Tariffs, rail rates and social welfare in the USA, 1887-1914

Abstract

Purpose This study aims to explain how the Interstate Commerce Commission (ICC) used its power over rail rates as part of an effort to promote the growth of economically underdeveloped regions of the USA. This was accomplished by subsidizing shipments of food and fuel staples to major domestic and world markets and by offsetting the burden of high protective tariffs through low transportation rates on imported goods, from its inception in 1887 until the disruption of ocean transport with the outbreak of First World War in 1914. Design/methodology/approach Through examination of contemporary ICC studies and cases, this study shows how the ICC condoned rate practices that promoted the socioeconomic welfare of sparsely populated regions primarily in the Southern and Western USA. Findings The study illustrates that the ICC facilitated exports by authorizing rates that subsidized the transport of overseas food and fuel staples from the interior while at the same time allowing preferential rail–sea contracts on imports that partially offset the burden of protective tariffs on these regions. The focus on regional social welfare within the ICC largely ended by 1914, with the end of protective tariffs and the start of First World War. Originality/value This new interpretation explains how international trade patterns in the USA were influenced in significant ways by the ICC to achieve regional social welfare objectives and to promote greater national economic integration.

Accounting as a social practice: US railroad regulation, value of service accounting, and regional economic development

“…Much of the historical literature relating to accounting’s role in social rationalization has concentrated on two issues. One area involved extending our understanding of how accounting knowledge may be used to exercise organizational power (Chiapello and Baker, 2011; Collier and Miranti, 2020; Hoskin, 1998; Hoskin and Macve, 1996; Loft, 1986; Lowe and Tinker, 1977; Miller and O’Leary, 1987; Miranti, 1989; Raffnsøe et al, 2017; Tinker et al, 1982; Tinker and Neimark, 1988; Tyson et al, 2004). A second line of research evaluated how accounting practices have influenced government processes, especially concerning the issues of regulatory capture and ineffectiveness raised by political scientists Marver H. Bernstein and Gabriel Kolko (Acikgoz, 2015; Baker and Quéré, 2014; Bernstein, 1955; Bowden, 2015; Chatov, 1975; Cortese, 2011; Deringer, 2018; Doron, 2016; Kolko, 1965; Kracman, 2019; Martin, 1971; Merino and Mayper, 2001; Merino and Neimark, 1982; Radcliffe et al, 2017; Sivakumar and Waymire, 2003; Soll, 2014; Stevenson-Clarke and Bowden, 2018).…”

“…Like the contemporary Frankfurt school, the ethical historicists believed that studying the past could help to identify social conditions requiring remediation through government action. This viewpoint differed greatly from the classical economics and laissez faire capitalism that had long predominated in the Anglo-American world (Collier and Miranti, 2020; Donleavy, 2019; Furner, 1975).…”

“…Initially defined by Henry Clay and based on the ideas of Alexander Hamilton, this system of beliefs was concerned with raising the nation’s economy to a level equivalent to Europe’s economies. In the post-Civil War period, these ideas were popularized by contributors like economist Henry C. Carey and German-American railroad developer and social theorist Friedrich List (Carey, 1867; Collier and Miranti, 2020; List, 1885). One aspect of the American System involved imposing high national tariffs to protect the development of infant industries.…”

“…Thus, agencies like railroads were key elements in maintaining national living standards through their impact on distribution costs for food and fuel staples. In his book The Science of Finance , Adams developed the view that much of the economic burden of the nation’s industrialization would initially be borne by agriculture because of the government’s imposition of high tariffs on imports to protect emergent domestic industries (Adams, 1898; Collier and Miranti, 2020). However, through the subsidization implicit in the value of service rates, the ICC sought to offset some of the disadvantages from high tariffs affecting agriculture and extractive industries, especially in underdeveloped interior regions of the US.…”

“…The Senate became increasingly reflective of the concerns of Western interests when all thirty-eight new members added to its ranks from 1852 to 1912 came from the pioneering Central and Western states. This political bloc shared a common desire with the twenty-two representatives from the South to advance transportation policies advantageous to constituent agricultural and extractive industries (Collier and Miranti, 2020).…”