American Legal History
I say that we're entering a period of bitter irony because we are talking about what happened after the war for freedom, for the Union, for free soil, free labor, and free men. And what we are about to see, though it is the growth of a powerful nation and a new nationalized constitution and a new system economic, political, social, as well as legal, is not what one might have thought we fought for.

As I tried to suggest even in thinking about the military conduct of the war, the crucial institution of the empire as it emerged from the Civil war is the railroad, more than any other technology, more than any other economical organizational structure, it's the railroad which defines the post Civil War Union. It begins defining in a characteristic way the nature of the US.

The railroads are the gigantic public highways of the world along which its great currents of trade and travel continually pour. They are the most marvelous invention of modern times. There is scarcely a want, wish, or aspiration of the human heart which they do not in some measure help to gratify. That's a justice of the Wisconsin Supreme Court dissenting from a minor matter of railroad regulation in 1870. He is, of course, heavily bribed by the railroads.

But he's also expressing a fundamental rpoposition of the way we lived then. That the railroad is the engine of the satisfaction of wants in much the same way that first the motorcar and then the whole consumer economy defined the nature of unequal economic power as the satisfaction of the wants of those who do not own.

Initial construction of railroads in the US begins in the 1830s. The Boston and Lol came about just about the same time the steam engine locomotion was beginining to be used in England, though it is there a matter of vertical transportation pulling coal from the scene to the surface, not in the US from the beginning a matter of surface horizontal transport. There were about 30,000 miles of railroad tracks before the Civil War and as I've pointed out, the great problem of railroad construction, in particular a significant problem in the South, was the absence of a standard guage. In theory, building a railroad is a pretty simple business. You level a bunch of ground and you fill it and you put increasingly light layers of gravel down and then you lay ties across it and you spike the rails into the ties. How far apart those rails are - how many inches space there is between the two rails - that's the guage of the railroad and it determines the construction of the stock that rolls on it. So if railraod guages vary, then where they exchange with one another there is no way to use the same rolling stock. You take for granted when you see freighttrains crossing the US that they can switch any car into any train and move any goods from anywhere to anywhere else because there is standard guage.

But, nonstandard guaging means that all goods have to be off-loaded from one railroad and moved onto another piece of rolling stock, another rolling car of some kind in order to continue to move. In the end, the US was going to settle on 4 ft 8 in and a half. A standard guage was going to become to be an essential component of the nation held together by the railroad, but as late as 1880, more than 20% of the nation's tracks still varied. Not until 1886 was the entire southern railroad network on a single guage. This as I have said accounts significantly for the nullification of the apparent military advantage of internal lines of supply that the Confederate states had during the war. They did in fact have internal lines of supply and if it had been possible to move troops by rail as easily for them as for the Union armies, it would have made a significant difference to the defense of the Conderacy.

It would have made even more of a difference to the ability to supply Lee's army in the North if it had been possible - assuming of course that you could keep the railroad tracks from being sabotaged or destroyed - it would have made a significant difference in supply, but there was no way to move anything through VA or PA by rail because there was no standard guage between those places. It's part of what makes the Shenandoah Valley the war that it is.

The war, however, did indeed convey to everybody the lessons of the efficiency of the railroad as the fundamental logistics of the empire. Between 1877 and 1890 railroad mileage in the US increased from 79,000 miles to more than 166,000 miles which amounted to roughly 1/3 of the total railroad lines on the planet. So by 1890 the US has a third of all the world's railroad mileage. It is essentially the most concentrated collection of railroad lines anywhere and it is serving not a peninsula at the corner of Northwest Asia but the North American continent.

The pace of railroad construction at that point, between 1880 and 90, was consuming more than 90% of all the world's steel made in the US. The steel industry is essentially a railroad construction supplier. There's nothing else important to do with steel but that is plenty important.

IF you think about it, the breadth of social demand for railroads embraces both what we would think of as the old and new economy. Farmers confront the possibility of the railroad with the recognition that it is what makes it possible for the first time to make bulk commodities grown in the great gardens of N America sailable to the world. It is in fact still true. That the bread basket of the Midwest could supply the declining Soviet Empire was solely as a consequence of railroad transport. You could not otherwise move wheat in bulk. We've already talked about what that implied to the American way of life. It implied whiskey and it is with the railroad that we can begin to think of doing something other than making whiskey out of it to make grain sailable at distance. What is going to happen is that there can be a processed food industry.

