Long-Haul/Short-Haul Discrimination

As railroad operators and companies moved past the Great Lakes and midwestern states in the 1860s and 1870s, numerous small operators were bought out by larger, better-financed “captains of industry,” such as Cornelius Vanderbilt and Jay Gould, or were overshadowed by the great trunk lines, such as the Union, Central, Northern and Southern Pacific lines and the Great Northern line, which connected the West Coast with the rest of the nation.

As operators expanded their lines and citizens pushed further and further into the Great Plains to grow corn and wheat, the owners realized that advanced systemization and standardization would be required to achieve greater efficiency and improve profits. Owners agreed upon the standard-gauge track width of 4 feet 8.5 inches in the 1880s, and in 1883 railroad companies introduced standard time zones to the United States. But most important to the operators was the cost of shipping goods and the rates charged for commodities and passengers, which they could coordinate and monopolize because they controlled huge shares of the primary and secondary railroad lines.

Farmers encountered the greatest discrimination. In Minnesota, local farmers paid 25 cents per hundred pounds of grain going to St. Paul. But elevator operators shipped grain at 12.5 cents per hundred pounds between the Twin Cities and Chicago. Farmers in Illinois could send a tub of butter to New York for 30 cents, while local farmers in Upstate New York, with little competition, paid 70 cents to ship butter only 170 miles.

Western farmers became increasingly concerned about the long-haul/short-haul discrimination they encountered through the 1870s and 1880s. Farmers were almost entirely dependent on the railroads to ship their commodities to cities and to bring in manufactured goods necessary for survival in the more remote areas of the country. The Grange, Farmers’ Alliance, and Populist movement all quickly recognized this fundamental philosophy of their constituents. These groups harnessed the anger they encountered into a policy of direct action behind which they could rally the farmers and merchants.

The Grange began supporting railroad legislation in the 1870s at the local level. Illinois legislators passed a law in 1871 setting reasonable maximum freight rates. Minnesota passed similar legislation in 1874. Railroad executives, however, continually informed governors that they intended to ignore the laws, and most laws were modified so that the railroad owners were not inconvenienced. By the early 1880s, Missouri, Nebraska, Kansas, and several southern states had passed similar rate-scheduling laws.

Politicians, farmers, and railroad operators continued to debate the economic importance of rates and production into the twentieth century. People tended to agree that national transportation networks were undeniably connected with national economic growth and American vitality. Farmers produced all of the foodstuffs required by cities, which continued to expand manufacturing output. Railroads were the only way to efficiently and economically move goods east and west, and north and south—from the small-scale producer to the collection points and from the factories to the consumers who purchased the finished goods. The collective will and organization of the small-scale producer affected a dramatic shift in politics at the state and national level in the 1870s and 1880s to benefit the people rather than the more powerful captains of industry or robber barons. Populists saw success in tangible ways, even though the 1887 Interstate Commerce Act would need further support to be effective, primarily with railway rate laws in 1903 and 1906, the creation of the Bureau of Commerce and Labor, and enforcement of antitrust legislation after 1903. Despite some victories in terms of populist demands, businessmen and academics still defend the economic necessities of long-haul/short-haul rate differences into the late twentieth and early twenty-first centuries.

Paul Nienkamp

See also: Electricity ; Gilded Age ; Granger Movement ; Interstate Commerce Act (ICA) (1887) ; Railroad Regulation ; Railroads ; Robber Barons

References

Friedman, David D. “In Defense of Long-haul/Short-haul Discrimination.” Bell Journal of Economics 10 (2). http://www.daviddfriedman.com/Academic/Long_haul_Short_Haul/Long_haul_
Sht_Hl.html
. Accessed January 7, 2013.

Gordon, Sarah. H. Passage to Union: How Railroads Transformed American Life, 1829–1929. Chicago: Ivan R. Dee, 1996.

Hoogenboom, Ari, and Olive Hoogenboom. A History of the ICC: From Panacea to Palliative. New York: W.W. Norton and Company, 1976.

Martin, Albro. Railroads Triumphant: The Growth, Rejection, and Rebirth of a Vital American Force. New York: Oxford University Press, 1992.

McMath, Robert C., Jr. American Populism: A Social History, 1877–1898. New York: The Noonday Press, 1993.

Ostler, Jeffrey. Prairie Populism: The Fate of Agrarian Radicalism in Kansas, Nebraska, and Iowa, 1880–1892. Lawrence: University of Kansas Press, 1993.

Stover, John F. The Life and Decline of the American Railroad. New York: Oxford University Press, 1970.