The Day of the Manchester School and Laissez Faire Is Gone Because American Railroad Leaders Strongly Favor Federal Regulation

With the notable exception of Howard Elliott, president of the Northern Pacific and a militant advocate of near laissez-faire in the railroad system, American railroad leaders strongly favored federal regulation at this time despite the setbacks administered by the Insurgents of Congress and the failure of the rate advance of 1910. . . .

"The principle of regulation we accept," William Sproule of the Southern Pacific told the San Francisco Chamber of Commerce in late 1912. Seeing history somewhat hazily, H. U. Mudge, president of the Rock Island, announced, "I believe most railroad men now think that it would have been better for the railroads if the federal government had claimed the right to regulate all freight rates and that the railroads had conceded this from the start. . . ."

"The day of the Manchester school and laissez faire is gone," Fairfax Harrison announced to a group of businessmen. The Commission assured the railroads that they would use the power of the law to "permit such advances of rates as may be necessary to maintain the sound financial condition which they certify now exists." Could untrammeled competition assure the railroads that rates would go up when profits were low? Only the Commissioners, who "are increasingly willing to be fair, even when there are strong evidences of momentary popularity to be derived from doing the thing which is unfair," could provide such guarantees. Railroad men reflected on the alternatives to national regulation, considered the cutthroat competition of the past and the less considerate state legislatures and commissions of the present, and concluded that the federal government was indeed a blessing. Harrison spoke for the larger part of the American railroad leadership when he admitted, "The day of the Manchester school and laissez faire is gone. . . . Personally, I do not repine at the change. . . ."

--Gabriel Kolko, Railroads and Regulation, 1877-1916 (New York: W.W. Norton and Company, 1970), 204, 206-207.