Railroads and Government Regulation Corrupt Practices by Railroad

Railroads and Government Regulation Corrupt Practices by Railroad Managers

Railroads and American Politics Agenda for Topic 7: Railroads and Government Regulation: 18871920 1. The “Railroad Problem” 2. State Regulation of Railroads 3. Supreme Court Rulings on Railroad Regulation by the States 4. The Interstate Commerce Act of 1887 5. Enforcement Problems 6. Regulatory Acts of Congress and Strict Regulation after 1903

Corrupt Practices by Railroad Managers A. Financial Schemes: 1. Railroad Directors Form their own Construction Company and sign Contracts with Themselves! 2. Railroad Directors/Promoters sell more stock and/or bonds than the actual value of the railroad. They then declare big dividends driving up the value of the stock which they then sell for a big profit. 3. Railroad Directors use their insider knowledge of the Railroad route to buy land which they then sell back to the Railroad at a huge profit. B. Examples: PA RR under Thomson, Scott, and Carnegie 1. Sleeping Car Company 2. Keystone Bridge Company 3. Telegraph Company

C. Major Public Railroad Scandals 1. The South Improvement Company – 1871 -72 2. The “Erie Railroad War” – 1867 -68 3. The Use of Land Grants – especially the Union Pacific Railroad 4. The Northern Securities Trust and the near collapse of Wall Street -- 1900

Baltimore and Ohio Railroad

John Edgar Thomson (1808 – 1874), PA RR

Tom Scott (1823 – 1881), PA RR

The Pennsylvania Railroad

John D. Rockefeller (1839 – 1937), Standard Oil

Railroads in the Pennsylvania Oil Regions 1865 -73

Cornelius Vanderbilt (1794 – 1877), New York Central Railroad

The New York Central Railroad

Daniel Drew (1797 – 1879), Erie Railroad

James Fisk, R. (1835 – 1872), Erie Railroad

Jason “Jay” Gould (1836 – 1892) Erie Railroad, Union Pacific Railroad, etc.

The Erie Railroad

New Amsterdam (New York), 1660

Wall Street, 1820

The “Big Board” About 1860