Childs on Rose, Seely, and Barrett, _The Best Transportation System in the World: Railroads, Trucks, Airlines, and American Public Policy in the Twentieth Century_

[eh.net-review at eh.net]

Published by EH.NET (May 2007)

Mark H. Rose, Bruce E. Seely, and Paul F. Barrett, _The Best 
Transportation System in the World: Railroads, Trucks, Airlines, and 
American Public Policy in the Twentieth Century_. Columbus: Ohio 
State University Press, 2006. xxvi + 318 pp. $50 (cloth), ISBN: 
0-8142-1036-8.

Reviewed for EH.NET by William R. Childs, Department of History, Ohio 
State University.[1]


This book makes some contributions to our understanding of national 
transport regulatory politics in the twentieth century. The narrative 
is based on a good balance of secondary and primary sources, 
reasserts the importance of the presidency in regulatory matters, 
moves back to the 1950s the origins of the deregulation movement, and 
offers an initial synthesis of deregulation after 1980.

But the book is uneven in its contributions in part because it is 
more narrowly constructed than its title suggests. It is a book about 
the politics of transport regulation of three industries at the 
national level (railways, trucks, and airlines; water carriers are 
barely mentioned). The authors are not much concerned with state or 
local regulation or regulatory federalism or with other industries 
that were deregulated (e.g., banking and savings and loans). Most 
significantly, they do not focus analytically on economics (industry 
structures) and management decision making (management strategies and 
firm structures) and how those elements intertwined with regulatory 
politics. To these three historians, "the state" (a concept that they 
do not define clearly) made all of the decisions in regulation; 
economics hardly mattered; and, management (especially railroad 
executives) rarely made mistakes. Politics trumped economics, 
technology, and individuals, both before and after deregulation.

The book begins with a long preface in which the authors reveal that 
longtime conversations among them -- all historians of technology -- 
had led to the conclusion that "the introduction and operation after 
1920 of technical means of delivering transportation services -- 
railroads, trucks, and airlines alike -- rested on distinctly 
political decisions made in political arenas. In virtually every 
discussion of transportation innovation, regulation, and 
deregulation, we find that politics was in the driver's seat" (xii). 
Towards the end of their preface, they note: "Stated once again, in 
the realm of framing these three main transportation industries, 
their firms, and their markets, leaders of the American state always 
sat squarely in the driver's seat" (xix).

Chapter 1 focuses on how the Interstate Commerce Commission (ICC) 
"framed" the railway industry (although at times Congress and the 
president make appearances in the narrative). Much of the chapter 
focuses on rate making, especially on the valuation project and value 
of service approaches, and the attempt, buttressed by the 
Transportation Act of 1920, to accept the "natural monopoly" aspect 
of railways and consolidate them into a more effective transportation 
system. The authors note, however, that this state action neglected 
to take into account the rise of a new industry, motor trucking. The 
ICC (and Congress) "had structured the railroad industry and 
attempted to set the terms of the railroad marketplace down to the 
last detail" (28). So rigidly focused on politics, the authors do not 
take into account the rapid appearance of motor trucking in the 1910s 
and 1920s as a new transport mode, and the difficulties railway 
management, ICC commissioners, and lawmakers faced in responding to 
the new technology.

Chapter two narrates the policy transition from consolidation to 
coordination of rail, truck, and water carriers, which some policy 
makers trumpeted in the late 1920s and 1930s. State actors, the 
authors maintain, enabled railways' "new competitors" (trucks and 
airlines, and curiously, water carriers) to compete while restraining 
railways' abilities to respond. (Water carriers, of course, had 
influenced railway rate structures as far back as the last quarter of 
the nineteenth century.) The tone of this and the preceding chapter 
takes on that of _Railway Age_, which was one of the key sources 
cited. The authors assert that the idea of "coordination" rested on 
the assumption that "each form of transport was different [and] that 
the public was better off if each _mode_, such as trucks or trains, 
remained a freestanding enterprise in competition with one another" 
(32). "The result was a 'national' system composed of separate 
transportation industries and separate transportation markets, each 
now defined variously as technology or mode and governed by several 
equally disconnected policies and regulatory agencies" (33). In part, 
this analysis makes some sense, but it misses some subtle and 
important points. For some public officials, "coordination" involved 
state planning through which each mode would perform _what it did 
best_ (that is, follow its natural economic evolution), thus 
eliminating inefficiencies brought on by competition among the 
various modes. The authors do not take into account economic 
structures of the transport modes; they do not emphasize the _ideas_ 
behind the political results; they ignore the fact that interest 
group politics (based in economic self-interests and on ideas) 
undermined what some on the ICC (Joseph B. Eastman, for example) 
desired; and they underplay the management decisions of railway 
executives.

