IV Railroad and National Policies
1906-1912
Increased powers of Interstate Commerce Commission—Harriman Inquiry—Railroad Regulation—Letters to Roosevelt
During the late summer of 1906, Lane was in Washington or traveling through the South and West to attend the hearings of the Interstate Commerce Commission. The Hepburn Act of 1906, among other extensions of power to the Commission, brought the express companies of the United States under its jurisdiction, and the Commission began the close investigation into the rates, rules, and practises, that finally resulted in a complete reorganization and zoning of the companies. The new powers given the Commission, by this Act, inspired fresh hope of righting old abuses, associated with railroad finance, over-capitalization and stock-jobbing. The Commission set itself to finding a way out of the ancient quarrel between shippers and railroads in the matters of rebating and demurrage charges.
In the latter part of the year, President Roosevelt called an important meeting at the White House, for the purpose of deciding whether an inquiry should not be made into the merging of the Western railroads, then under the control of E. H. Harriman. Elihu Root, then Secretary of State; William H. Taft, Secretary of War; Charles Bonaparte, Attorney General, were present; Chairman Martin A. Knapp and Franklin K. Lane of the Interstate Commerce Commission, and the special Counsel for the Commission—Frank B. Kellogg. The matter of the proposed inquiry was discussed, each man being asked, in turn, to express his opinion. Root and Knapp were not in favor of beginning an investigation of the railroad merger, Bonaparte, Kellogg, and Lane favored an immediate inquiry. Lane declared that, in a few weeks, when the report of the Interstate Commerce Commission was published, it would be impossible to avoid making the inquiry.
At this point, President Roosevelt turned to William H. Taft, who as yet had expressed no opinion, saying, “Will, what do you think of this?” Mr. Taft said quietly, “It’s right, isn’t it? Well, damn it, do it then.” And the plans for the famous Harriman Inquiry, the first real step taken toward curbing the power of public utilities, were then taken under consideration.
During the inquiry, when E. H. Harriman was on the stand for hours, the Commissioners trying to extract, by round-about questioning, the admission from him that he would like to extend his control over the railroads of the country, Lane, who had been silent for some time, suddenly turned and asked Harriman the direct question. What would he do with all the roads in the country, if he had the power? With equal candor and simplicity, Harriman replied that he would consolidate them under his own management. This answer rang through the country.
To Edward F. Adams
Washington, February 16, 1907
MY DEAR ADAMS,— … I think the standpoint taken by our railroad friends in 1882 is that which possesses their souls to-day. I am conscious each time I ask a question that there is deep resentment in the heart of the railroad official at being compelled to answer, but that he is compelled to, he recognizes. The operating and traffic officials of the railroads are having a very hard time these days with the law departments. They can not understand why the law department advises them to give the information we demand, and I have heard of some most lively conferences in which the counsel of the companies were blackguarded heartily for being cowards, in not fighting the Commission. You certainly took advanced ground in 1882, … —there can be no such thing as a business secret in a quasi-public corporation. … Very truly yours,
Franklin K. Lane — To Benjamin Ide Wheeler President, University of California
Washington, March 31,1907
MY DEAR MR. WHEELER,— … I have taken the liberty of giving Mr. Aladyin, leader of the Group of Toil in the Russian Duma, a note of introduction. He’s an immensely interesting young man, a fine speaker and comes from plain, peasant stock. He will talk to your boys if you ask him. During these days of panic in Wall Street the President [Roosevelt] has called me in often and shown in many ways that he in no way regrets the appointment you urged. I have been much interested in studying him in time of stress. He is one of the most resolute of men and at the same time entirely and altogether reasonable. No man I know is more willing to take suggestion. No one leads him, not even Root, but no one need fear to give suggestion. He lives up to his legend, so far as I can discover, and that’s a big order. The railroad men who are wise will rush to the support of the policies he will urge before the next Congress, or they will have national ownership to face as an immediate issue, or a character of regulation that they will regard as intolerable.