Not a good news you may say but it is crucial to the farmers. Similarly to raw materials producers. The miners and extractors of the great Western empire. That whole structure for the use of the US west and south of the Missouri R can only exist because of the RR. Even the mining of silver in Nevada for heaven's sake requires the RR, let alone those things which are less precious and are of greater bulk. So it isn't merely Mr. Twain or rather Mr. Clemen's and his friends living their strange and wonderful boom time life in VA City, Nevada who depend upon the RR. It's all the hard rock miners of the West.

And oil.

which is just beginning to assume the importance that will leave it in the end as the dominant commodity of the world.T

The very idea of a national empire stretching across the entirety of the continent implies the RR. There isn't any other way.

The nature of the US that rises from the war, that continental empire towards which John Adams and his now RR president grandson Charles Francis Adams are pouring their efforts and enterprise over 100 years. That's the empire of the RR.

Of course, now is when we can begin to talk about capitalism of a significant kind because nothing is as capital intensive as the RRs and nothing makes the power of capital more obvious in its relationship to its workers than the RRs. Before the war, there were 10 RR in the US that had capitalization of 10 million dollars or more. In 1883 there were over 40 RR with that level of capitalization.

By 1900, well let's stay where we were in 1883. By that time with 40 RR over 10 million dollars in capitalization there were 8 each possessing assets worth more than $135 million. By 1900, the RR were valued at $10 billion which was approximately 10% of the wealth of the US.

Under most circumstances, that kind of wealth distribution would be ? Of course we live here. What's the wealth distribution in the current US like?

Anybody know? This is a middle class country it must be top heavy. LEt's use 2001 numbers. That's before the Bush tax cuts. That's before the grand party on Wall St. Let's stay at 2001. Top 1% of population: 38% of total wealth.

Top 10% of population: 71% of total wealth.

The bottom 40% of population: less than 1% of total wealth.

That's where we live except it got worse.

That's where we lived when G Bush became pres of US. You would think that you couldn't start law school in the US without knowing that because if you don't know that you don't know anything about justice.

But we didn't live there. We lived in the US that won the Civil War which was already becoming a capitalist nation in which by 1890, the RR and their owners ownerd 10% of total national wealth, a staggering number unless you live here.

The basic mechanisms by which RR accumulated the capital to grow by which they began to become that major concentration of national wealth were two: land granting - that is, direct provision of real estate to RR - and securities marketing. But the last federal land grant to a RR occured in 1871 within 5 years of the end of the Civil War and the Panic of 1873, one of those occasional collapses in the credit markets that used to occur in capitalism before Alan Greenspan figured it all out. The Panic of 1873 destroyed the remainder of the willingness of public capital to invest itself in RR as public entities suffered something a little bit like the strangulation they're about to suffer in the US.

So after 1873 there is essentially no granting of land to RRs anymore, though we'll want to look at how the land grant system worked. After 1873 during that great run that essentially doubled the nature of the RRs in the US. That's all private capital.

The primary means of acquisition of RR capital falls into the two instruments we've long since become accustomed to. RRs issued bonds.

And those bonds which were secured of course by the physical assets and income of the RR, those bonds were the primary investment vehicles. They were sold very largely to investors outside the US as well as inside, primarily in England.

American RR bonds are a very important growth element of a respectable investment portfolio for an English investor in the late 19th c.

By 1890 the bonded debt of the roads was in total approx 5 billion dollars, roughly half their overall value and almost 5 times the total public debt of the US. 5 times.

So you must imagine this empire as having essnetially no public debt despite its Hamiltonianism. It is the private market, the private ownership of the roads which compels international investment at a level far greater than that of the empire itself.

The complexity of the finance involved handling 5 times the national debt in a private banking and securities issuance structure, imagine what the finance industries if that were true now. If Goldman, Sachs were 5 times bigger than the Treasury of the US instead of merely 5 times more powerful, at least when it comes to getting flu vaccine.

The private market complexity is esseentially what makes the financial industries that we know. It's the banking houses of NY. It's JP Morgan and Co and ? They're the essential underwriters and issuers of all of that bonded debt and it is on their structure, their financial engineering if you please, that all of this rests.

When the depression of the 1890s happens, beginning with a credit panic much greater than that of 1873 and much smaller than that of 2008, resulting in a terrible unemployment and the most horrendous economic conditions in the US that we ever suffered except after 1929 and after 2008. The third greatest economic collapse in American history. After the beginning of the Depression of 1890, all the RR in the US went bankrupt. They became, in effect, the property of the reorganization experts, the financiers who had built them and who now engineered the process of dealing with their insolvencies. JP Morgan reorganized the southerns, the PA, the Erie. Indeed, all the largest of the RR in the US, save one, he left a very dilapidated Union Pacific to be reorganized by CunLobe? and its partner Harrimond. Had it not been for the Union Pacific and Harrimond Cunlobe, Morgan would have owned the RRs of the US.

