As any viewer of the British Channel 4 Time Team series will have noticed, almost everywhere below Hadrian’s Wall that the archaeological team digs, they have a fair chance of finding an Imperial Roman road, or a local road leading to it. The Romans were great engineers and road builders (and not just in Britain). Roman roads were all about political control and moving armies, and later kings were not ignorant of the connection, nor were republics and democracies. Everywhere, ruling classes and states have spotted the obvious advantages of controlling peoples’ movement and communications. The royal road is also the post road, and road intersections are good points for collecting revenue. Roads are a perfect example of Murray Rothbard’s very promising notion of “command posts,” that is, “vital nerve centers” of society which the state seeks to own or monopolize.
In The American Story (1955), Old Right author Garet Garrett, a rather strict American nationalist, took a coldly political-economic view of the geographical logic of 19th-century American transportation systems. By themselves, cheap land, canal projects, and the onrushing tide of homesteaders would have yielded two increasingly separate economic-geographical entities: the Atlantic-Appalachian and Appalachian-Mississippian. Fortunately, he thought, practical politicians and enterprisers saved America from Balkanization, arising from water routes and steamboats, by deliberately building an east-west transportation network. Railroads and the telegraph made continental political unity possible. In contrast, Albert Jay Nock wrote (approvingly) in 1935 that had natural, unsubsidized homesteading directed American expansion, “our western frontier would not yet be anywhere near the Mississippi River.”
And there was a downside or two to better roads and railroads. Following hard upon the Jacobite rising of 1745, the English crown chose to create, in Paul Mantoux’s words, “a complete system of well-kept roads ‘proper for the passage of troops, horses, and carriages, at all times of the year.’” Economist Gerald Gunderson has noted the impact that better canals, steamboats, and roads had on the American war of 1861–1865, relative to the poor transportation on hand during America’s Revolutionary War. In the later war, bigger armies could maneuver around, permitting bigger battles and (probably) greater destruction. In that war railroads played a secondary role, Gunderson notes, but their future military potential had been shown. In Europe, World Wars I and II realized it (and what a success). Capt. Basil Liddell Hart has described how Russia’s hopelessly bad roads worked as a military asset against invading German forces in the Second World War.
Know-all, grab-all, and rule-all
If memory serves, it was around 1977 when we first heard rumors of GPS. Car manufacturers were about to install marvelous devices to ensure your rescue if you ran out of gas in the Mojave Desert. Wonderful, but drawbacks loomed. In 2001 French urbanist Paul Virilio could flatly call GPS a “form of sovereignty,” as revealed by the U.S.-NATO bombing campaign in Kosovo. He meant something like this: with total knowledge comes (the illusion of) total power.
Here we crash into the modernist idea that if the state (or other gifted elite) organizes social space according to a rational grid or under an all-seeing Panopticon, life will be better. Anyone who qualifies can play this game. Just as there are state capitalists who want to engross all the wealth in the world, so too are there political and military leaders who want all imaginable power, lethality, and control, and, finally, intellectuals who want all imaginable real-knowledge (which rests, apparently, on the boring old laws of physics).
Imagine a tight-knit alliance of those three kinds of extremist, overseen by the state, and you have a key to the age. Taking our cue from Georges Dumézil, these insane aspirations constitute the great “sins” of three estates: the producers, the warriors, and the priests (= intellectuals). Sir Francis Bacon’s famous power/knowledge program integrated those goals and promised massively greater wealth, power, and practical science, albeit at the modest price of completely remodeling society and humanity. In the name of transparency these people should form a Trifunctional (referring to the Three Estates) — and not a Trilateral — Commission. Transcending their long-standing demands for an Open Door, current U.S. policymakers recklessly pursue their Griff nach der Weltmacht (grab for world power): total worldwide economic, military, and ideological power; and that last item now entails their “right” to know about everyone and everything on the planet.
19th-century American transportation follies
Restricting ourselves here to transportation, let us examine how such economic, political-military, and ideological actors interacted in one political space and time. Adam Smith’s famous dictum — “that the division of labor is limited by the extent of the market” — apparently led a good many 19th-century liberals to conclude that widening markets by any means (including state subsidies) was good — even better if they themselves profited. The early 19th-century American canal mania is a case in point. The enormous debts heaped up thereby in the states briefly discouraged boomers and projectors, but by mid century, as railroads came into view, a new projecting, subsidizing, and swindling mania took hold in the states and (not least) in Congress. The implicit slogan was “Build it, and they will compete within it.” Building railroads on state and federally owned land with generous government loans and other favors bespoke the real (applied) American notion of “laissez faire.” Partisan clashes alleged to be “about” slavery derailed transnational railroad projects into debates about northern versus southern routes and threw the fate of Kansas and Nebraska into the fray.
