The United States Since the Civil War Part 11

[Ill.u.s.tration: Map of the United States showing railroads in 1890]

Despite the admittedly great benefits resulting from the railroad system, there was a rising tide of complaint on the part of the public in regard to some aspects of its construction and management. It was objected, for example, that many of the western roads especially were purely speculative undertakings. Lines were sometimes built into new territory where compet.i.tion did not exist and where, consequently, the rates could be kept at a high point. The Chicago, Burlington and Quincy presented such a case in 1856. Profits were so great as to embarra.s.s the company, since the payment of large dividends was sure to arouse the hostility of the farmers who paid the freight rates.

"This, indeed," declared the biographer of one of the presidents of the road, "was the time of glad, confident morning, never again to occur in the history of railroad-building in the United States."

Sometimes lines were driven into territory which was already sufficiently supplied with transportation facilities, in order to compel the company already on the ground to buy out the new road. If, as time went on, traffic enough for both roads did not appear, they had to be kept alive through the imposition of high rates; otherwise, one of them failed and the investors suffered a loss. The opportunities for profit, however, were so numerous that the amount of capital reported invested in railways increased by $3,200,000,000 during the five years preceding 1885.

A practice which was productive of much wrong-doing and which was suggestive of more dishonesty than could be proved, related to the letting of contracts for the construction of new lines. The directors of a road frequently formed part or all of the board of directors of a construction company. In their capacity as railroad directors they voted advantageous contracts to themselves in their other capacity, giving no opportunity to independent construction companies who might agree to build at a lower cost. As the cost of construction was part of the debt of the road, the directors were adding generously to their own wealth, while the company was being saddled with an increased burden. It cost only $58,000,000, for example, to build the Central Pacific, but a construction company was paid $120,000,000 for its services. When John Murray Forbes was investigating the Chicago, Burlington and Quincy he found that the president of the road was paying himself a salary as president of a construction company, out of the railroad's funds, without the supervision of the treasurer or any one else, and without any auditing of his accounts. Moreover, six of the twelve members of the board of directors were also members of the construction company. Such an attempt to "run with the hare and hunt with the hounds" was suggestive, to say the least, of great possibilities of profit to the directors and a constant invitation to unnecessary construction.

Another grievance against the railways was the reckless, irresponsible and arrogant management under which some of them operated. An eminent expert testified before an investigating commission in 1885 that Jay Gould once sold $40,000,000 of Erie Railway stock and pocketed the proceeds himself. Most of the energy of the officers of some roads was expended in deceiving and cheating compet.i.tors. "Railroad financiering" became a "by-word for whatever is financially loose, corrupt and dishonest." If certain roads demonstrated by successful operation that honest methods were better in the long run, their probity received scant advertis.e.m.e.nt in comparison with the unscrupulous practices of their less respectable neighbors. It is to be remembered, also, that the growth of the railway system had been so rapid and so huge that it was impossible to meet the demand for trained administrators. Naturally, men possessed of little or no technical understanding of transportation problems could not provide highly responsible management.

The dishonest manipulation of the issues and sales of railroad stocks is a practice that was not confined solely to the twenty-five years after the Civil War, but the numerous examples of it which occurred during that period aggravated the exasperation which has already been mentioned. Daniel Drew, the treasurer of the Erie Railway in 1866, furnished an excellent ill.u.s.tration of this type of activity. Drew had in his possession a large amount of Erie stock which had been secretly issued to him in return for a loan to the company. The stock in the market was selling near par and still rising. Drew instructed his agents to make contracts for the future delivery of stock at prices current at the time when the contracts were made. When the time came for fulfilling his contracts, Drew suddenly threw the secret stock on the market, drove general market prices on Erie stock down from ninety-five to fifty, bought at the low figure, and sold at the high price which was called for in the contracts made by his agents. The effect of such sharp dealing on investors, the railroad or the public seems not to have entered into the calculation. Indeed, the Erie and many another road was looked upon by its owners merely as a convenient piece of machinery for producing fortunes.