You will be here again soon and I hope that you will come directly to our house and give us the pleasure of a genuine visit. … Sincerely yours,
Franklin K. Lane — To Elihu Root
Washington, February 14, 1908
My DEAR MR. SECRETARY,—I have lately been engaged in writing an opinion upon the jurisdiction of the Interstate Commerce Commission over ocean carriers engaged in foreign commerce, and it has occurred to me that an extensive American merchant marine might be developed by some legislation which would permit American ships to enjoy preferential through routes in conjunction with our railroad systems. The present Interstate Commerce Law, as I interpret it, gives to the Commission jurisdiction over carriers to the seaboard. It is the assumption of the law that rates will be made to and from the American ports and that at such ports all ships may equally compete for foreign cargo.
Might it not be possible to extend the jurisdiction of the Commission over all American vessels engaged in foreign trade, and with such ships alone—they alone being fully amenable to our law —permit the railroad which carries to the port to make through joint rates to the foreign point of destination? There is so vast a volume of this through traffic that the preference which could thus be given to the American ship would act as a most substantial subsidy. There may be objections to this suggestion arising either out of national or international policy which render it unworthy of further consideration. It has appealed to me, however, as possibly containing the germ of what Mr. Webster would have termed a “respectable idea.” Faithfully yours,
Franklin K. Lane — To E. B. Beard
Washington, December 19, 1908
MY DEAR MR. BEARD,—I have not seen the article in the CALL, to which you refer, but have heard of it from a couple of Californians, much to my distress. Of course I appreciate that at a time of strain such as that which you shippers and business men of California are now undergoing, it is to be expected that the most conservative language will not be used. … The trouble is with the law. … It is only upon complaint that an order can be made reducing a rate, and I understand that such complaints are at present being drafted in San Francisco and will in time come before us but such matters cannot be brought to issue in a week nor heard in a day, and when I tell you that we have on hand four hundred cases, at the present time, you will appreciate how great the volume of our work is, and that you are not alone in your feeling of indignation or of distress. If you will examine the docket of the Commission, you will find that the cases of the Pacific Coast have been taken care of more promptly within the last two years than the cases in any other part of the United States. I have seen to this myself, because of the long neglect of that part of the country. …
I want to speak one direct personal word to you. You are now protesting against increased rates. I have outlined to you the only remedy [a change in the law] that I see available against the continuance of just such a policy on the part of the railroads, and I think it might be well for you to see that the Senators and Representatives from California support this legislation. It is not calculated in any way to do injustice or injury to the railroads. … This is a plan which I have proposed myself, and for which I have secured the endorsement of the Commission. The San Francisco Chamber of Commerce has endorsed it. The whole Pacific Coast should follow suit enthusiastically.
Please remember that I am not the Commissioner from California; that I am a Commissioner for the United States; and that it is not my business to fight the railroads, but to hear impartially what both sides may have to say and be as entirely fair with the railroads as with the shippers. I am flattered to know that the railroad men of the United States do not regard me as a deadhead on this Commission. My aggressiveness on behalf of the shipping public has brought upon my head much criticism, and it would be the greatest satisfaction for those who have been prosecuted for rebating or discovered in illegal practises to feel that they were able in any degree to raise in the minds of the shippers any question of my loyalty to duty.
I expect to be in California during January, for a few days, and hope that I may see you at that time. Very sincerely yours,
Franklin K. Lane — To George W. Lane
Washington, February 13, 1909
MY DEAR GEORGE,—… I suppose you haven’t seen my interview on the Japanese question. I gave it at the request of the President [Roosevelt], because he said that the Republican Senators and Congressmen would not stand by him if it was going to be a partisan question in California politics. So I said that I would give the value of my name and influence to the support of his policy, so that Flint, Kahn, ET AL., could quote me as against any attack by the Democrats. The President has done great work for the Coast. Congress never would have done anything at this time, and by the time it is willing to do something the problem will practically be solved. I am expecting to be roasted somewhat, in California, but I felt that it was only right to stand by the man who was really making our fight without any real backing from the East, and without many friends on the Pacific—so far as the “pollies” are concerned.
