John H. Reagan and Early Regulation

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John H. Reagan

John H. Reagan

After the passage of the railroad commission bill, Governors Hogg’s next task was to select the three commissioners. Hogg’s choice to head the commission was U.S. Senator John H. Reagan. The 73-year-old Reagan was an elder statesman of Texas politics. Reagan had been postmaster general of the Confederacy, and served prison time after the war before being pardoned. Reagan had urged conciliation between the North and the South, a viewpoint that eventually won him the nickname “The Old Roman.” He had been elected to Congress in 1874, moving up to the Senate in 1887.

To learn more about Reagan as the postmaster general of the Confederacy, visit our Portraits of Texas Governors site.

During his time in Congress, Reagan had become one of the nation’s leading authorities on the problems of railroads. He had been a leader in the writing and passage of the federal Interstate Commerce Act in 1887, which regulated railroads on the national level. Reagan also had a unique ability to mediate between opposing viewpoints. His fairness in the handling of the Interstate Commerce Act had won him praise not only from railroad opponents but also from many in the industry. His philosophy of government was similarly moderate. Reagan was a believer in states’ rights to handle business within their own border, but he also had a deep commitment to cooperation between the states and the federal government.

Although he had planned to finish his career in public service in the Senate, Reagan was impressed with the strength of the railroad commission bill. Thirty-three states already had railroad commissions, but many of the commissions had only the power to investigate abuses and make reports. The Texas commission was patterned after the Interstate Commerce Commission and had a number of enforcement powers. Specifically, the Texas Railroad Commission was empowered to administer the state’s railroad laws; determine passenger fares, freight rates, and charges; hold public hearings; and receive reports, make investigations, and keep records on the financial aspects of trains, terminals, and other traffic services such as wharves and express companies.

See Reagan's letter accepting the job and Hogg's reply on our Texas Treasures site.

 

William P. McLean

Reagan agreed to resign from his Senate seat and take up the leadership of the new Railroad Commission. Joining him were Lafayette L. Foster and William Pinckney McLean. Foster was a former speaker of the Texas House of Representatives and most recently had served as commissioner of insurance, statistics, and history. Foster was known for his mastery of detail and his large store of knowledge about railroad affairs. McLean was a judge and had a statewide reputation for his legal expertise.

As soon as it began operations, the Railroad Commission began hearing and responding to complaints from shippers

Hogg’s choices had their critics. The industry, led by railroad attorney George Clark, made plans to put a proposal before the voters in 1892 to make the commission elected rather than appointed. Harsh criticism also came from the Farmers’ Alliance, which was angered that no farmer had been appointed to the commission. The Texas Railroad Commission held its first meeting in June 1891, but work proceeded slowly. Almost at once, the commission’s very existence was challenged in court and in the political arena.

The Commission Under Attack

A group of railroad companies went to federal court against the Railroad Commission’s power to set and enforce rates. The railroads sought an injunction to block what they called confiscatory rates. According to the suit, the Railroad Commission’s rates were too low and did not allow the railroads to pay their operating expenses or the interest on their bonds.

Reagan mounted a passionate defense of the commission

The State of Texas fought back, telling the courts that the railroad's argument was illegitimate. The commission sought to prove that the railroads had issued bonds on a fraudulent basis, with the sole purpose of creating a fictitious picture of indebtedness that would discredit the rates set by the commission. Governor Hogg declared that these “fictitious bonds are not capital nor the representatives of capital. They are the fruits of crime.”

A federal judge in Dallas, a railroad stronghold, granted the corporations everything they wanted. Under a sweeping injunction, the Railroad Commission was prohibited from setting or enforcing rates. Pending appeal, the Railroad Commission could do little but wait and see whether it would be allowed to do the work it was created to accomplish.

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