Hazardous Business
Industry, Regulation, and the Texas Railroad Commission
The Railroads Come to Texas
The Fight for the Commission
John H. Reagan and Early Regulation
The Oil Wars
The Power Years
Other Responsibilities
The Railroad Commission Today

John H. Reagan and Early Regulation

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The Election of 1892

The federal court ruling came in 1892, at the height of one of the most exciting election years in Texas politics. All across the spectrum, old alliances forged in the heat of the Civil War were being broken and reformed into new ones that would set the stage for the politics of the 20th century.

The controversy over the railroads was a central issue in the campaign and in the formation of these new alliances. The most dramatic development was the formation of a new political party called the People’s Party, or Populists. The Populist Party grew out of the radical wing of the Farmers’ Alliance and presented a list of demands that cut across traditional party lines to appeal to disgruntled farmers, ranchers, and laborers. The Populists demanded government ownership of the railroads and the telegraph and telephone companies, along with currency and banking reforms and a graduated income tax.

Hogg, Reagan, and other progressive Democrats looked on with alarm. With the grass-roots organization of the Farmers’ Alliance behind them, the Populists were bound to siphon off a large portion of the farm support that had propelled Hogg to victory in 1890. At the same time, Hogg was being challenged for the Democratic nomination by railroad attorney George Clark of Waco. Running on the slogan “Turn Texas Loose,” Clark was putting together a coalition of those who were pro-railroad and anti-regulation with other groups that were alienated from the Democrats. (Clark even reached out to Republicans, who had little statewide support in Texas in those years. The Republican Party was the home of African-American voters, and the most prominent African-American leader in Texas, Wright Cuney of Galveston, threw his support to Clark.)

Side TripTo see a picture of Hogg and Reagan together, check out our Portraits of Texas Governors site.

Clark decried the Railroad Commission as a “constitutional monstrosity” that was driving investment from the state. The creation of the Railroad Commission, according to Clark, “was wrong in principle, undemocratic, and unrepublican. Commissions do no good. They do harm. Their only function is to harass. I regard it as essentially foolish and essentially vicious. It belongs to a family with whom I never expect to be on friendly terms.”

Hogg preferred to deal in specifics. The court injunctions against the commission, Hogg said, were forcing the public to pay off the debts of the railroads in the form of high freight rates. The railroads, Hogg demonstrated, had burdened themselves with enormous debt in order to raise capital through stock and bond sales. The railroads had issued $455 million in stock on property that was only valued at $63 million for tax purposes – a clear case of stock watering. Worse, the railroads had not even invested this money in new construction. In the previous seven years, the railroads had incurred $30 million in new debt yet done very little new construction in the state. And it wasn’t only investors who were hurt by the excessive stock issues. The railroads had to pay their stockholders somehow, and the money came from increasing rates, laying off workers, reducing wages, or curtailing service or safety.

Hogg promised that the U.S. Supreme Court would uphold the constitutionality of the Railroad Commission and that the commission should be empowered to do even more. He demanded “a law that will effectually prevent the issuance of fictitious and watered bonds and stock by railway companies in the State, believing that these great enterprises should be conducted upon commercial principles, and not as gambling devices.” To cut some ground out from under Clark, he proposed elective terms for the railroad commissioners, provided that the terms were staggered, with only one commissioner elected in a given year to serve out a six-year term. Hogg also moved to shore up his support among rural voters by endorsing some of the more moderate proposals of the Populists, such as the free coinage of silver.

Hogg's Dallas speech

In an ordinary year in Texas politics, nomination by the Democratic Party convention was tantamount to election in the one-party state. But not this year. After Hogg won renomination by the convention, Clark and his supporters formed their own third party, called the Jeffersonian Democrats. Hogg faced a battle right up to election day. He staked out his position as follows: “Nugent [Thomas L. Nugent, the Populist candidate] is for government ownership of the railroads; Clark is for turning them loose. I want neither, but advocate their just control and regulation through the Commission.”

After a grueling campaign, Hogg won a clear victory. The farm and ranch vote was decisive. In the three-way contest, the final results gave Hogg 43 percent of the vote, with Clark receiving 30 percent and Nugent coming in third with 25 percent.

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Page last modified: August 17, 2011