John H. Reagan and Early Regulation

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An Agency Matures

A 1900 hearing on the use of "doubleheader" engines featured dozens of witnesses

Despite the challenges, in its first 50 years of existence, the Railroad Commission handled an average of 80 cases (called "dockets") every year involving rates, rules, and regulation of rail carriers and covering every commodity from cotton to livestock to grain to sand.

The commission often found itself in jurisdictional disputes with the federal Interstate Commerce Commission (ICC), disputes that often had to be ironed out in court and that were usually resolved in favor of the ICC. For example, in the 1914 Shreveport Rate Case, the courts gave the ICC jurisdiction over Texas rates in a dispute over hauling cotton between Texas and Louisiana.

Taking measurements, 1941

Another well-known case of the early years was the Galveston Differential Case, in which that city sought to abolish its rate differences with Houston. After Houston became a deep-water port with the completion of the Houston Ship Channel during World War I, Galveston suffered greatly from the rate differential. The issue was brought before the Railroad Commission and the ICC many times before the rate difference was finally eliminated in 1933.

The commission handled hundreds of cotton rate cases. The controversy of cotton rates contributed greatly to the movement of cotton by truck rather than by rail.

Decline of Railroad Power

Loading peanuts in Santo, 1949

Federal and state regulation did have some effect on the railroads. Freight rates continued to decline dramatically. In 1891, a typical rate was 1.403 cents per ton mile. By 1907 the rate was 1.039 cents – a decline of 25 percent. Competition and the strict enforcement of stock and bond laws had much to do with the decline. Railroads were prohibited from issuing stocks and bonds except to finance new construction. The days of unbridled capitalism were over, and expansion of the roads slowed.

During World War I, the federal government assumed control of the nation's railroads. When control was returned to the railroad companies in 1920, the federal ICC retained a much larger role in regulation than it had ever had before. For example, many companies had overexpanded during the boom years and now wanted to abandon their unwanted miles of track. When the Railroad Commission opposed the abandonment, the companies could appeal to the ICC, which overruled the Railroad Commission in virtually every instance.

Given its constraints, the commission continued to try to act to regulate the industry. It continued to act to protect shippers and communities against high rates and discrimination. The issue of free passes drew particular notice from the shipping public, who believed that they were helping to subsidize "deadheads" who rode for free.

The Caldwell depot in ruins

In addition, the railroads now had a rival – the automobile. By 1910, there were more than 3500 miles of paved road in Texas. Construction accelerated after the passage of the Federal Highway Act in 1916 and the creation of the Texas Highway Department in 1917. Over the next several decades, there would be a gradual shift from railroads to cars and trucks as the mainstay of the nation’s transportation system. The rise of the automobile was reflected in the responsibilities of the commission, which was given regulatory authority over trucks and buses in the late 1920s.

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