… The Harriman crowd seems to think that they will all be on good terms with Taft, but unless I’m mistaken in the man they will be greatly fooled. …
Have you noticed that nice point of constitutional law, dug up by a newspaper reporter, which renders Knox ineligible as Secretary of State? He voted for an increase in the salary of the Secretary of State three years ago. They will try to avoid the effect of the constitutional inhibition by repealing the act increasing the salary. Technically this won’t do Knox any good, altho’ it will probably be upheld by the Courts, if the matter is ever taken into the Courts.
Roosevelt is very nervous these days but as he said to me the other day, “They know that I am President right up to March fourth.” I took Ned and Nancy to see him and he treated them most beautifully. Gave Ned a pair of boar tusks from the Philippines and told him a story about the boar ripping up a man’s leg just before he was shot, and to them both he gave a personal card.
F. K. L.
With this letter he sent a copy of a verse written by his daughter, not yet seven.
“On through the night as the willows go weeping
The daffodils sigh,
As the wind sweeps by
Right through the sky.”
To Charles K. McClatchy Sacramento Bee
Washington, March 20, 1909
My Dear McClatchy,—I am just in receipt of your letter of March 15th, with reference to my running for Governor next year.
There is nothing in this rumor whatever. I have been approached by a good many people on this matter, and perhaps I have not said as definitely as I should that I had no expectation of re-entering California politics. When I was last in California some of my friends pointed out to me the great opening there would be for me if I would become a Republican and lead the Lincoln-Roosevelt people. There does not seem to be any line of demarcation between a Democrat and a Republican these days, so that such a change would not in itself be an act of suicide. My own personal belief is that the organization in California on the Republican side could be rather easily beaten, and we could do with California what La Follette did with Wisconsin. But I am trying not to think of politics, and I told those people who came to me that I thought my line of work for the next few years was fixed.
… No one yet knows from Mr. Taft’s line of policy what kind of a President he will make. Everybody is giving him the benefit of the doubt. The thing, I find, that hangs over all Presidents and other public men here to terrify them is the fear of bad times. The greatness of Roosevelt lay, in a sense, in his recklessness. These people undoubtedly have the power to bring on panics whenever they want to and to depress business, and they will exercise that power as against any administration that does not play their game, and the “money power,” as we used to call it, allows the President and Congress a certain scope—a field within which it may move but if it goes outside that field and follows policies or demands measures which interfere with the game as played by the high financiers, they do not hesitate to use their “big stick,” which is the threat of business depression. …
There are a lot of things to be done in our State yet before we both pass out. … As always, very truly yours,
Franklin K. Lane — To Lawrence F. Abbott Outlook
Washington, September 22, 1909
MY DEAR ABBOTT,— … President Taft’s suggestion of a Commerce Court is a very sensible one. We suggested the institution of such a Court some years ago, so that the question of nullifying our order will be brought up before men who have special experience. … The trouble with the Courts is that they know nothing about the question. Fundamentally it is not … law but economics that we deal with. The fixing of a rate is a matter of politics. That is the reason why I have always held that the traffic manager is the most potent of our statesmen. So that we should have a Court that will pass really upon the one question of confiscation—the constitutionality of the rates fixed—and leave experienced men to deal with the economic questions. …
I have long wanted to see you and have a talk about our work. At times it is rather disheartening. The problem is vast, and we pass few milestones. The one great accomplishment of the Commission, I think, in the last three years, has been the enforcement of the law as against rebating. We have a small force now that is used in this connection under my personal direction, and I think the greatest contribution that we have made, perhaps, to the railroads has been during the time of panic when they were kept from cutting rates directly or indirectly and throwing each other into the hands of receivers.
The great volume of our complaints comes from the territory west of the Mississippi River and practically all of the larger cities in the inter-mountain country have complaints pending before us attacking the reasonableness of the rates charged them, and it is to give consideration to these that the Commission, as a body, goes West the first of the month. …
I have just returned from a trip to Europe, and I find that what I said two or three years ago about the United States being the most Conservative of the civilized countries is absolutely true.