Following a fine summary in Chapter 2 of the early years of airline 
regulation, Chapter 3 focuses on regulation of the airlines between 
1944 and the early 1970s. Again the authors present the national 
state as the shaper of the industry, in this case through the efforts 
of the Civil Aeronautics Board (CAB). The government had been both 
promoter and regulator of the nascent industry, offering mail 
contracts to help sustain the new businesses and limiting 
competition. Not until World War II, however, did the CAB gain more 
influence to shape the industry through controlling entry, price, and 
routes. By the 1970s, however, it had come to be viewed as a failed 
regulatory agency. Unlike with the railways, the authors admit that 
airline management made some mistakes (e.g., not understanding the 
overcapacity wrought by jets nor the attempts by CAB to offer service 
to more than business class customers), but they do not emphasize 
this theme. To them the CAB -- or the state -- had created the 
industry and had failed to promote and regulate it effectively.

Chapter 4 is a sprawling survey of railroad and truck regulation in 
the postwar era before deregulation emerged. It furnishes at times a 
useful synthesis, but its most important contribution is its focus on 
President Dwight D. Eisenhower and his administration's efforts to 
bring about deregulation. The chapter notes the effectiveness of 
truckers in blunting the administration's efforts to help the 
railways, includes a testy analysis of rate bureaus, and offers a 
survey of railway mergers, with an extended section on the Penn 
Central merger. There, the authors list some of the problems (e.g., 
management failed to see that the computer systems in each firm did 
not match the other's and labor leaders failed to note the cultural 
differences between the working groups), but they still insist that 
the railway problem was mostly tied to the regulatory system, which 
the ICC/state had imposed.

Chapter 5 continues the focus on presidential initiatives in the 
deregulation movement. President Lyndon B. Johnson included a 
coordinated transportation system in his approach to "fine-tuning" 
the economy. While he did get a Department of Transportation (in 
1966), he did not get the centralized, presidential clout he thought 
necessary to shape a coordinated and efficient transportation system. 
Chapter 6 shows how President Richard M. Nixon "helped move the idea 
of deregulation from the realm of the thinkable -- where Eisenhower 
and Kennedy had left it -- into the mainstream of American politics" 
(151). Collapse of the Penn Central in the spring of 1970, along with 
a less robust economy than Johnson had enjoyed, shaped Nixon's 
approach. He was the first to meet with the railway executives and 
union leaders about deregulation; he saw the significance of 
utilizing the consumer movement to promote deregulation; and, he was 
able to do what Eisenhower, Kennedy, and Johnson had not -- gain 
presidential appointment power for the chair of the ICC (a theme that 
the authors overplay, in that while it was a political issue it was 
not all that significant to reforming the regulatory state).

Although in office only a short while, Gerald R. Ford deserves the 
treatment received in Chapter 7. President Ford's staff organized an 
anti-regulatory public relations campaign and carefully identified 
and organized pro-deregulation members in Congress. The result was 
modest but notable -- passage of the Railroad Revitalization and 
Regulatory Reform Act of 1976. In exchange for furnishing loans to 
ailing railroads and devising Conrail, the act began to loosen 
government rate controls and to allow abandonment of service (which 
the ICC, following the law, had restricted, thus maintaining high 
operations costs, which in turn undermined railway efficiencies and 
competitiveness). The regulatory regime from the 1920s was still in 
place, however, and there was not much movement on deregulating 
trucks and airlines. Still, the authors persuasively argue that 
President Ford's efforts laid the groundwork for more political 
success very soon.