In 1862, with Southern congressional delegations sitting elsewhere, the U.S. Congress acted on its wisdom and, choosing both routes and future public beneficiaries, created the Union Pacific corporation outright to build eastward and chartered the already existing (on paper) Central Pacific to complete the route from the West. (The Southern Pacific came along a bit later.) Like the war, these iron turnpikes were meant to unite all the states from the Atlantic to the Pacific.
Profits for some
And so from 1862 forward, “railroads defined the age,” as historian Richard White writes in Railroaded: The Transcontinentals and the Making of Modern America (2011). That is entirely true, but (very important) they began their career just when Northern war contracts built up a cadre of sharp operators drawn mainly from Greater New England. Many of these war-borne capitalists climbed aboard the locomotive of history. Jay Cooke famously mass-marketed U.S. government war bonds to small investors, giving new meaning to the term “stock jobbing.” Naturally, he took up railroad finance, and Herman Melville’s Confidence Man (1857) stalked the land.
Big money could be made from overcapitalized and heavily indebted railroads. The same men would sit, interlocking and overlapping, on the corporate boards of various railroads, banks, and insider-controlled construction companies (so one hand could overpay the other), as their conflicts of interest stretched heavenward. This was no problem: dancing with themselves, they couldn’t lose. Trickery with bonds and stock issues abounded — water in, water out – and, as White puts it, stockholders’ “reports” ranked among the great works of 19th-century fiction. Ocean transport remained more efficient, and transcontinental traffic was worth little on overbuilt lines — hence more building. In the real competition for political assistance, a future “exclusive right to build” outweighed having a real railroad that moved anything. Worse, these highly “leveraged” railroads arose in a deflationary economy, which in practice meant that bankers liked to lend paper and get gold in return, thereby earning double (or more) interest. The transcontinental railroads largely enriched promoters, owners, and insiders.
As Nock told us in 1935, railroads were not about transportation but financial politics. To that end railroad men bought newspapers and “reformers” and fielded mighty lobbies to purchase congressional votes in bulk. As White says, railroads dictated the “terms of [all other] competition.” Yet railroad companies were not modern, rational corporations, and corporate failure was just fine for owners and insiders, whose money was elsewhere. The railroads’ organizational charts meant little, and their generally crooked managers hardly made good bureaucrats, as Charles Francis Adams, president of the Union Pacific from 1883 to 1890, learned when he tried to oversee them. (Through it all Adams, a former Union officer, took the Union Army as his organizational model but could never fully implement it.)
In extremis railroad supporters developed new, apologist economic theories to cope with railroad-generated problems. Among them was Adams — a modernizing, liberal (in the positivist, Auguste Comte mode). White dryly suggests that by ignoring speculation and corruption, some of these apologists’ theories fell rather short.
Restructuring American life
It should be plain that profits for railroad boondoggles directly implied losses for others, losses that were not merely monetary. Thus space became political as railroads made cities “nearer” to each other than to their own hinterland. They measured space by speed and then by cost. Much like Edmund Burke’s “sophisters, economists, and calculators,” railroad functionaries reduced local knowledge to mere numbers. Geography became “absolute space”: ordered and controlled, it imposed on Americans a new life space.
Seeing like a railroad was seeing like a state. Travel calculated in hours/costs created relational space. Aiming at the maximum number of maximally loaded railroad cars, operating with the lowest costs and highest levels of traffic possible, railroad calculators brought forth considerable economic instability and life-threatening practices. Railroad timetables and rates could make nearby places distant, so that a straight line was not always the shortest distance. Railroads discriminated among commodities they carried, and as long-haul rates declined, they made up for losses through higher short-haul rates. Given state-subsidized money-oriented disorder on a new scale, sheer “ineptitude” (as White says) was often compatible with high profits.