By the way, at the Sorbonne at Paris they are exhibiting the chair in which President Roosevelt will sit when he comes to deliver his address and I am thinking that he will have quite as hearty a reception in Paris as in any of our cities.
Very truly yours,
FRANKLIN K. LANE
To John H. Wigmore
Washington, December 3, 1909
MY DEAR DOCTOR,—… I think there is but little doubt that De Vries will receive the appointment, though of course everything here is in absolute chaos. … The best symptom in my own case is that I have been called in twice to consult over proposed amendments to the law, and the President’s [Taft’s] reference thereto in his forthcoming message. He seems to think my judgment worth something—more than I do myself, in fact—for down in my heart, though I do not let anybody see it, I am really a modest creature.
Since my return from the West we have had one merry round of sickness in the house … but all are on their feet once more and as gay as they can be with a more or less grumpy head of the household in the neighborhood, (assuming for the nonce that I am the head of the household).
The President is going to appoint Lurton.1 He should have said so when he made up his mind to do it, which was immediately after Peckham’s death. He would have saved himself an immense amount of trouble. Lurton seems to have been very hostile to the Interstate Commerce Commission, and is too old, but otherwise I hear nothing said against him. I really would like to see Bowers put on the bench very much. He has made a very favorable impression here, and is a clear lawyer, a very strong man, and in sympathy with Federal control that’s real.
By the way, I had a talk the other day with Attorney General Wickersham regarding the treatment of criminals, and I believe you can secure through him the initiation of an enlightened policy in this matter. He told me that he was going to make some recommendations in his report, and perhaps the President may deal with the matter slightly in his message. Wickersham is a thoroughly modern proposition, and as he has charge of all the penitentiaries, and his recommendations, with relation to parole and such things, absolutely go with the President, I believe you could do more good in an hour’s talk with him than you could effect in a year otherwise. If you could run down, during the holiday vacation, I would bring you two together for a talk on this matter, and you, also, might take up the very live question with the President of cutting off red-tape in the courts. Give my love to Mrs. Wigmore, and tell her, too, that we would be most delighted to see her here. Faithfully yours,
Franklin K. Lane
On December 9,1909, President Taft reappointed Franklin K. Lane as a member of the Interstate Commerce Commission.
To Mrs. Franklin K. Lane
En route to California, Monday, March [1910]
… I have spent a rather pleasant day reading, and looking at this great desert of New Mexico and Arizona. No one on board that I know or care to know, but the big sky and my books keep me busy. Do you remember that picture in the Corcoran Gallery with a wee line of land at the bottom and a great high reach of blue sky above, covering nine-tenths of the canvas? I have thought of it often to-day—“the high, irrepressible sky.” It is moonlight and the rare air gives physical tone, so that I feel a bit more like myself, as was, than is ordinary. …
I have thought of a lecture to-day and you must keep this letter as a reminder and make me do it one of these days: THE PROBLEMS OF RAILROAD REGULATION. THE TRAFFIC MANAGER AS A STATESMAN: THE UNEARNED INCREMENT OF OUR RAILROADS.
And another: THE NEED OF A WORLD BANK: INTERNATIONAL AND INDEPENDENT FINANCIAL AUTHORITY, which shall fix standards of value, based on no one metal or commodity, but on a great number of staples.
I have thought much of the farm. It will be so far away and so impracticable of use! But such an anchor to windward, for two most hand-to-mouth spendthrifts! …
To Theodore Roosevelt
Washington, April 29, 1910
MY DEAR MR. ROOSEVELT,—Mr. Kellogg tells me that he expects to see you in Europe, and I avail myself of his offer to carry a word of welcome to you, inasmuch as I must leave for Europe the day after your arrival in New York, the President having appointed me as a delegate to the International Railway Congress at Berne.