So one aspect then of the way that the RR affects both the empire and its law is the extraordinary gravitational weight of its demands on capital and the extraordinary political importance that follows from that. Another which is obvious is that the RRs are interjurisdictional enterprises of a kind which have never existed before. It's the beginning of your answer. It's the inherent interjuridictionality of the RR which puts it in a peculiar position with respect to a federal imperial structure. It wants uniformity. Indeed, it must have uniformity. It wants power to compel local government. Indeed, it requires power to compel local government.

And it's not only jurisdictionally diverse, it's territorially immobile. It's a captive to every government through which it passes. It cannot move itself. Therefore, what it demands and what in view of its power of ownership it receives, is forms of control, forms of political suthority in law appropriate to large scale interjurisdictional activities that cannot be moved.

RRs are of course managerially complex in a way which nothing, not even government, is managerially complex.

RRs will demand the alteration of the clock. RRs will demand that time be segmented and controlled. Before industrial processes of other kinds begin to slice jobs in time, RRs are slicing time. Because of the RRs we're going to have standard time. That is to say from town to town within a time zone, a very idea of RR creation, everybody's clocks are going to be synchronized. Across the continent time is going to be sliced into zones. Ben Franklin thought it was a good idea to turn clocks ahead in the summer and back in the winter so as to put human activity as much as possible in the actual hours of daylight. The relationship between daylight savings time and artificial illumination is a complex one. You want to think about. The real purpose of 18th c Daylight Savings Time in Franklin's invention is simply to conserve the one existing source of lighting which is daylight.

But RRs are going to use standard time for a different purpose. They are creating a clock which beats all productive purposes. A clock which determines the schedule of everything. They are beginning the process of creating in human society a single tick which organizes all activity. The great labor historian EP Thompson says the 18th c is the century of the scale, the 19th c is the century of the clock. I've said that before. That clock, you should think of it as that clock in Grand Central Station. It's RR time.

Until the advent of the cheap quartz watch, if you wanted to carry the best possible portable time piece in the world, you didn't buy some piece of Swiss jewelry. You bought a pocket watch of a RR conductor. The RRs made and issued to their employees watches that were good. They cared about the quality of time. They also care about auditing and accounting. They care about cost forecasting and revenue forecasting. They beging to do the very things that businesses in the 20th c think of as the essence of enterprise awareness. They are the developers of the management techniques taht are the necessary social precondition for large scale capitalism.

When steel and oil begin to grow as a necessity of RR production, when they begin to become themselves enterprises of enormous size and power, they borrow auditors and auditing structures from the RRs. RRs become the management trainers for the rest of the new industrial economy - the large scale enterprise. They're where the skilled talent comes from. Now of course in every idrection there are also legal ramifications of all of this right?

By 1857 the Vermont Supreme Court Justice Isaac Redfield has begun to publish what he calls a treatise on RR law, which is not actually the law appertaining to RRs it's all the law that a RR lawyer might need to know from corporate charters to mandamus jurisdiction in the state and federal courts.

It's like a justice of the peace manual for a RR lawyer all the various things you might want to know topically introduced. The RR lawyer is the business lawyer of the late 19th c. The person with the broadest needs interjurisdictionally and in subject matter terms.

Within the areas of private and public law, the RR becomes the force generating the circumstances of legal change. In the law of real property there are two directions in whcih this happens. First, in pressure on eminent domain. The RRs like the mill owners a generation before but on an unprecedented scale want to control state power of eminent domain. They want a delegation of eminent domain and they want to be able to enter onto property before final determination of the amount of compensation.

So Horwitz' argument about the Mill Acts and water law in the 1830s and 40s could be recapitulated but in a higher tone and a major key with respect to the effect of RRs on eminent domain law after the war. The Mill Acts contemplate a single act of construction and a single transaction 3/4 in nature between the state delegating eminent domain power, the enterprise, and the landowners. They're like Lee Bollinger's, Quagmeyer north of 125th St. But the RR situation is a different one. It's the construction of the line. It's the summoning of vast amounts of capital and a process of land assembly and a process of construction all of it to the beat of the RR clock in whcih the pace and understanding of the public right and the private owner's entitlement to a jury trial for the setting of compensation are inconveniences so that the question becomes to enter first and pay later.

which produces all of the various difficulties that were later to bedevil the Supreme Court in the 1980s.

The second great effect of the RR on the property system is its effect on the underlying economy of the empire which is always land speculation.

