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. [Footnote: To the
Supreme Bench.] 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."