Given how much seemingly arbitrary railroad rates affected other industries, “radicals” demanded fair, uniform rates. Instead, railroads “calculated,” by trial and error, the maximum prices they could charge per commodity without reducing volume (bringing to mind Oskar Lange’s proposals for calculation under “market socialism”). In California, where railroads were particularly unneeded, railroad price strategy effectively suppressed much river shipping. The Southern Pacific railroad paid the Pacific Mail steamboat company to raise its prices, diverting traffic to the railroad. Here railroad “tariffs” really were tariffs.
Damage to American law
Among other losses imposed on Americans in aid of railroads, corporate personhood stands out. The U.S. Supreme Court invented it, by assertion, in Santa Clara v. Southern Pacific Railroad (1886). When the railroads got into trouble, White writes, “The law preserved insolvent railroads as corporate zombies” and “made the managers the receivers.” Restructuring saved the railroads and sidelined their creditors. The idea that individual workers could really “bargain” with large corporate persons seemed increasingly implausible, outside the courts, which invariably treated corporations better than unions. (They had not “incorporated” themselves correctly.) Richard Olney, railroad-friendly U.S. attorney general, used the Pullman (and related) strikes of 1894 as an occasion to provoke railroad workers’ unions and crush them with federal intervention. Technicalities about “protecting the mails” and the federal courts’ sudden constitutional discovery involving injunctions finished the job.
The losers rally
An anti-monopoly movement of Grangers and belated Jacksonians soon sprang up. Opponents of the (government-fostered) railroads, they restated the old republican theorem on the relationship between widely distributed property and independent citizens. Angry farmers organized the Farmers Alliance and poured into the Populist movement. Populists also included craftsmen and other small-scale enterprisers, and Populist leaders were often prominent local businessmen.
Obviously railroads had a much more direct impact on the thousands of railroad workers, who began organizing brotherhoods, or unions, that briefly coalesced with the Knights of Labor. The brotherhoods contended with railroad managers over arbitrary rules versus workers’ learned practices, miles versus hours as the basis of pay, and safety — inasmuch as railroad work could be very deadly. Their “producerism,” which derived from American republican theory, allied them with the anti-monopoly cause. (The Chinese Question, racism, et cetera cut across these issues.) By the late 1880s railroads grew stronger vis-à-vis workers, achieving “legitimate violence” and turning anti-monopoly rhetoric against unions.
Critics stressed that railroad rate discrimination violated established common-carrier theory. Railroad economic theorists countered by making competition the enemy, insisting that railroads were natural monopolies. Over time, some reformers began to distinguish “good” railroads from bad, and those reformers and railroads converged on federal regulation. Railroads could abide friendly regulation under flexible statutory language involving vague standards of “reasonableness.” For them, the key question was who would control the regulatory agencies. In practice, cozy relations between the railroads and the new Interstate Commerce Commission (1886) quickly emerged. Bankers, previously complicit enough in railroad fraud, eventually tried to rein in the iron horses and make them as “honest” as they were. Railroad owners went on borrowing, building, and borrowing again to postpone any reckoning.
Social costs of railroad mania
Railroads could move troops and supplies, which made the state happy. Transcontinental railroads enriched promoters, owners, and insiders, which made them happy. The western railroads were so premature and overextended that they had to recruit their own settlers and customers, adding to an already existing wave of land speculation. Railroads speeded settlement and control of the West while fostering farm, cattle, and mining overproduction. They hastened assaults on Indian lands and the destruction of the bison. With keen insight, White sees the destruction of southern cattle during the Civil War as the essential precondition of the famous western cattle drives, which railroads further enabled.
For farmers the final blow came after the Panic of 1893, when corn and wheat prices began falling faster than freight rates. White finds no support for Joseph Schumpeter’s claim that American railroading constituted “creative destruction” somehow excusable in the end. White adds that in conventional assessments of the social costs of American railroading, higher land values (i.e., real-estate prices) serve as a proxy for social benefits. (That is almost as convincing as the argument that higher rents vindicate English Enclosures, i.e., not very.) As for Americans en masse, White concludes that, separating income from property (rents, stocks, and bonds “owned in the East”), almost everyone suffered losses except for railroad owners, insiders, and promoters.
The railroad moguls had their goals, and the military-political estate had others. Between them they built an iron cage and ordered Americans to live in it. Railroads as such did not entirely destroy American localism and human-scale life. The completion of that task was left to the automobile, indirectly subsidized from as far back as the Wilson administration. (See Kevin Carson, “The Distorting Effects of Transportation Subsidies,” The Freeman, October 22, 2010; https://bit.ly/1j7HCMY.)