Gould, Drew and other railroad men of their time were also expert in the practice of "stock-watering." This consists in expanding the nominal capitalization of an enterprise without an equivalent addition to the actual capital. The rates which the railway has to charge the public tend to increase by approximately whatever dividends are paid on the water.[1] Then, as later, when a road was prospering greatly it would sometimes declare a "stock dividend," that is, give its stockholders additional stock in proportion to what they already owned. The addition would frequently be water. Its purpose might be to cover up the great profits made by the company. If, on a million dollars' worth of stock, it was paying ten per cent. dividends, the public might demand lower freight and pa.s.senger rates; but if the stock were doubled and earnings remained stationary, then the dividends would appear as five per cent.--an amount to which there could be no objection. H.V. Poor, the railroad expert, declared before a commission of investigation in 1885 that the New York Central Railroad was carrying $48,000,000 of water, on which it had paid eight per cent. dividends for fifteen years. He also estimated that of the seven and a half billions of indebtedness which the roads of the country were carrying in 1883, two billions represented water. Others thought that the proportion of water was greater. In any case the unnecessary burden upon business to provide dividends for the watered stock was an item of some magnitude. The investor, however, looked upon stock-watering with other eyes. The building of a new road was a speculation; the profits might be large, to be sure, but there might in many cases be a loss. In order to tempt money into railroad enterprises, therefore, inducements in the form of generous stock bonuses were necessary.

The rate wars of the seventies gave wide advertis.e.m.e.nt to another aspect of railroad history. The most famous of these contests had their origin in the grain-carrying trade from the Lakes to the sea-board. The entry of the Baltimore and Ohio and the Grand Trunk into Chicago in 1874, stimulated a four-cornered compet.i.tion among these roads and the Pennsylvania and New York Central for the traffic between the upper Mississippi Valley and the coast. Rates on grain and other products were cut, and cut again; freight charges dropped to a figure which wiped out profits; yet it was impossible for any line to drop out of the compet.i.tion until exhaustion forced all to do so. A railroad can not suspend business when profits disappear, for fixed expenses continue and the depreciation of the value of the property, especially of the stations, tracks and rolling stock, is extreme.

Since the rate wars were clearly bringing ruin in their train, rate agreements and pooling arrangements were devised. The latter took several forms. Sometimes a group of competing roads agreed to divide the business among the compet.i.tors on the basis of an agreed-upon percentage. Another plan was to pool earnings at the close of a period and divide according to a prearranged ratio. Sometimes destructive compet.i.tion was prevented by a division of the territory, each company being allowed a free hand in its own field. In general, pooling agreements were likely to break down, although a southern pool organized by Albert Fink on a very extensive scale lasted for many years and was thought to have had a vital influence in eliminating rate-wars. Their efficacy depended mainly on good faith, and good faith was a rarity among railroad officials in the seventies and eighties. In the eyes of the public, rate agreements and pools were vicious conspiracies which left the rights and well-being of the private s.h.i.+pper completely out of the calculation.

Still another indictment of the railways resulted from their partic.i.p.ation in politics. It was inevitable, of course, that the roads should be drawn into the field of legislation--the grants of public land, for example, helped bring about the result. It early seemed advantageous to attempt to influence state legislatures to pa.s.s favorable laws, and it seemed a necessity to bring pressure to bear in order to protect the roads from hostile acts. The methods used by the railway agents in their political activity naturally varied all the way from legitimate agitation to crude and subtle forms of bribery. An insidious method of influencing both law-making and litigation was the pa.s.s system. Under it the roads were accustomed to give free transportation to a long list of federal and state judges, legislators and politicians. For a judge to accept such favors from a corporation which might at any time be haled before his court, and for a legislator to receive a gift from a body that was constantly in need of legislative attention is now held to be improper in the extreme.

But in those days a less sensitive public opinion felt hardly a qualm.

