The American Nation A History of the United States, Combined Volume (14th Edition)

The Government Reacts to Big Business: Railroad Regulation 475

“are just as harmonious as roast beef and a hungry
stomach.” Yet like other harsh critics of that day,
Gronlund expected the millennium to arrive in a
peaceful, indeed orderly manner. The red flag of
socialism, he said, “has no relation to blood.” The
movement could accommodate “representatives of all
classes,” even “thoughtful” middlemen parasites.
The leading voice of the Socialist Labor party,
Daniel De Leon, editor of the party’s weekly publi-
cation,The People, was a different type. He was born
in the West Indies, son of a Dutch army doctor sta-
tioned in Curaçao, and educated in Europe. He emi-
grated to the United States in the 1870s, where he
was progressively attracted by the ideas of Henry
George, then Edward Bellamy and the Knights of
Labor, and finally Marx. While personally mild-man-
nered and kindly, when he put pen to paper he
became a doctrinaire revolutionary. He excoriated
American labor unions in the People, insisting that
industrial workers could improve their lot only by
adopting socialism and joining the Socialist Labor
party. He paid scant attention, however, to the prac-
tical needs or even to the opinions of rank-and-file
working people. In 1891 he was the Socialist Labor
party’s candidate for governor of New York.

The Government Reacts to Big

Business: Railroad Regulation

Political action related to the growth of big business
came first on the state level and dealt chiefly with the
regulation of railroads. Even before the Civil War, a
number of New England states established railroad

commissions to supervise lines within their borders;

by the end of the century, twenty-eight states had

such boards.

Strict regulation was largely the result of agita-

tion by the National Grange of the Patrons of

Husbandry. The Grange, founded in 1867 by

Oliver H. Kelley, was created to provide social and

cultural benefits for isolated rural communities. As it

spread and grew in influence—fourteen states had

Granges by 1872 and membership reached 800,000

in 1874—the movement became political too.

“Granger” candidates, often not themselves farmers

(many local businessmen resented such railroad

practices as rebating), won control of a number of

state legislatures in the West and South. Granger-

controlled legislatures established “reasonable”

maximum rates and outlawed “unjust” discrimina-

tion. The legislature also set up a commission to

enforce the laws and punish violators.

The railroads protested, insisting that they were

being deprived of property without due process of law.

InMunn v. Illinois(1877), a case that involved a grain

elevator whose owner had refused to comply with a

state warehouse act, the Supreme Court upheld the

constitutionality of this kind of act. Any business that

served a public interest, such as a railroad or a grain

warehouse, was subject to state control, the justices

ruled. Legislatures might fix maximum charges; if the

charges seemed unreasonable to the parties concerned,

they should direct their complaints to the legislatures

or to the voters, not to the courts.

Regulation of the railroad network by the indi-

vidual states was inefficient, and in some cases the

Table 17.2 Reformers Oppose Economic Consolidation

Reformers Publication Argument

Henry George Author,Progress and

Poverty(1879)

Labor was the source of wealth; but investors made money from capital and

property. Governments should tax property, to help redistribute the unearned

income of the wealthy.

Edward Bellamy Author,Looking

Backward(1888)

The trend toward industrial concentration would culminate in the government

owning everything: an era of prosperity, stability, and cooperative planning

would ensue.

Henry Demarest

Lloyd

Author,Wealth Against

Commonwealth(1894)

Concentration of power in corporations inevitably led to monopoly; the govern-

ment must step in to prevent corporations from becoming behemoths.

Laurence

Gronlund

Author,The Cooperative

Commonwealth(1884)

Capitalism, including corporations, was doomed, as Marx had predicted; but the

collapse of capitalism would not require a violent revolution.

Daniel De Leon Editor, Socialist Labor,

The Weekly

Capitalism, though doomed, would not fall without a fight; violent revolution

was inevitable.