The basic structure of a RR land grant is a checkerboard pattern on alternate sides of the line granting from the state to the construction of the RR checkerboards checkers each 8 miles in extent in both directions. So that the land front of the RR becomes RR land here and private development here.

The direct subsidy to the road results in an indirect subsidy to the speculators in the other private interests who have info about where the road's going to be built. That's the source of the primary forms of corruption, bribery the secondary.

The question of where the road is going to go changes not just the value of the land immediately adjacent, it changes the value of all farmland situated on both sides because it is farmland within easy journey. What of course is going to be built here is a grain elevator. What's going to be done is to generate concentration points for the agricultural and extracted economies in the spaces immediately adjacent to the road and in those spaces private ownership is going to begin to control the economic hinterland in a way which has previously only been possible by seaports.

That has a siginificant effect on the nature of the investment flows into land speculation, which as I say is always where the empire's private engine of development has always been. Cheap land if only you knew which cheap land to buy.

Whatever grant public works are in the history of the union, they have always produced that effect. It's the politicians and those with advanced knowledge of public works who clean up. The water system of NYC played that role twice in the 19th c, once for Aaron Burr and Alexander Hamilton and once for Tammany Hall.

Those of you who live above 110th St and receive bad water from the Croton Resevoir system are essentially receiving the water that made the fortunes of Hamilton and Burr's generation when NYC first began to buy up state land for watershed. Those of you who live below 110th St and get the good water, it's important to understand politically to send the good water to the good people. Those who live below 110th St get the water from the Delaware Water Gap which are the late 19th c purchases of NYC.

In the law of contract as you can imagine, the primary sources of the changes arise from the RR's extraordinary powers buyer, seller, and mover of goods.

On the purchasing side, the RRs are the great purchasers of everything. Any commodities that can be used in their business, which is pretty much anything that can be used in anybody's business, they are the largest buyers of and their form contracts for the purchase of goods will become the style on which people do all sorts of business. The RR is seller, well transportation services pricing, short hall pricing, collusion, all the grand issues of what commercial power can mean are issues about the RR. And of course, the RR's extraordinary efficiency of transportters of goods begins to change a whole range of other questions associated with contracting having to do with allocation of risk which is after all what contracts are really about.

In the area of Tort law the RR is of course the generator of two things: fire and death.

With respect to fire, the roadside fire cases of the 1830s and 40s as Horwitz showed you are substantially the place where we begin to look for state subsidization to active users of property as opposed to passive ones. The law of contributory negligence arises. The farmer says they burned my crops because sparks flew from the engine and they lit the fields on fire and the courts say well you shoul dhave cleared on your side back 35 ft from the RR cut if the fire started and you had anything flammable on land close to the RR line then you contributed to the outcome nad you get nothing.

This is contrary to where the English courts got in the same period holding the RRs essentially strictly liable for track fires which is what came to be the case pretty much everywhere else in the common law world outside the US where contributory negligence fashioned the subsidy for the RRs by preventing parties injured by their ordinary activities from significantly recovering unless they spent substantially themselves to reduce the likelihood of harm.

If there is a basic rule of the thing called tort, a subject that no one really talks about until the 19th c in the history of English law as a category, but if there is a fundamental law of the law of civil liability for injuries, it is that the action dies with the claimant. The long history of the common law as tort distinguishes itself in some or another weird way from crime and trespass become some other thing than the criminal indictment, but the law is always that to have compensation for the injury you have to have suffered it and death ends the subject. The very idea of the wrongful death action is an outgrowth of the RR.

It's the forms of death. It's the horribleness, the swiftness, and the manmadeness of the agency of death which makes the whole idea of the wrongful death action somehow necessary. Note that in the English law, this is the consequence of statute so the lord campbell's act of 1846 which required trains to stop or sound at level crossings.

And for the breach of Lord Campbell's Act, for the failure to stop or warn at level crossings, there was an action.

Wisconsin made a wrongful death action in the course of the same period and it's the Wisconsin wrongful death action in 1856 that required trains to come to a full stop at level crossings and gave an action for the failure to do so which begins the process of making a wrongful death action. The following year in 1857, the first general wrongful death statute was enacted also in Wisconsin.

And of course the RRs have a substantial effect on the law of employment. Harms. It's the whole fellow servant rule problem. Those who have had Legal Methods with Prof Strauss I needn't go to far into this subject. But what's happening again from Horwitz point of view and it's a fair proposition, is that a subsidy is being created for the road by requiring something more than th einjury and the negligence in order to make it possible for an employee to recover for harm sustained.