The country is awaiting you anxiously—not out of mere curiosity to know what your attitude will be, but to lead it, to give it direction. The public opinion which you developed in favor of the “square deal” is stronger to-day than when you left, and your personal following is larger to-day than it ever has been. There is no feeling (or if there is any it is negligible) that the President [Taft] has been consciously disloyal to the policies which you inaugurated or to his public promises. He is patriotic, conscientious, and lovable. This was your own view as expressed to me, and this view has been confirmed by my personal experience with him. It is also, I believe, the judgment of the country at large. But the people do not feel that they control the government or that their interests will be safeguarded by a relationship that is purely diplomatic between the White House and Congress. In short we have a new consciousness of Democracy, largely resulting from your administration, and it is such that the character of government which satisfied the people of twenty years ago is found lacking to-day. Practically all the criticism to which this administration has been subjected arises out of the feeling of the people that their opinions and desires are not sufficiently consulted, and they are suspicious of everything and everybody that is not open and frank with them.
Outside of a few of the larger states the entire country is insurgent, and insurgency means revolt against taking orders. The prospect is that the next House will be Democratic, but the Democrats apparently lack a realization of the many new problems upon which the country is divided. Their success would not indicate the acceptance of any positive program of legislation; it would be a vote of lack of confidence in the Republican party because it has allowed apparent party interest to rise superior to public good. The prospect is that every measure which Congress will pass at this session will be wise and in line with your policies, but the people do not feel that THEY are passing the bills.
I have presumed to say this much, thinking that perhaps you would regard my opinion as entirely unbiased, and in the hope that I might throw some light upon what I regard as the fundamental trouble which has to be dealt with. Whether you choose to re-enter political life or not, men of all parties desire your leadership and will accept your advice as they will that of none other.
Pardon me for this typewriting, but I thought that you might prefer a letter in this form which you could read to one in my own hand which you could not read. Believe me, as always, faithfully yours.
Franklin K. Lane
From Berlin, Lane received from Theodore Roosevelt, dated May 13, 1910, these lines,—
" … I think your letter most interesting. As far as I can judge you have about sized up the situation right. With hearty good wishes, faithfully yours,
Theodore Roosevelt — To John H. Wigmore
Washington, March 2, 1911
MY DEAR JOHN,—No other letter that I have received has done me as much good or given me as much pleasure, or has been as much of a stimulus, as has yours. The fact that you took the time to go through the REPORT so carefully is an evidence of a friendship that is beyond all price, and of which I feel most unworthy. I have had the figures checked over, resulting in some slight changes, and will send you a revised copy as soon as it is printed. The newspaper criticisms are generally very friendly, although the FINANCIAL CHRONICLE, the WALL STREET JOURNAL, and other railway organs are extremely bitter. The Western papers do not seem to have been very much elated over the decision. It has appeared to me from the beginning as if they had been “fixed” in advance and that their reports were always biased for the railroads, but the country at large will realize, I think, before long, that the decisions are sound, sensible, and in the public interest. Some of the least narrow of the railroad men also take this view. The best editorial I have seen is in the New York EVENING POST. Sincerely yours,
Franklin K. Lane
P. S. I got this note from Roosevelt this morning, headed THE OUTLOOK:—
“Fine! I am really greatly obliged to you, and I shall read the REPORT with genuine interest. More power to your elbow! Faithfully yours.”
“This report was known,” Commissioner Harlan explains, “as the Western Advance Rate Case. It was one of the first of the great cases covering many commodities and applying over largely extended territories. In his opinion denying the rate advances proposed by the carriers, Commissioner Lane discussed the Commission’s new powers of suspending the operation of increased rates pending investigation and the burden of proof in such cases. He marshalled a vast array of facts and figures and announced conclusions that were accepted as convincing by the public at large. He then pointed out that the laws enforced by the Commission sought dominion over private capital for no other purpose than to secure the public against injustice and thereby make capital itself more secure.”
