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A Review of James Ely's Railroads &American Law


Friday, Jan. 25, 2002

James W. Ely, Jr., Railroads & American Law (University of Kansas Press 2001)

Show me a scholar or pundit who is all lathered up about the revolutionary impact on our legal system of some recent socio-economic development - say, the Internet or human cloning or the new world order - and I will show you a person who would benefit from the calming influence of James Ely's new history of the relationship between railroads and American law.

Ely makes no extravagant claims for the lessons to be learned from nearly two centuries of railroad enterprise and regulation. But the fundamental lesson is obvious: We've been through the revolution before, and we've survived, courtesy of the magical American mare's nest of overlapping elected lawmaking bodies, on the one hand, and the equally messy but effective American system of private enterprise, on the other.

For the rest of us, Railroads & American Law is an engaging archaeological tour - a controlled whirlwind travelling through a nineteenth century phenomenon whose impact at that time certainly equals the effects of the computer revolution in the century just past.

Railroads and Free Markets

Ely begins among the roots of the many modern legal institutions that first arose in response to the railroads (the scope of the railroads' influence is astonishing). Then he moves with impressive comprehensiveness, clarity, and speed through fields ranging from labor law to eminent domain to administrative law to antitrust.

Eventually Ely reaches the present. From that vantage point, he offers his conclusions about the relative merits of railroad regulation (and, by implication, commercial regulation in general). To support his conclusions, he examines and analyzes the roles of the numerous and various creatures that played a role in the evolution of the railroads: Presidents, governors, and mayors; federal, state, and local legislatures and courts; commissioners, arbitrators, mediators, and bureaucrats of every stripe; and the free market.

Revealing that the hero of the story is the free market will not spoil the ending. From prologue to epilogue, Ely telegraphs his preference for entrepreneurs and industrialists over lawmakers and administrators.

Indeed, the book is peppered with references to the manifold problems with government regulation in the face of Americans' "deeply engrained values of private property and free market ordering." Other values - equality, freedom of association, and a fair day's pay for a fair day's work all come to mind - are acknowledged at least implicitly, but only property and markets rate "deeply engrained" status.

Endorsing Free Markets, But Not Blindly and Without Exceptions

Ely deserves high marks for honesty and even-handedness. He makes no bones about his preference for small government and free markets, and his book is packed with evidence showing that the best efforts of well-intentioned legislators and regulators have often done more harm than good for railroads, their customers, and the public. As he gently concludes, "waves of regulation put the industry in a straitjacket and ultimately proved disastrous. Controls were invariably directed against earlier problems, and failed to anticipate future developments."

But Ely also acknowledges that private ordering has a dark side, and that in this context, at least, governments can play an important role. For example, in his discussion of race discrimination in rail passenger services and employment, Ely reports that the railroads commonly acquiesced in the "general custom of racial separation" and accommodated labor union demands for employment practices that favored whites.

Ely then concludes with a summary of the important role played by administrative agencies and the courts in combating public, corporate, and union race discrimination. He emphasizes, in particular, the impact of Brown v. Board of Education and its public transportation progeny. In this instance, it is clear the author does not take the free market as a panacea.

Similarly, Ely concedes the importance of subsidies and preferences provided to the railroads by active, interventionist government - especially state and local governments - during the birth of the railroads in the middle third of the nineteenth century. And he notes that government intervention has remained important even in recent decades, when federal and state governments have played a critical part in the preservation of passenger rail service.

A Fair Portrait of Each of the Persons Depicted

The only characters for whom Ely has harsh words are the scholars who have argued that courts and legislatures have a history of bias in favor of the railroads. According to Ely, such arguments are based on "myths," and "there is little evidence to support" them.

On the contrary, he finds, courts and legislatures "always understood that individuals and the public had rights important to safeguard," and as a result those institutions sometimes favored railroads but also sometimes favored the railroads' opponents. With legal developments subject to the relative power and "perceived needs of railroaders, shippers, workers, landowners, injured parties, and the public at particular moments," Ely concludes that "[a] quest for consistency is futile."

For Ely, then, the sweep of railroad legal history reveals a large, multi-faceted, evolving debate, characterized by complex and countervailing forces of self-interest and shifting public priorities. These forces, Ely concludes, have always jostled the railroads, but never quite derailed them, either to the left or to the right.

Ross Davies practices law at Shea & Gardner in Washington, DC, and edits The Green Bag, An Entertaining Journal of Law

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