In all of these ways what's happening is that the aggregation of capital is taking onto itself legal power and it is providing an opportunity for the law to be made in its favor.

Now as I've pointed out, the RRs are essentially after 1873 creatures of private capital. Little direct subsidy of any kind is still available. Municipalities do not issue bonds to bring the RR to town. LAnd grants are not available. The great burst of RR building which as I've suggested is also part of the reason Reconstruction was aborted. The great burst of RR building is the work of private capital and we should expect private capital to be dirty.

So let's talk about mortgage bonds.

Here's how maybe it would work.

You issue bonds secured by the physical assets of the road to one class of investors - the people who like to have something for their money. And then you go to farmers who are going to be completely dependent on the RR and you say "We have a wonderful deal for you. We've printed up some stock certificates and you should buy them. We say that these stock certificates will pay a dividend of 10%. IT says so right on the front of our very attractively printed share certificate." So you get 10% on your money and you won't even have to have any money because we'll just take a mortgage on your farm. On the mortgage on your farm you have to pay 8%. That's what it says on the front of the mortgage, but don't worry. We're paying you 10% dividend on the stock. So we'll pay the interest for you on your mortgage every year out of the first 8% of dividends we pay you on your stock and we'll apply the next 2% to the reduction of your principle. So we won't pay you any money but you'll have the stock and the mortgage on your farm will be compeltely paid for and you'll have these wonderful share certificates that will very much increase in value and everything will be great. Isn't it nice to know that your farm as become an ATM. Oh no I'm sorry they didn't say that because nobody had ever seen one.

And the farmer thinks that's a good deal so he buys his stock. So the RR then turns around and takes all those mortgages and securitizes them and sells bonds to other shrewed investors. They're not hedgefunds cause there's no hedgefunds yet but they're hedgefund investors and they buy the mortgage bonds secured by all those farms. When the RR goes broke then there's nobody to pay the interest on the mortgages. Now the RR gave an addendum to the farmer that they would pay the interest on the mortgage and hold him harmless on the interest paymnets but not on the principle payments. Not indemnity against call on the mortgage so when the RR goes broke and the mortgage holders want to foreclose, tough.

And the farmer is going to lose his farm.

You would think that that could never happen again wouldn't you? You would think that.

You wouldn't think that that would happen every single time would you?

Somebody in constitutional law may have mentioned Blazedell against the Home Loan right? And mortgage foreclosure agitation during the Great Depression. But the Supreme Court said there was no emergency power and the contracts obligations not to be and you would think that at that time it hadn't happened 40 years before but you would surely think it will never happen again. But of course it's going to happen again because this is capitalism.

SO that's how it works.

And of course that's going to mean pressure on holder in due course doctrine as everybody races around and tries to prove that the holder of the securitized bond is not entitled to his money. He should have a reformation responsibility which is essentially like the responsibility of mortgage renegotiation currently equally ineffectively being talked about. Of course you don't have a national empire throwing trillions of dollars at it. But it doesn't matter whether you do or you don't. It's going to be the same problem either way.

You will have populism of two kinds: left and right. Right wing populism will have its favorite people to blame. That would be the negroes so you will get Tom Dooley and other forms of racist southern populists, the outcome of which after a time is Hewey Long and George Wallace. As the 20th c rolls along there's always somebody playing right wing southern populism which is essentially anti black in character. The left wing populism is progressive party agitation for social security and social reform and unionization and all of that. We'll talk about it.

Mr. Egan in today's NY Times is wrongly associating that with Teddy Roosevelt but that's false.

Now of course the other thing that's going to happen in a world like this where all these securitizations are being tossed around and everybody's making money off the stupidity of the farmers and we'll all get richer until it breaks, one of the things you should expect would be agreat deal of political corruption.

In order to secure for the Delacross in Milwaukee the benefit of a federal land grant to the state to be used for RR construction in Wisconsin in 1856 (I'm sticking to Wisconsin because it's nice to have it all in one closely watched cheesehead place). A fellow called Kilburn purchased at the going rate which was $10,000 each a majority of the Wisconsin legislature. Bought them outright. They had a pricetag on their forehead and he bought them. He needed the state land grant, the state had to agree that if they got the land he was going to get it so they would go to the feds and get it for him. Kilburn was investigated by a fellow called Thompson who was a Wisco state senator with a committee with relevant jurisdiction who hadn't been bribed by Kilburn. That was because he had been bribed by the other people - the Chicago RR combine that wanted the land too. So he staged an investigation of the people who had been bribed by his competitors and sent a sepoena that woul dhave required Kilburn to come and tell who he bribed and how much he paid for them which Kilburn decided he should litigate.