That the practice was likely to arouse an unconscious bias in the minds of public officials is hardly debatable. The more crude forms of bribery, too, were not uncommon. It was testified before a committee of investigation that the Erie Railway Company in one year expended $700,000 as a corruption fund and for legal expenses, carrying the amount on the books in the "India-rubber account." The manipulation of the courts of New York by the Erie and the New York Central during the late sixties was nothing short of a scandal. Alliances between political rings and railroad officials for the purpose of caring for their mutual interests were so common that reformers questioned whether the American people could be said to possess self-government in actuality. Immediately after the Civil War, Charles Francis Adams, an acute student of transportation, declared that it was scarcely an exaggeration to say that the state legislatures were becoming a species of irregular boards of railroad direction. The evils of the alliance between the roads and politics were not, of course, due entirely to the former. The receiver of a pa.s.s shared with the giver the evil of the system. Many a legislator was corrupt; more shared in practices which were little removed from dishonorable. Adams, for example, gives an account of his experiences, as a director of the Union Pacific, in dealing with a United States senator in 1884. The congressman was ready to take excellent care of railroad corporations which retained him as counsel, but was a corrupt and ill-mannered bully toward the Union Pacific, which had not employed him.[2]

The most constant grievance was discrimination--that the roads varied their rates for the benefit or detriment of especial types of freight, of individuals and of entire localities. Through business between competing points was carried at a low figure, while the roads recouped themselves by charging heavily in towns where compet.i.tion was absent.

s.h.i.+ppers complained that rates between St. Paul and Chicago, for example, where compet.i.tion existed were hardly more than half the charges to places at a similar distance where a single road was in a position to demand what it pleased. Manufacturers in Rochester could send goods to New York City and res.h.i.+p them to Cincinnati, back through Rochester, for less than the rate direct to their destination.

Yet the direct haul was seven hundred miles shorter than the indirect.

Secret arrangements were commonly made with favored s.h.i.+ppers by which they secured lower rates than their compet.i.tors. When it became evident that transportation cost entered into the price of substantially everything which the ordinary citizen consumed, and when it was considered that a slight rise in railroad rates might easily amount to a heavy tax on a s.h.i.+pper or an entire region, it was seen that uniformity of rates was a matter of the utmost concern.

In brief, then, it was complained that the growth of the transportation system had placed enormous power in the hands of a small group of men, many of whom had indicated by their selfishness, arrogance and questionable practices that they ought not to be entrusted with so great a measure of authority.

The best example of the American railroad president after the war was Commodore Cornelius Vanderbilt. Vanderbilt began his career by ferrying pa.s.sengers and freight between Staten Island and New York City. Later he turned his attention to s.h.i.+pping, in which he made a fortune, and planned the operation of steams.h.i.+ps on a large scale.

Becoming interested in railroading, he clearly perceived the importance of the western trade and the necessity of consolidation.

Vanderbilt was a man of vision, a man who combined magnitude of plan with the vigorous grasp of the practical details necessary for the realization of his ambitions. He was buoyant, energetic, confident, ambitious, determined, despotic. Unhampered by modern conceptions of public duty, undeterred by the hostility of powerful opponents, with eyes fixed upon the combination and control of a great transportation system, Vanderbilt entered courageously upon bitter struggles for supremacy which involved the misuse of the courts, the control of the New York state legislature and a thousand charges of corrupt influence and bribery, but he welded railroads together, replaced wood and iron with steel, and constructed tracks and terminals. At his death in 1877 he left a huge fortune and bequeathed to his successors a great, consolidated railroad enterprise, skillfully and successfully administered. The great weakness of Commodore Vanderbilt and his a.s.sociates, and of those who later imitated his work was their fundamental conception of the railroad as a private venture. Success consisted in bigness, great profits, crus.h.i.+ng or buying out compet.i.tors, and administering the business for the best good of the few owners, regardless of the interests of the region through which the railway pa.s.sed. Vanderbilt and many of his contemporaries were men of business sagacity and foresight, but their ethical outlook was restricted and their sense of public responsibility not well developed.

