the payment of trifling monthly balances. The growth of this system has been one of the marvels of railroad development. So far as the business of transporting freight is concerned, it will be seen at once that these organizations effected a practical consolidation of all the roads interested in them. The result hitherto has been one of almost unmixed good. Responsibility was secured ; consignees were no longer bandied about between numerous disconnected forwarders, each one of whom shoved liability off upon his neighbor. Promptitude, also, was secured by the introduction of time contracts, and, with simplicity, of course came economy.
There are three peculiarly significant features in the history of these organizations, — the creation of corporations within corporations, the establishment of a clearing-house, and the rapid growth of the system. It is not impossible that these innovations may result in a revolution of the freighting business, perhaps of the railroad system. The essential feature of the organization is the combining of roads, whether competing or connecting, through the machinery of a clearing-house. This once established, the extent of its possible development cannot be forecast. If a corporation within a corporation, including, as it easily might, a central tribunal practically empowered to enforce its own judgments should gradually be developed out of this beginning, it is more than probable that the days of railroad competition would be numbered. It is absurd to suppose that, after the creation of such a central power, the force necessary to make its decision effective would be wanting. No single member, however powerful, of a combination of the sort suggested, could afford to rebel, when the immediate result of so doing would be that it would be thrown out of the clearing-house and its connections cut.
Neither will it be possible to meet by legislation such a contingency as that suggested. Congress or State legislatures may, indeed, enact by statute that connecting roads shall receive freights from or deliver them to any recusant line ; but here their power stops. They cannot by any law, no matter how stringent or cunningly devised, control the direction which may be given to the immense mass of freight which merely seeks a transit from one part of the continent to another ; neither can they dictate as to the use of rolling-stock, which includes the vital-point of breaking bulk. Both of these matters obey a law of their own, and merchandise once passing under the control and into the cars of a combination, will, of necessity, follow the channel into which it is directed. No relief could be found from this quarter, even supposing that a combination wielding the immense political influence which would be possessed by that suggested could not regulate legislation to suit itself. The present time-freight lines may, therefore, contain the germ of that consolidation which shall weld the railroad interests together as one body, and give to them the unity and concentration which hitherto they have notoriously lacked. This result of the experiment of 1865 would seem by no means so unlikely as that from one carpet-bag in 1838 should spring the present express system of America.
It is much the custom among those who discuss this consolidating phase in the development of a great system to denounce it as an unmitigated commercial and political evil. It remains to consider whether these judgments are fully warranted. So far as the interests of commerce and of intercourse in general are concerned such conclusions do not seem to be sustained by a calmer examination of the results in so far as they are yet developed. On the contrary, it may safely be asserted that, taken as a whole, the advance hitherto made in the direction of a closer and more perfect combination has been highly beneficial to the best interests both of trade and of travel. All declamation to the contrary notwithstanding, this conclusion hardly admits of a doubt. Even in the case of the Pennsylvania coal combination, unjustifiable as in many respects it was, so far as the material interests of the whole country were concerned a responsible combination even of monopolies, insuring a steady supply at regular prices, was preferable to the chronic chaos previously existing. This case, however, was purely exceptional. As a general rule it will scarcely be maintained that it is to small, local or disconnected lines that the public now looks for the last conveniences and comforts of travel, or for the most prompt and cheapest transportation of freight. On the contrary, it is only the consolidated corporations whose means admit of that freedom of expenditure and minute division of labor which is essential to perfect ease of modern movement, whether of merchandise or of persons. It may in fact be broadly stated as a general rule, to which no exceptions exist, that, wherever there is a break in management in the railroad system, the intercourse of the community experiences a jar or shock, the sense of which is lessened in the exact degree in which such break of management is overcome by a closer connection.
It may be argued that this applies only to the combination of connecting, and not to that of competing lines. It is by no means clear, however, whether, when fairly considered in all its aspects, even this distinction is well taken. The subject has already been somewhat discussed in its connection with railroad competition and the practice of “pooling profits.” On the one side are to be estimated the decided advantages of the superior promptness and convenience, the desire to secure every improved appliance, whether of comfort or safety, which results from a competition, which, in these respects, is always felt, and also the more modified advantage of charges which are occasionally unduly low ; — upon the other hand, it is to be remembered that competition is confined to points of convergence, that excessive local rates always make good depressed through rates, that violent fluctuations characterize sharp competition, and, finally, that the absence of responsibility must perpetuate every abuse. Even upon this point we are by no means without a practical experience. No people ever enjoyed more fully the advantages of competing lines than did the inhabitants of certain portions of the State of Vermont during the long struggle between the Vermont Central road and the Rutland & Burlington ; each of these corporations strove for years to steal business from the other, and illustrated every feature of railroad competition. After more than fifteen years of disturbance, during which the people, whom the roads were built to accommodate, were sacrificed to their quarrels, the companies at last consolidated amid public rejoicing. The war of through competition and local suffering was over, and one uniform, responsible management gave some assurance that the railroad service of a whole community should cease to be the shuttlecock of angry combatants.
Neither are the political considerations connected with these vast corporations often fairly considered. The evils under our form of government connected with railroad legislation, in any shape, cannot easily be overstated. It is very questionable, however, whether they are aggravated by the existence of great consolidations. One fact is to be borne in mind. If the political power of the large consolidation is great, so also is the jealousy and apprehension excited by it. In this respect also, there comes in the important element of responsibility ; — the great corporation presents a point upon which the force of public opinion can be concentrated ; — it thus bears with it its own element of weakness. This is not the case with smaller companies. They can and do combine for political action with most pernicious results to the public ; but in this case, though the power is in reality greater, the responsibility is wholly divided away. What is known as “log-rolling” is probably the most familiar form of legislative corruption in general use in America. No bribes are paid, no money changes hands, but a regular truck-and-dicker of votes takes place, through which wholly incongruous schemes are lumped together and passed, regardless of opposition. In this contemptible science the lesser railroad corporations are apt to be the most thorough proficients. Each has its little band of friends, and each is apt to want its rag of special legislation. Individually, they are powerless, but in combination with the friends of every other doubtful measure they are irresistible. Their obscurity is their great protection. From behind it they raise the cry against the larger companies, concerning which a jealousy is known to exist, and, while the public attention is absorbed in another direction, they quietly secure their plunder. To a large corporation, on the other hand, there attaches in some degree that responsibility which belongs to a high public official. Its agents are known, its operations are jealously watched, it can be held to a public account. Where, in short, it would be perfectly feasible for the community to meet and control a single agent, all experience goes to show that a dozen may run riot.
As regards the consolidation of railroads, therefore, the case may be summed up somewhat as follows. Both railroad combination and railroad consolidation, are the legitimate and inevitable consequence of railroad competition, and, as such, like all other phases of natural development, are not easily to be restrained by legislative enactments. That they may not result in serious political and material complications is by no means clear, but these are not likely to be of the character hitherto anticipated. If, as now seems to be the case, the exigencies of our civilization force upon us this concentrating process, there must ultimately result a condition of things which can be resolved only in one of two ways ; — either the community, as it has already done in certain of the States, must face, and endeavor to control, a recognized railroad monopoly in responsible private hands ; or it must directly, in a greater or less degree, take part in its management, thus recognizing the control of the railroad system as one of the necessary, and for that reason, legitimate functions of every government. At present, as respects consolidation, both the railroad system and public opinion are in a state of simple confusion. Vague denunciation and crude statute enactments have hitherto usurped the place of reason and mature action, and it now remains to be seen what effect they will have upon a development which they may distort but cannot prevent.