So he litigated to the Wisco Supreme Court against the supoena having previously bought for $10,000 justice AD Smith of the Wisco Supreme Court, a gentlement we saw in Ableman against Booth standing up for abolitionism and against the federal slaveholder power. He'd also given $50,000 to the governor. So the Wisco Supreme Court said they would quash the supoena but the US supreme Court in the case of Kilburn against Thompson reversed and established we are told in com law, the power of American legislative investigators to use supoena and to fair it out facts for the purposes of bringing truth to light and legislating justly, thouhg of course that's not what's going on in Kilburn against Thompson but don't count on the com law teacher to tell you that. It's a mafia duel. That's all it is.

Now of course there really are attempts to bring some kind of disinfection to the RR's relationship to government. The popular view, both before and immediately after the war, is that there should be advisory commissions, regulators capable of understanding all the fleetness of foot and complexity of planning of the RRs. These were primarily New England operations. It's the Puritanism. It's the Calvinist idea that you should be doing well by being virtuous rather than by being thuggish. Under the grandson of John Adams, Charles Francis Adams, the Mass commission and an Alabama state commission headed by a man called Walter Brag were relatively effective at using subtle disinfection. In early 70s in Wisco nad Illinois and Iowa in the heartland of the agricultural midwest where ther elation between the roads and the farmers had become extremely complicated, the populist movements of farmers known as Granger Halls had begun to really play some significant role in state and later national politics. Iowa and Illinois formed commisions with power to set max rates.

To conduct siginificant invcestigations into the relationship between the RR as shipper and the farmers.

NY investigation in 1879 organized by the NY Chamber of Commerce, that's really the dry goods merchants Jacob Strauss or Nate Macy. Those guys the ones who were the department store suppliers to the whole of the interior of the US. AT this moment if you're a farmer growing rich in Iowa then what you do is buy your wife this year's fashions from the NY dry goods houses. Either you ride out on the RR together and shop in NY or you even have a fashion RR express to you. So the NY retailers, you could think of them also as real estate investors - Astor, Vanderbilt - they're going to become RR people, they're very concerned about the RRs. They have the same kind of questions about the RRs that say Google has about Verizon.

They want a strong RR regulatory structure and the NY Chamber of Commerce was quite influential in setting out for the redership in Congress the general problems of the RRs.

In the Midwest this all contributes to the growht of the populist politics. The Granger movement grows directly into the PRogressive party. Its concerns are the mortgage foreclosure and the dirt of political corruption and the general ownership of government by RR capital.

IT's a democratic movement by farmers. They want to regulate the mechanisms by which farm produce is shipped and they want to control as much as they can the way in which the RRs own their business. The problem is is that the interstate commerce law makes clear that they can't reach with state government any of the activity of the RRs on the longhaul side. They can't really regulate from within the political zone of their own agitation even as voters in the state government, they can't regulate the RRs beyong the borders of the state.

But it appears after 1881 in the decision in Munn against Illinois that they can regulate the behavior of the RRs in purely intrastate shipments and they can regulate the grain elevators who are the primary interface between the RRs and the farmers and so in the first half ot eh 1880s it grows up a substantial attempt in the Midwest in the so called Granger laws to provide for significant regulation of the competitive behavior of the RRs nad hte agricultural processors.

The grain elevators are to this story what Cargill and ADM are to the present story.

But of course, they have some allies. As I've already said, they have the great retailers of NYC and they have the independent oil producers of PA who would like to be able to remain in business as independent producers though they're having their wells blown up and other kinds of thuggery directed at their workers - beatings, intimidation, raiding - and they're slowly being squeezed out as a consequence of anti competitive dealing betwen the RR and the thug blowing up their oil wells - a criminal called John D. Rockefeller who is slowly uniting oil production under the umbrella of his umbrellas of companies. He's trustifying the oil business under the name Standard Oil and he is doing so in large measure by extracting from the RRs concessionnary rates which are making it impossible for anybody to ship oil out of the fields in PA at a price that can compete with his. So slowly he is breaking them and absorbing them. And where that won't work fast enough he is employing intimidation and crime. Riches, he will say later on, are God's way of saying that my boy you have done well. And he gives away almost nothing though he leaves behind him the Riverside Church which you can go and look at any afternoon and you want to see what criminality does to itself when it wishes to grow respectable in old age.