So considerable a list of grievances naturally bestirred the people to seek relief at the hands of their legislators. Two lines of action were followed. In Ma.s.sachusetts, as early as 1869, a state commission was formed with purely advisory powers. Under the able leaders.h.i.+p of Charles Francis Adams it attained great influence and worked effectively for the elimination of railroad abuses through conference and the weight of public opinion. In Illinois, on the other hand, reliance was placed upon compulsory action. The state const.i.tution of 1870 declared the railroads to be public highways and required the legislature to fix rates for the carriage of freight and pa.s.sengers, and to pa.s.s laws to correct abuses connected with the railways and grain warehouses. In compliance with the const.i.tution the state pa.s.sed the necessary legislation and placed their execution in the hands of a commission with considerable power. Other western states followed the Illinois model.

On the national scale the agitation for government action began with the minor parties. In 1872 the Labor Reformers demanded fair rates and no discrimination; in 1876 the Prohibitionists called for lower rates; in 1880 the Greenbackers stood for fair and uniform rates; four years later they urged laws which would put an end to pooling, stock-watering and discrimination, and in the same year the Republicans promised an act to regulate commerce if they were elected.

The most effective force behind the demand for railroad regulation was the Patrons of Husbandry, better known as the "Grange." This society was founded by O.H. Kelley, a government clerk in Was.h.i.+ngton, in 1867.

Its initial purpose was the organization of the agricultural cla.s.ses for social and intellectual improvement, but later it engaged in the effort to correct transportation abuses and to arouse cooperation among the farmers in other ways. The movement grew astonis.h.i.+ngly, especially in the Middle West, where its members.h.i.+p reached nearly 759,000 in 1875.

Transportation conditions in the West had not reached the relatively stable situation which characterized those of the East. In the West much new work was being done, with the attendant evils of construction companies and unnecessary and speculative undertakings. Much of the railroad stock was in the hands of eastern investors whom the western farmers pictured as living in idle ease on swollen incomes, careless of the high rates and unfair discriminations under which the farmer groaned. The constantly falling prices, which influenced the West in so many other ways, served to heighten the discontent with any abuse which increased the farmer's burden. Moreover, the western states had contributed huge amounts of land to help build the railways and they were not minded to give up the hold which their generosity had justified.

Impelled, then, by such force as the Grange and similar organizations supplied, the western states proceeded to the adoption of laws whose purposes ordinarily included railroad rate-making by the legislature or by a commission, the doing away with such abuses as discrimination, and the prohibition of free pa.s.ses. The railroads promptly opposed the laws and carried the battle to the courts. The so-called "Granger Cases" resulted. Three of these were representative of the general trend of the decisions.

The famous case Munn _v._ Illinois, which was decided by the Supreme Court in 1876 was possibly the most vital case in the history of the regulation of public service corporations after the Civil War. The legislature of Illinois, in conformity with the state const.i.tution of 1870, had pa.s.sed a law fixing maximum charges for the storage of grain in warehouses. The owners of a certain warehouse refused compliance with the law on the ground that it was contrary to the Const.i.tution and hence null and void. They argued that when the state fixed rates it deprived the owners of the right to set higher charges and so, in effect, deprived them of their property, in defiance of that portion of the Fourteenth Amendment forbidding a state to "deprive any person of life, liberty, or property, without due process of law."

On examination of the history of the control of such enterprises, the Court found that it had been customary in England for many centuries and in this country from the beginning, to regulate rates on ferries, charges at inns, and similar public enterprises, and that it had never been thought that such action deprived persons of property without due process of law. In other words, the established common law, at the time of the pa.s.sage of the Fourteenth Amendment, did not look upon rate regulation as a deprivation of property. The Court, therefore, declared the Illinois warehouse law const.i.tutional, and in doing so made the following statement:

Property does become clothed with a public interest when used in a manner to make it of public consequence, and affect the community at large. When, therefore, one devotes his property to a use in which the public has an interest, he, in effect, grants to the public an interest in that use, and must submit to be controlled by the public for the common good, to the extent of the interest he has thus created.