In Chapter 8, the authors show that President Jimmy Carter, while 
bringing no new ideas to the arena, nevertheless promoted 
deregulation through the regulatory commissions and in Congress. This 
is one area in which Carter appeared to have developed effective 
congressional relations, for he was able to bring about deregulation 
of airlines in 1978 and trucks and railways in 1980. Yet, the authors 
go too far in their assertions. Take for example their conclusion on 
truck deregulation (which opened entry to the industry and relaxed 
rate controls): "Carter and his top officials ... had created one 
market for all truckers, replacing distinct submarkets" (203). 
Instead of a singular force -- the "state" -- it was a combination of 
changing economic conditions, shifting political powers, and new 
ideas about consumerism, regulation, and economic growth that shaped 
the decision to open up trucking competition. Carter's administration 
played a role, but it was not the omnipotent one asserted by the 
authors.

The last chapter, "The American State and Transportation, 1980-1995," 
includes a useful overview of what happened after the flurry of 
deregulation statutes in the late 1970s and early 1980s. Essentially, 
the authors argue that deregulation spread through the processes of 
"devolution" and "deinstitutionalization," thus giving more freedom 
to transport executives to follow market forces. The ICC was 
dismantled; Congress preempted state regulatory commissions of their 
powers; intermodal activity increased; railways merged and abandoned 
unprofitable routes; new airlines entered and left the industry, with 
a resulting concentration as airlines took up defensive positions in 
airport hubs. The authors consistently follow their theme of "state" 
construction; for the airline industry, they conclude that "In 
reality, the absence of overt federal action to limit the growth of 
fortress hubs had framed the postderegulation airline industry" (237).

There is no concluding chapter, although the last few pages restate 
the authors' point of view about "state" powers and add a new 
perspective not specifically noted earlier: "The barrier to 
understanding deregulation of transportation firms in 1978 and 1980 
as more than a simple withdrawal of the federal government from 
markets rests upon the limits of language and with our ideologically 
driven conceptualization of a market as a counterpart to an imagined 
state of political nature -- a place sacred in its origin and lacking 
institutional constraint. Rather than dichotomizing markets and 
regulation, it makes more sense to perceive them along a continuum 
shaped in both cases by the leaders of the American state -- with 
regulation and deregulation representing different types of legal and 
administrative strategies for organizing the activities of 
transportation managers and workers" (238).

In summary, the book offers a mixed bag of ideas and insights. On the 
one hand, the shifting of the deregulation movement in time (back to 
at least the 1950s) and in focus (on the executive branch) is notable 
and important. On the other hand, the authors' point of view 
throughout the book undermines the contributions they make. No one 
can deny that politics is part of the story, or that "the state" is 
involved in shaping regulation (and deregulation). Without 
acknowledging it directly, however, the authors have completely 
ignored the powerful argument Thomas K. McCraw made in _Prophets of 
Regulation_ (Cambridge, MA: Belknap Press, 1984): "_More than any 
other single factor, this underlying structure of the particular 
industry being regulated has defined the context in which regulatory 
agencies have operated_" (p. 305, emphasis in original). McCraw 
understood regulation to be a political art (p. 63), but one that 
took place within the context of industry structures and natural 
economic markets. My own research in regulation has confirmed this 
conclusion. For Rose, Seely, and Barrett, apparently, there is 
nothing natural about industry structures; they do not shape politics 
but politics shape them. This point of view, rigidly applied 
throughout the book, undermines the important contributions noted 
above.


[1] The reviewer did not have any direct input into this volume.

A note on the authors: During the preparation of the manuscript, Paul 
Barrett, Department of Humanities at Illinois Institute of Technology 
became ill, passing away in 2004. Bruce Seely (Michigan Technological 
University/NSF) and Mark Rose (Department of History, Florida 
Atlantic University) continued the preparation of the manuscript. 
Seely drafted the first two chapters; Barrett the third; and Rose 4-9.


William R. Childs has published most recently _The Texas Railroad 
Commission: Understanding Regulation in America to the Mid-Twentieth 
Century_ (College Station, TX: Texas A&M University Press, 2005).

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