To William R. Wheeler Traffic Bureau, Merchants’ Exchange San Francisco, California
Washington, June 27, 1911
DEAR SIR,—Adverting to yours of June 22, IN RE express rates, I beg to advise that nothing can be added to my previous letter unless it is the expression of my personal opinion that a rate should not be made for the carriage of 20,000 pound shipments by express.
We are receiving daily similar complaints to yours, respecting the nonadjustment of express rates, and if you will call at this office we shall be pleased to reveal the reason for our failure, hitherto, to grant the relief desired. It is extremely warm in Washington at the present time, but if anything could add to the disagreeableness of life in the city it is the unreasoning insistence on the part of the traffic bureaus of the country that express rates shall be fixed overnight.
I desire to say that I have given some year or two of more or less profane contemplation to this question, and have now engaged a large corps of men, under the direction of Mr. Frank Lyon as attorney for the Commission, to seek a way out of the inextricable maze of express company figures. Whether we will be able to find the light before the Infinite Hand that controls our destinies cuts short the cord, is a question to which no certain answer can be given. Would you kindly advise the importunate members of a most worthy institution, that express rates to San Francisco possess me as an obsessment. My prayer is at night interfered with by consideration of the question—“What should the 100 pound rate be by Wells Fargo & Co. from New York to San Francisco?” And at night often I am aroused from sleep, feeling confident in my dreams that the mystic figure of “a just and reasonable rate,” under Section One, on 100-pound shipments to San Francisco, had been determined, and awaken with a joyous cry upon my lips, to discover that life has been made still more unhappy by the torture of the subconscious mind during sleep.
No doubt your shippers are being treated unfairly, both by the express companies and by the Interstate Commerce Commission. This is a cruel world. Congress itself adds to the torture, by almost daily referring to us some bill touching express rates or parcels post, or some such similar service, and while the thermometer stands at 117 degrees in the shade we are requested to advise as to whether express companies should not be abolished. It has only been by the exercise of a rare and unusual degree of self-control on my part, and by long periods of prayer, that I have refrained from advising Congress that I thought express companies should be abolished and designating the place to which they should be relegated.
As perhaps you may have heard, I shall visit the Pacific Coast in person during the next few weeks, and there I trust I may have the pleasure of meeting you and your noble Governing Committees, to whom I shall explain in person and in detail the difficulties attaching to the solution of this problem. … Sincerely yours,
Franklin K. Lane — To Lawrence F. Abbott Outlook
Washington, December 4, 1911
MY DEAR ABBOTT,— … We are making history fast these days, and at the bottom of it all lies the idea, in the minds of the American people, that they are going to use this machine they call the Government. For the centuries and centuries that have passed, government has been something imposed from above, to which the subject or citizen must submit. For the first century of our national life this idea has held good. Now, however, the people have grown in imagination, so that they appreciate the fact that the government is very little more than a cooperative institution in which there is nothing inherently sacred, excepting in so far as it is a crystallization of general sentiment and is a good working arrangement. And the feeling with relation to big business, when we get down to the bottom of it, is that if men have made these tremendous fortunes out of privileges granted by the whole people, we can correct this by a change in our laws. They do not object to men making any amount of money so long as the individual makes it, but if the Government makes it for him, that is another matter.
I have been meeting … with some of the committees, in Congress and out, that are drafting bills regulating trusts, and I expect something by no means radical as a starter.
You ask as to leadership in both Houses. There is not much in the Lower House that can be relied upon to do constructive work, so far as I can discover. Our Democratic leaders all wear hobble skirts. But in the Senate there is some very good stuff.
I expect to be in New York in January, and then I hope to see you. Very truly yours,
Franklin K. Lane
When he was running for Governor in 1902, Lane made prison reform one of the foremost issues of his campaign. Several years later when a movement was started petitioning the Governor to parole Abraham Ruef, who had served a part of his term in the penitentiary for bribery in San Francisco, Lane signed the petition. This brought a letter of remonstrance from his friend Charles McClatchy, editor and owner of the Sacramento Bee, who felt that such a movement was ill-timed and not in the interest of the public good.
Notes
1 To the Supreme Bench.