In that context with the oil producers of western PA they would be the constituents of radical republicanism. Now we are explaining part of the deep corruption of the Grant administration. Now we are explaining how the VP of the US Skyler Colfax and Thaddeus Stevens and all those othe rPA radicals came from Gettysburg to the Riverside Church. How radicalism got corrupted because it grew in the center of the RR nightmare or dream, whichever you call it. Which is another part of how the Great Compromise of 1876 got made and federal troops got withdrawn from the South and we moved towards Jim Corw.

It's another part of how we came to be where we were. We didn't get unfreedom out of the Civil War solely because of racism. White supremacy needed what it got to be sure but so did capital.

And for those who wanted to say that there was something inherent in the relationship between capitalism and not just slavery but white supremacy, this was where to look. Of course, that's never been a safe thing to be interested in. Martin King got interested in that in 1967.

So farmers and the Granger Movement, the merchants and the oil producers and you're beginning to talk about a coalition for national RR regulation. Beginning in 1874, the House of Rep begins passing legislation calling for the creation of a national RR regulatory authority with power to set rates in interstate commerce. That gets nowhere without Senate support and in 1878 a young go ahead corrupt senator from TX named John Reagan representing a soon to exist oil business in TX begins to provide the major senate leadership for an interstate commerce authority.

In 1884, the House again passed Reagan's bill providing for a commission with power to set max rates, abate discrimination in rebates and forbid pooling and higher prices on intrastate short hauls than on interstate traffic. In 1885 with the assistance of Sen Cullen of Illinois a bill passed the senate to the same effect.

And then in 1886 the Supreme Court held in Wabash against Illinois that state short hauls could not be prevented by state legislation. In other words, overruling Munn against Illinois and holding that the interstate commerce clause prohibited even the regulation of intrastate journeys by intrastate railroads.

And in mid 87 in direct response to Wabash against Illinois, the ICA, the Interstate Commerce Act passed both Senate and House and the interstate commerce commission, which we'll deal with further later on, came into being.

But capitalism got sick in 1873. Agricultural prices around the world began to fall. The consequences in England were relatively serious. Australian history has got a little bit of this in it too and in the US German families that had moved to the midwest to grow wheat and brew beer with it began to suffer pretty hard. The family of one Louis Denvitz Brandeis is going to start having some substantial trouble in St. Louis. But of course the agricultural depression is severe throughout the US.

And RRs begin to suffer. The problem as was suggested by great and thoughtful RR executive named Alfred Fink was, as he put it, competition don't work in the transportation business. The problem is that in the transportation business you are a seller of perishable merchandise. Cubic space in a car or a seat for a passenger has no value if it isn't sold. It becomes worthless immediately. So the maintenance of scheduled service and scheduled capacity is damaging to RRs. If you can't fill the seats, if you can't fill the cars, then you go broke very quickly. In the 20th c this it the problem with our stinking airlines.

The problem from the point of view of RR operators had to be solved by pooling. That is to say by anti competitive activity designed to prevent excess capacity and rate cutting when prices are falling.

Mechanisms for the prevention of rate cutting are simply mechanisms for the creation of effective cartels and pooling, freight pooling, division of labor, agreements not to undercut one another's rates, agreements to provide interconnection to prevent the waste of rolling stock, all of this becomes the central practice of the railroads once prices begin to fall. But of course, it's hard to have cartels that are privately policed. The correct solution is to have governmnet policed cartels; hence, the so called cocoa thesis named after the Canadian left-wing historian Gabriel Cocoa who in a very brilliant doctoral dissertation in 1969 first proposed on a new view of the politica history in which the RRs of the US were seeking RR regulation after 1886 no longer really seeking to prevent it. That the real goal was to bring about an ICA that could actually support rather than hinder pools. Actively to engage the federal government in securing the very anti competitive conduct that state Granger movements were inclined to prevent.

So now, the real issue given Wabash against Illinois on the one hand and the efforts by the RRs to regulate in the interest in anti competitive price maintenance on the other is what will the federal position in respect to competition be?

Anti trust agitation is ? becomes like the desire for healthcare reform in the US at the present time?

You need a bill to go to the country with said Senator Orville Platt. What is happening here is that the Senate wishes to pass a bill against the trusts on which to go to the country. What is actually happening of course is a capitalist capturing government. Voters in a anti encumbent, anti corporate mood would like to see agitation against. They want an ICA that works in the interests of farmers and shippers rather than RRs and they want an anti trust law that will require that the trusts be busted up and that this aggregations of capital controlling the consumer market - beef, sugar, whiskey, oil, RR - all of that oligopolization of the economy somehow be reversed by the power of the state.

Sen John Sherman of Illinois if you please will become the voice of that movement but it's the US Senate so he's not actually acting in their behalf. He's acting in behalf of the people who own him. Sen Platt's correct. We're looking for a bill against the trusts on which to go to the country.