While the Munn case was before the Court, the case Peik _v._ the Chicago and Northwestern Railway Company was raising a question which struck at the heart of the chief practical impediment in the way of state control of transportation. The central question in the litigation was whether the legislature of Wisconsin could lawfully regulate rates on railroads inside the state. Since the bulk of the traffic on most roads crosses state borders at one time or another in its transit, the regulation of rates within a state normally affects interstate commerce. But the regulation of interstate commerce is vested in Congress by the terms of the Const.i.tution. The railroad was quick to take advantage of the division of power between the states and the nation. Indeed, when fighting state legislation, the roads earnestly emphasized the exclusive power of Congress over interstate commerce; but when fighting national regulation, they equally deprecated any interference with the reserved rights of the states.

Acting in accordance with its established practice, the Court decided that the state was authorized to regulate rates within its borders, even though such regulation indirectly affected persons outside, until Congress pa.s.sed legislation concerning interstate commerce. Obviously this decision allowed the states to work out their railroad problems unhampered, and const.i.tuted one of the chief victories for the Grangers.

In 1886, however, the Court overturned some of the principles which had been established in the Munn and Peik cases. The new development came about in connection with the Wabash railroad. It appeared that the road had been carrying freight from Peoria, Illinois, to New York for smaller rates than were charged from Gilman to New York, despite the fact that Peoria was eighty-six miles farther away. Since Illinois law forbade a road to levy a greater charge for a short haul than for a long one, a suit was inst.i.tuted and carried to the Supreme Court.

The company held that the Illinois legislation affected interstate commerce and hence trenched upon the const.i.tutional power of Congress.

This time the Court upheld the road. It decided that the transportation of goods from Illinois to New York was commerce among the states, that such commerce was subject to regulation by Congress exclusively, and that the Illinois statute was void. It seemed, then, that state regulation was a broken reed on which n.o.body could safely lean, and attention thereupon turned to the federal government.

Congress had already been discussing federal regulation intermittently for some years. The so-called "Windom Report" of 1874 had advised federal construction and improvement of transportation facilities in order to lower rates through compet.i.tion, but no action had resulted.

In 1878 the "Reagan bill" had proposed government regulation, and from that time the subject had been almost continuously before Congress. In 1885 the Senate had appointed a select committee of five to investigate and report upon the regulation of freight and pa.s.senger transportation. The committee was headed by Shelby M. Cullom, who had been a member of the legislature of Illinois and later governor, in the years when the railroad and warehouse laws were being put into effect. It endeavored to discover all shades of opinion by visiting the leading commercial centers, and by consulting business men, state commissioners of railroads, Granger officials and others. After a somewhat thorough investigation, the committee expressed its conviction that no general question of governmental policy occupied so prominent a place in the attention of the public as that of controlling the growth and influence of corporations. The needed relief might be obtained, the committee thought, through any one of four methods: private owners.h.i.+p and management, with a greater or less degree of government oversight; government owners.h.i.+p and management; government owners.h.i.+p with private management under public regulations; partial state owners.h.i.+p and management in compet.i.tion with private companies. The widespread opposition to state owners.h.i.+p of railroads, the commission thought, seemed to point to some form of government regulation and control of the existing situation.

Impressed with the magnitude of the abuses involved, and the hopelessness of regulation through state laws, the committee presented a bill designed to bring about regulation on a national scale through a federal agency. The resulting law was the Interstate Commerce Act of February 4, 1887. It provided that all railway charges should be reasonable and just; forbade the roads to grant rebates, or to give preferences to any person, locality or cla.s.s of freight, or to charge more for a short haul than for a long one except with the consent of the proper authorities; it made pooling unlawful; and it ordered the companies to post printed copies of their rates, which were not to be altered except after ten days' public notice. The act also created an Interstate Commerce Commission of five members to serve six-year terms, into whose hands the administration of the measure was placed.

Persons who claimed that the railways were violating the provisions of the law could make complaint to the Commission, or bring suit in a United States Court. In order that the Commission might know the condition of the roads, it was given power to call upon the carriers for information, to demand annual reports from them, and to require the attendance of witnesses. If the railroads refused to carry out the orders of the Commission, they could be brought before a United States district court.

