The agents that do the work of transportation by rail are the railway
corporations. These "artificial persons" are created by the several
States and intrusted with the performance of services of a public
nature. In all the German states and to a large degree in many other
European states, the governments themselves provide the means of
transportation by rail; but in the United States the ownership and
management of the railroads is rightly regarded to be a task of
greater magnitude than the administrative department of our government
is as yet able to cope with.
The growth of the railway corporations of the United States has been
typical of the evolution of industrial organisation in this country.
The early railway corporations were small. The Philadelphia,
Wilmington and Baltimore Railroad, for instance, comprised the lines
of four companies. In 1850 the road connecting Albany and Buffalo
included the lines of seven companies. During the last fifty years
most of the small companies have united to form the corporations which
now operate our large railway systems. Though the last statistical
report of the Interstate Commerce Commission--the one for the year
ended June 30, 1896--contains financial reports from 1985 companies,
there were only 782 "independent operating roads," the remainder of
the companies being subsidiary organisations. This report shows that
forty-four of these operating companies have an aggregate mileage that
equals nearly six tenths of the total railway mileage of the United
States. Indeed, the statistician to the Interstate Commerce Commission
declared in 1894 that "over 83 per cent. of the business of the
railways and 82 per cent. of their earnings fall under the control of
less than forty associations of business men."
The Pennsylvania system affords a good concrete illustration of
railway consolidation. That corporation, with its 9000 miles of road,
was built up by the union of over 200 railroad companies, and it now
comprises within its organisation 177 corporations--most, though not
all, of which are subsidiary railroad companies. This one railway
system does one seventh of the entire freight business performed by
all the railroads of the United States and handles one eighth of all
the passenger traffic.