When it was said that the Sherman Act was an act for a nation of villagers it was true. IT's the nation of villagers now being precipitated into the age of mass capital seeking in law, something to control the political power of accumulated wealth.

And substantially not finding it. This is the great paradox of anti rtust as Hoffstatter points at it. The political agitation results in ineffective law. The law becomes ineffective once the politics is unimportant.

Of course, the better way for capital to mass itself such that it owns government then the people can do nothing about it would be to disappear altogether so that nobody knows it's really there. If you could contrive to own half of everything. If you could contrive to oust the bottom of the society from ownership of anything. If you could so tilt the system that there wasn't anything left for anybody but the top and then you could impose amnesia so taht nobody knew it so that nobody understood that it was there, so that you could go all the way from kindergarten's first reader through law school without ever knowing, then you would really win. Bu you could never accomplish that under 19th c conditions because you don't have TV.

So what is happening in this first half of the age of bitter irony is that the structure of law is becoming the structure of the ownership of new accumulations of capital that were never there before which are taking upon themselves whole ranges of activity ? to democratic society but entirely endorsed by democratic society. They are becoming the public ideology of the empire. They are enablign the empire and the empire that they are enabling is an empire built for them. The forces that made the war, the meaning of the war, the idea that the war had an aspiration for anothing union no longer matters. No longer relevant. And slowly the societ begins to move toward a different confrontation, one that has little or nothing to do with the freed men.

That's how it looks from the perspective of the com law teacher. In 1886 the court says the Interstate Commerce clause preempts all state legislation of the acitivities of interstate businesses and they're purely intrastate activities and partners and in 1887 it holds the Civil Rights Act unconstitutional, at least as it applies to non state actors, private public accomodations, stores, businesses, churches, school.

The power of the Congress under the 14th Amendment is slowly becoming the power to protect RR companies against state regulation. The outgrowth of the 14th Amendment is becoming Jim Crow.

Capital needs protection against democracy.

White supremacy needs protection against freedom.

And every year at the end of May when the weather gets warm they all go out and decorate the graves.

Look at the difference between what they built on Manhattan island in the 1850s or 1830s and what they built there in the 1870s and 80s. Go walk in the 20s west of 8th Ave and look at the Chelsea of the 1840s. They're not expensive houses but they're cheerful iwth front yards and big windows, brick expanses, colorful painting, simple decoration. Then go and look at the brownstones of the 1880s anywhere on the Upper West Side. Dark, funerial, cool. They're mausoleums on the street. They don't have yards, they have areas - little fenced in square asphalt lots, big high staircases leading to these tall thin cold exteriors.

We're talking about the houses of the rich those brownstones. They are not cheap construction. The city is much richer than it was 25 or 30 years before. The people who are building now are building around a Central Park which has come into existence, uprooting as you know a couple of free black communities. Two churches of free black communities in NY have been destroyed to make Central Park and it's gone from being a parade ground. Look at the original plans of Central Park sometime that called for an immense military parade ground near where the Metropolitan Museum of Art now is to being a Memorial Park full of shady lanes and rides and bridal paths. Holmstead nad Vault have done an immensely inspiring job. They have made a natural space in the middle of a city like nothing that the world has but they have also built a memorial to all the dead and if you look at all the decorations as I said last week, you'll see it very clearly. You'll see everywhere the urns and the birds of remembrance and the falling grain and all the Roman artifice of funerial decoration.

Well, it's part of the modeling. They've got lots of things in mind. They've got lots of Hudson River School paintings in mind. But that's right. The funerial elements of it isn't accidental. They know that's what they're doing. It's what you'd have to do. It's what contemporary design requires. It's why those brownstones are there.

But even as that's the subject, the war and its dead, the reality of the thing is that we're going towards here. It's the money of the RR empire flooding in.

Ir's the money generated by all those farms being foreclosed on. It's the real beginning of the idea of Wall St and Main St.

And of course, some people who got rich in the cotton business and who are now going to invest in RRs, like say the Lehman Bros or Cunelobe, they're going to be remembered for something else. They're going to become financiers. They're going to become the financial engineers of RR capitalism.

And they're going to survive 1929 and they're going to perish in 2008.

And don't worry everything is going to be just fine. Just fine. Everybody will get a job very shortly. Going back to work for the financial engineering that made this empire adn that produced this.

And why would anybody not want to be a servant of a thing like that?

See you tomorrow.


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r1 - 21 Dec 2009 - 22:11:16 - IanSullivan
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