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Published by EH.Net (March 2024).

Albert J. Churella. The Pennsylvania Railroad, Volume II: The Age of Limits, 1917-1933. Bloomington: Indiana University Press, 2023. xiv + 891 pp. $60 (hardcover), ISBN 978-0253066350.

Reviewed by Patrick Newman, Department of Economics, University of Tampa.

 

This book is the second volume of what might be called Albert Churella’s epic history of the Pennsylvania Railroad. What was originally supposed to be just a 200,000-word book (approximately 800 double-spaced pages) has turned into a three-volume 1.5 million-word series (6,000 double-spaced pages). Each book (a third volume is forthcoming) is truly a tome—the current volume contains nearly 900 typeset pages that have two columns of text each.

Churella’s rationale for such an extended analysis of the Pennsylvania Railroad is he “did not feel that it was possible to leave out any of the individuals, groups, or events that made a significant contribution to the company’s development.” The Pennsylvania Railroad “spanned so much of the country, pioneered so many technological advances and organizational innovations, and affected the lives of so many people” (p. vii). This is an admirable recognition of the importance of individual actors in the telling of history. It is specific men and women, not abstract entities, who are responsible for business decisions and actions. Understanding the unique motivations of people helps clarify the significance of their choices. One cannot, for example, write a history of Standard Oil without analyzing the personality and motivations of its main founder John D. Rockefeller. However, the historian using this method takes on the challenge of sifting through myriad players and actions to find the key ones. The less adept risk flooding their work with so much detail that it becomes an encyclopedia of irrelevant facts. Churella, on the other hand, shows himself an extremely skilled prospector.

Churella presents an exhaustive yet clear overview of the Pennsylvania Railroad from World War I through the nadir of the Great Depression. While it is not a book that the average layperson would use beyond the coffee table, volume II should absolutely be consulted by researchers and aficionados of the Pennsylvania Railroad or the railroad industry writ large during this period.

The book is divided into seven roughly chronological chapters that cover government policy, labor relations, the Pennsylvania Railroad’s impact on communities, and more. Chapter 1 describes the railroad during World War I, Chapter 2 focuses on union-management battles, and Chapter 3 analyzes corporate executives’ attempts to practice welfare capitalism. Chapter 4 surveys the Pennsylvania Railroad’s infrastructure and urban development, Chapter 5 describes its interaction with and acquisition of alternative forms of transportation, Chapter 6 provides details on the company’s finances during the 1920s, and Chapter 7 finishes by explaining how it fared at the onset of the Great Depression. Given the level of detail, it is impossible to do justice to every chapter, or even provide an in-depth analysis of one chapter, in a short review. Instead, I will instead concentrate on two specific cases which illustrate Churella’s emphasis on the people involved with the Pennsylvania Railroad.

Chapter 1, “War,” narrates the years surrounding World War I and how the Pennsylvania Railroad’s officials responded to new government policies. Those interested in the theory of regulatory capture will find much to learn. George Stigler (1971) famously argued that special interests will try to influence the regulation of their industry to obtain benefits from it at the expense of the public and other groups. Economists and historians have applied the theory to the railroad industry and the early years of the Interstate Commerce Commission, the regulatory agency Congress created in 1887 to supervise railroad pricing and other practices. (See Hilton 1966 and Kolko 1965.) In Volume I, Churella shows how the railroads, eager to reduce competitive pressures, lobbied the ICC to reduce price cutting and raise railroad rates.

Churella argues that by World War I the railroads clearly lost whatever control they had managed to establish over the ICC to the shippers who paid the railroads to transport their goods and the union workers the railroads hired to operate their lines. The president of the Pennsylvania Railroad, Samuel Rea, and other executives could not prevent these special interests from lobbying the ICC to reduce railroad rates and drive up labor costs. While these outcomes benefitted the shippers and unions, the railroads suffered from the cost-price squeeze and the quality of service deteriorated. Making matters worse, in December 1917 the Wilson administration took over the railroad companies to facilitate the war effort and brought them under the control of the new Railroad Administration. This was technically “federalization rather than nationalization” because the railroads remained privately owned but all business decisions were subject to federal control (p. 36). The takeover alienated Rea and other presidents as “they failed to persuade Congress to grant adequate compensation for the use of their facilities” (p. 43).

