Exam 14: Railroads and Economic Development

Martin's research (1971)supports the claim that the Interstate Commerce Commission (ICC)was?a federal regulatory agency,The ICC was designed to capture market gains for the consumers of railroad services as well as for the railroad industrialists.

The Granger Cases of the 1870s

The Fourteenth Amendment was applied to the railroads in the Santa Clara County v Southern Pacific Railroad (1886)decision even though the original intent of that amendment had been to protect the property of former slaves.

Like the contemporary forms of transportation-airplanes,automobiles and trucks-railroads shifted from being perceived as a private luxury to a public necessity.

The Great Northern railroad was privately managed well by James J.Hill (1889)and never went bankrupt.

Modern work in economic history by people like Robert Fogel (1964)and Albert Fishlow (1965)shows

The pure competitor usually charges higher prices and offers more output than the monopolist?or oligopolist.

Fogel's (1964)work on railroads after the Civil War shows that they did not dominate the markets?for steel,coal or wood.

Charging "what the traffic will bear" was a tactic commonly pursued by American railroads before they were subjected to regulation.

Explain why profits and a positive rate of return on investment matter in any industry.Explain how they provide industrialists with the incentive to provide the services most valued by their customers.Illustrate using the experiences of the railroad industrialists.