In forbidding pools, the Act committed the railroads to the policy of enforced compet.i.tion, a policy which was commonly accepted at the time as the best one for the public interest. Such experts, however, as Professor A.T. Hadley and Charles Francis Adams, Jr., raised important objections. They cited the rate wars to indicate the results of compet.i.tion and declared that railroads ought to be monopolies. If two grocery stores are established where trade enough exists for only one, they a.s.serted, the weaker compet.i.tor can close his doors and the public loss is not heavy; but in the case of the railways a weak compet.i.tor must continue business even at disastrously low rates because all his interest charges continue and the depreciation on his property is extreme. The construction of an unnecessary road and its subsequent operation at a loss, its failure or its abandonment, const.i.tute a great drain upon the public. Such objectors contended that pooling combinations did away with many of the evils of cut-throat compet.i.tion, and they accordingly urged that the carriers be permitted to make such arrangements, under whatever government regulation might be needed to prevent unreasonable charges. By such means the available business of a region might be fairly divided among the roads entering it, without resort to compet.i.tive rate-cutting and its consequent evils.

The pa.s.sage of the law was looked upon with much hostility on the part of the railroad interests. James J. Hill thought that the railroads might survive, although the country would be ruined, and he predicted that Congress would shortly be called in special session to repeal the act. More important than mere hostility was the constant opposition and evasion which characterized the att.i.tude of the carriers toward the operation of the law. Discriminations were commonly practiced and hidden away in accounts under false or misleading headings. Rebates were given and received, a fact which was due in no small degree to the s.h.i.+ppers themselves. A large s.h.i.+pper might demand advantageous rates and threaten to turn his trade over to a rival road. As the arrangement would be secret, and the likelihood of discovery small, the temptation to break the law was correspondingly great.

The good results of the pa.s.sage of the law were disappointingly slight. To be sure, the Commission was gaining experience, administrative precedents were being established and injustice was somewhat less common than before. The first chairman was Judge T.M.

Cooley, a noted lawyer whose appointment was considered an admirable one. Most important of all, the principle of government regulation was established. Nevertheless, progress was so slow as to be almost invisible. The courts hampered the activities of the Commission. When cases arose involving its decisions, they allowed a retrial of the entire case from the beginning, permitting the introduction of facts which had been designedly withheld by the carriers in order to undermine the influence of the Commission, and sometimes they reversed its findings and so dulled the effectiveness of its labors. Eleven years after the Act was pa.s.sed the Commission declared that abuses were so constant that the situation was intolerable; a prominent railroad president made the charge that "good faith had departed from the railway world"; and an important authority on railroad affairs declared that the Commission had become an impotent bureau of statistics.

BIBLIOGRAPHICAL NOTE

More study has been made of railroad regulation and the technical side of railroading than of the history of transportation and the effects of the roads on the political and economic life of the people. An excellent single volume is John Moody, _The Railroad Builders_ (1919), which devotes attention to the important personages of railroad history, discusses the growth of large systems and contains valuable maps; the best concise account of the history of the railways is W.Z.

Ripley, _Railroads: Rates and Regulation_ (1912). Chap. I; W.Z.

Ripley, _Railway Problems_ (rev. ed., 1913), is reliable; E.R. Johnson and T.W. Van Metre, _Principles of Railroad Transportation_ (1916), has some excellent chapters and several informing maps; C.F. Carter, _When Railroads were New_, (1909), is a popular account; C.F. Adams, _Chapters of Erie_ (1886), exposes early railroad practices; H.G.

Pearson, _An American Railroad Builder_ (1911), presents the career of J.M. Forbes as a railroad president; A.T. Hadley, _Railroad Transportation_ (1886), is a cla.s.sic, early account. Consult also E.R.