Despite the unfavorable regulatory climate, in the postwar years railroad executives did not lobby for deregulation but rather reregulation. The Association of Railway Executives (ARE), a lobbying group Rea helped form, spearheaded their efforts. T. De Witt Cuyler, a director of the Pennsylvania Railroad and chairman of the ARE, proposed new interventions. “Far from demanding an end to government regulation,” Churella writes, “Cuyler insisted on an expansion of the federal regulatory apparatus,” namely, a new Department of Transportation that superseded the pro-shipper ICC and set minimum railroad rates that guaranteed a profitable rate of return (p. 54). Cuyler’s legislative proposal met resistance by the shippers and unions, led by shipping attorney Clifford Thorne and labor attorney Glenn Plumb. They proposed their own policy prescriptions—Thorne wanted a return to the shipper-friendly ICC while Plumb called for government ownership with significant labor representation. The result was a compromise measure, the Transportation Act of 1920. In his analysis of the changing control of the ICC and wartime railroad regulatory agencies, Churella shows that regulatory capture is not a one-shot affair but rather an ongoing process where different special interests fight for control and the special interest that captures it in one period often loses it in another.

Chapters 2 and 3, titled “Labor” and “Welfare” respectively, provide insights on the Pennsylvania Railroad’s relationship with workers and the types of policies they supported. While railroads lobbied the ICC to control competition and raise rates, railroad unions desired policies that raised their wages above market-clearing levels through a variety of means, including government restrictions on African American employment by the railroads. The all-white railroad unions were chronically worried about their lower-cost competition, which is why they frequently lobbied governments to make it uneconomical to hire African Americans.

Beginning in the 1890s railroad unions “exploited public fears regarding railway accidents, inaccurately suggesting that the refusal of railroad executives to provide enough crew imperiled safety.” These “arguments were largely spurious.” State legislatures responded by enacting full-crew laws that required a certain number of crew on trains, something unions supported because they “artificially increas[ed] the number of jobs available to them.” (p. 225). Indiana’s 1909 law, for instance, stipulated a minimum number of crew on freight and passenger trains and stated that brakeman “shall not be required to perform the duties” of porters who carried luggage.

By World War I twenty-two states had some form of a full-crew law. Pennsylvania Railroad executives responded to these state-mandated increases in labor costs not by hiring men from the unions but by hiring cheaper African American labor as “trainmen” who performed the duties of both porters and brakemen (p. 225). Upset at the competition, the unions lobbied the state legislatures to strengthen their regulations and explicitly prevent African American employees from any train service stipulated in the full-crew laws. “The PRR’s African American operating personnel,” explains Churella, “soon experienced the effects of the discriminatory collusion among railroad, union, and government officials” (p. 231). These full-crew laws were common examples of how structural racism was part and parcel of regulations demanded by unions, and Churella drives this point home further by providing details on the plight of the African Americans who were affected. We learn of Nathaniel Marable, an African American porter who responded to the termination of his job by pursuing legal action in 1916. After several trials, the court system finally reached a verdict in 1924: dismissing the suit and holding Marable and other plaintiffs responsible for court costs. “Thus ended the last lingering relationship between African American operating employees and the Pennsylvania Railroad,” concludes Churella (p. 232).

Churella’s discussion of the Transportation Act of 1920 and union discrimination are just two examples that make this work valuable for business historians and others interested in a people-driven narrative. There are many more. Churella’s work is fascinating economic history that provides detailed analysis of the development of the Pennsylvania Railroad and its interaction with contemporary government policies. The researcher will find much to learn about the Pennsylvania Railroad and each chapter is thoroughly cited with extensive endnotes that contain further literature to read. One can only wait in eager anticipation for Churella’s third and final volume in his saga.

References

Churella, Albert. The Pennsylvania Railroad, Volume I: Building an Empire, 1846-1917. Philadelphia: University of Pennsylvania Press, 2013.

Hilton, George. “The Consistency of the Interstate Commerce Act.” Journal of Law and Economics 9. October 1966: 87-113.

Kolko, Gabriel. Railroads and Regulation, 1877-1916. Princeton: Princeton University Press, 1965.

Stigler, George. “The Theory of Economic Regulation.” The Bell Journal of Economics and Management Science. Spring 1971: 3-21.

 

Patrick Newman is an assistant teaching professor of economics at the University of Tampa. He is the author of Cronyism: Liberty versus Power in Early America, 1607-1849 (2021) and Cronyism: Rise of the Corporatist State, 1849-1929 (forthcoming).

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