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

The Fight for the Commission

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Legislative Efforts

Jay Gould

Based on the ineffectiveness of the laws passed in 1876, many railroad opponents began to argue in earnest for the creation of an expert commission to oversee rates and fares, mediate disputes between shippers and the railroads, and enact regulations. Responding to widespread demands from the shipping public, the Texas legislature gave the first serious consideration to creating a railroad commission in 1881.

The railroads were quick to perceive the threat and act against it. The most successful railroad magnate in the country was Jay Gould. Sometimes called “the most hated man in America,” Gould controlled many of the nation’s most important railways, including the Union Pacific, Kansas Pacific, Denver Pacific, Central Pacific, and Missouri Pacific. Now, he traveled to Texas to inspect his latest property, the Texas & Pacific, as it raced to be the first to cross the state.

During his visit, Gould warned the legislature that passage of regulation could only hurt the state: “There is one peril -- injudicious interference by Congresses and State Legislatures with business. It was legislation that precipitated the panic of 1873; the Granger legislation of the Northwest some years ago cost this country more than it will ever know. The peril is legislation. This is the danger always." Gould and railroad supporters argued that the creation of a commission would hurt business and would violate the Texas Constitution, which gave regulatory power to the legislature. Their view prevailed. The commission bill failed to win passage.

Immigrant's map of the southwest, 1881

During the 1883 legislative session, the legislature passed new laws setting passenger rates at three cents a mile, ending land grants to railroads and making it illegal to charge more for short hauls than for long hauls. They also created an office of State Engineer to investigate railroad abuses and report them to the Attorney General. These new regulations had no enforcement mechanism and provided little satisfaction to the shipping public.

The Farmers’ Alliance

Minutes of a Farmers' Alliance meeting, 1889

A new crop of farm leaders was determined not to repeat the mistakes of the Grange. The Farmers’ Alliance had been formed in Lampasas in 1877 and at first had grown slowly. Eventually, it would become one of the most potent protest organizations in American history. The Farmers’ Alliance movement was more militant and aggressive than the Grange. Members advocated a number of economic ideas designed to address the problems of falling farm prices and farm debt and to oppose the power of banks and the Eastern political elite. Politically, they took a strong stand for railroad regulation and came in on the side of labor during the Great Southwest Strike in 1886. The Alliance grew from 50,000 members in 1885 to 150,000 members by 1888. By 1890 it had become a powerful player on the political scene.

The Texas Traffic Association

The railroads continued to consolidate. In July 1885, Jay Gould and Collis P. Huntington, along with several lesser railroad magnates, formed the Texas Traffic Association. The association was a pool designed to stop rate wars and set fixed rates both within Texas and to and from points outside the state. All Texas revenue would be pooled and divided according to a formula devised by the companies.

At first, shippers were impressed. The association’s rates were lower than what had gone before and were published in the newspaper, thus bringing an end to much of the discrimination. Because all revenue was pooled, it was not to any railroad’s advantage to offer lower rates to attract business.

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Page last modified: August 17, 2011