The new dominion. [volume] (Morgantown, W. Va.) 1876-1904, 1889-07-20
RAILROAD WARS AND POOLS.

applcation.
RAILROAD WARS AND POOLS.
At the railroad centers, where
competition had free play, rates were
ruinously low; at all other points
they might be, and frequently were,
ruinously high. Moreover the growth
of the railways and the union of sep
arate links into large trunk lines
ushercd in an era of railroad wars,
or wars Of rates, which disordered
business, made stocks and securities
worthless, and produced for the time
being a code of railway morals in
which low cunning and treachery to
plighted faith were ruling principles.
To escape the fearful losses in
Cured by these wars" to save the
property of solvent roads, and to
protect honorable managers from the
rivalry of bankrupt roads and the
treachery Of dishonorable managers,
and to give some stability to the
transportation system, it became a
matter of necessity, and almost of
public policy, for the companies to
agree among themselves upon some
terms by which they could conduct
their business as successive or com
peting carriers. This led at first to
secret agreements, usually between
the general freight agents, whereby
territory was divided, earnings APP.
portioned or traffic distributed. In
this way grew up the well known
pooling system" which came into
almost universal use, and had per-
haps its most successful develop
ment in the southern Railway and
Steamship Association" formed by
some thirty carriers in 1875, which
established central bureau, or
clearing house, for the transaction
and adjustment of all business in
which it's members were jointly con
cerned, and which, under the super
attendance of Col. Albert Fink,
seems to have worked satisfactorily
to its members, although an effort
to establish ike association in the
Northwest proved failure. I'm
doubtedly similar efforts to reach
a common basis of business dealing
were frequent, and more or less sue
cessful in other occupations than
railroad transportation, but the rail
way pool was Immediately seized
upon as a model, and the public be-
gan to hear of the anthracite pool
the oil "pool,' the steel-rail pool"
and many similar combinations in
other branches of business. might
profitably stop here to examine some
of the pools" for they were the
foreshadowings of the trusts" but
must pursue the subject of railway
management still further, not only
for the light it throws on these lat
ter organizations, but as being his
torically more in the order of their
real lineage.
AMERICAN RAILWAY MANAGEMENT.
| do not know how much Ameri-
can railway managers learned from
the managers of other countries. The
railroads of England, France, Bel
GUM and Germany were built al
most simultaneously with our roads,
but none of them so entirely free
from public supervision or control
as our own. 1t is safe however, to
assert that in the construction and
earlier operation of American rail
roads, the capabilities of the cor
porate structure were developed and
exploited in a richness and variety
not before known or imagined. The
marks of a corporation, so far as it
is necessary to state them here,
which distinguish it from partner
ship or like association are first, that
it is neither dissolved nor necessari-
ly affected by the death or bankrupt
cy of stakeholder, nor, as a rule,
does it's own bankruptcy impose any
further liability on a stakeholder
who has paid for his stock; and sec
ondlv, the important fact that the
same person may be member of
corporations, and thus in effect deal
with himself in many capacities.
The railway managers were familiar
with all these facts, especially with
the last named, and speedily used
them for their own advantage. Mo
neys for building the roads came
from stock subscribed, the sale of
bonds, and occasionally from public
subscriptions in some form. AS the
roads grew in magnitude the stock
holders and the bondholders, who
frequently lived abroad, had less i'm
mediate oversight and control over
them, and the management became
more secret and autocratic. The
boards of directors, or, more accur
ately, the immediate managers, thus
controlled great sums of money and
great railroad properties, asN also
great volumes of traffic, really in
double trust-first, for the private
interest of the owners of the road,
who had furnished the money to
build and operate it, and secondly,
and in no subordinate sense, for the
public at large, to whom they owed
just, equal and impartial service in
return for the corporate franchise,
lut lily III VI cnlucuG QOndlI, dult Juc
control of what was in law a public
highway. They universally failed
or refused to recognize the latter
trust, and they were often faithless
to the former.
In other words, they universally
disclaimed their obligations of equal
service to the public, and they often
perverted their control of the great
properties they managed to their own
personal enrichment.
HOW THEY GET RICH.
Men have frequently wondered how
railroad manager on his official
salary could suddenly grow into a
millionaire. The secret is largely in
the device of the subsidiary corpor-
alton, or as recent writer, Mr.. Bon
ham, in his excellent book on 'Indus-
trial Liberty" calls it, the parasite
corporation" In the era of railroad
building the subsidiary corporation
took the contracts for constructing,
equipping or otherwise supplying the
road. TWAS composed of the railroad
m nagers, with enough associates to
act as its officers. Stripped of all
disguise, the transaction was one in
which the managers used their posi-
tions to enrich themselves by favor