Johnson, _American Railway Transportation_ (1903); Frank Parsons, _Heart of the Railroad Problem_ (1906); C.F. Adams, Jr., _Railroads: Their Origin and Problems_ (1878, rev. ed., 1893); "A Decade of Federal Railway Regulation," in _Atlantic Monthly_ (Apr., 1898). On the personal side, the following are valuable: E.P. Oberholtzer, _Jay Cooke, Financier of the Civil War_ (2 vols., 1907); J.G. Pyle, _Life of J.J. Hill_ (2 vols., 1917); _Memoirs of Henry Villard_ (1909). On the subject of land grants and regulation: L.H. Haney, _Congressional History of Railways_ (2 vols., 1910); S.J. Buck, _The Granger Movement_ (1913), and the same author's _The Agrarian Crusade_ (1920), are best on the relation of unrest among the agricultural cla.s.ses to the railroad problem. The "Cullom Report" is in Senate Reports, 49th Congress, 1st session (Serial Number 2356), in 2 vols., and is a mine of information on early abuses. The most important Granger cases are in _United States Reports_, vol. 94, p. 113 (Munn _v._ Ill.), and vol.

118, p. 557 (Wabash case).

[1] For example, an investor might contribute $100 in cash to an enterprise. The "paid in capital" or "actual" capital would, then be $100. He might receive in return $100 in stock and $100 in bonds, in which case the "nominal capital" would be $200; the additional $100 would be "water." If the enterprise paid interest on the bonds, and dividends on the stock, it would, of course, be paying a return on the water. The practice of stock-watering did not end with the days of Gould and Drew.

[2] In this connection Professor Farrand mentions the statement of a railroad magnate that "in Republican counties he was a Republican, and in Democratic counties he was a Democrat, but that everywhere he was for the railroad." _Development of the United States_, p. 290.

CHAPTER X

EXTREME REPUBLICANISM

That the election of 1888 differed from its predecessors since 1865 was due chiefly to the independence, courage and political insight of President Cleveland. Hitherto campaigns had been contested with as little reference to real issues as conditions rendered possible.

Neither party had possessed leaders with sufficient understanding of the needs of the nation to force a genuine settlement of an important issue. That 1888 saw a clear contest made it a memorable year in recent politics.

It will be remembered that the tariff act of 1883 had been satisfactory only to a minority in Congress, because it retained the high level of customs duties that had been established during the Civil War. The congressional election of 1882 had resulted in the choice of a Democratic House of Representatives and had offered another opportunity for downward revision. Early in 1884, therefore, William R. Morrison presented a bill making considerable additions to the free list and providing for a "horizontal" reduction of about twenty per cent. on all other duties as levied under the act of 1883. The measure was defeated by four votes. Opposed to it were substantially all the Republicans and forty-one Democrats, most of them from the industrial states of New York, New Jersey, Pennsylvania and Ohio. The Democratic tariff plank of 1884, as has been seen, was practically meaningless, but the election of Cleveland, and the choice of a Democratic House gave another opportunity for revision. Again Morrison attempted a reduction, and again he was defeated by Samuel J. Randall and the other protectionist Democrats.

The entire matter, however, was about to receive a new and important development at the hands of President Cleveland and John G. Carlisle, who was the Speaker of the House during the four years from 1885 to 1889. Carlisle was a Kentuckian, a man of grave bearing, unflagging industry and substantial attainments. His tariff principles were in accord with those of the President, and his position as Speaker enabled him to determine the make-up of the Committee on Ways and Means, which would frame any tariff legislation. Cleveland had expressed his belief in the desirability of tariff reduction in his messages to Congress of 1885 and 1886, basing his recommendations on the same facts that had earlier actuated President Arthur in making similar suggestions. His recommendations, however, had received the same slight consideration that had been accorded those of his Republican predecessor. He therefore determined to challenge the attention of the country and of Congress by means of a novel expedient.

Previous presidential messages had covered a wide variety of subjects--foreign relations, domestic affairs, and recommendations of all kinds. Departing from this custom, the President made up his mind to devote an entire message to tariff reform. His project was startling from the political point of view, for his party was far from being a unit in its att.i.tude toward reduction, a presidential campaign was at hand, and the Independents, who had had a strong influence in bringing about his success in 1884, sent word to him that a reform message would imperil his chances of re-election. This type of argument had little weight with Cleveland, however, and his reply was brief: "Do you not think that the people of the United States are ent.i.tled to some instruction on this subject?"