Prophets of Regulation

Before I begin, please allow me to state, that I have never given a book review in my life. Any connection or comparison on this subject matter in relevant part to the development and implementation of U.S government regulation will be limited to New Jersey City University's political science course U.S. Government and Business and Thomas K. McCraw's, Prophets of Regulation; however, I will attempt to opinionate and structure various point of views based on articles of academic review that are cited from the internet that is consistent but independent to my critique of the text.

Thomas K. McCraw's writings in the text will reach out and grab you by your shirt. McCraw's history of government regulation of business describes the careers of four men who shaped its rationale and institutional structure.1 His biographical description of Charles Francis Adams, Louis D. Brandeis, James M. Landis and Alfred E. Kahn leaves the reader educationally informed in respect to organizing and applying government regulation while stylistically entertaining the reader.

In the first chapter Charles Francis Adams is an aristocrat born from the blue-blood line of the second President of the United States John Adams. Charles Francis Adams graduated from Harvard at the bottom half of his class. "My youth and education," Charles reflected in his autobiography, "now seem to me to have been a skillfully arranged series of mistakes, first on the part of others and then on my own part."2 Later, against his fathers wish he joins the United States Calvary in 1862. Where he rose to the military rank of colonel and led a regiment of African-American troops. After the Civil War he began his public service as writer and community advocate speaking out against the railroad industry. Already by the 1860s railroads dwarfed most other institutions in American society. At a time when the federal government employed only 50,000 civilians, railroad corporations provided jobs for many times that number.3

In 1869 Adams was appointed to the Massachusetts Board of Railroad Commissioners.

During his ten years of service:

[The] Massachusetts legislation of 1869 was inordinately short (only a few paragraphs), even for a regulatory statute. It outlined decidedly limited powers. It focused not on the agency's authority to issue orders but on the investigatory function, mandating the "sunshine" approach to regulation. Its strongest language required that corporations release information to the commissioners, "at all times, on demand.4

Adams was conscience of the fact that politics always played a role in government and business and his commission would tread softly while never giving up their autonomy to independent study and investigations.

He wrote and established policies on safety, labor, and rates of regulation.

Safety Regulation

Adams standardization and operating procedures for all states railroads was called, the "Rules and Regulations for Operating Railroads" this was adopted and embraced by both the legislature and the railroad industry. This policy on safety regulation was the result of the "Revere disaster" of 1871 where twenty-nine people died; fifty-seven injured. The "Revere disaster" of 1871 was due to the railroads industry's negligence towards safety which was the result of [a] violent rear-end collision at the Revere station, where an onrushing locomotive plowed into a stationary passenger train.5

Labor Regulation

At 4:00 P.M. on the afternoon of February 12, 1877, the 67 engineers who operated the locomotives of the Boston & Maine Rail-road walked off the job.6 The union strike was orchestrated by the leadership of Grand Engineer, P.M. Arthur because of the disagreement in a ten percent reduction in employee wages due to the depression. Adams quickly moved to adopt policy in regards to labor-management relations. However, this policy was strictly on a voluntary basis.

Adams was reasoning from a premise of attainable harmony. Under proper institutional arrangements, industrial peace would reign automatically. Conflict, more apparent than real in any case, would simply disappear, as the interest of the corporations, their employees, and the converged. Unfortunately for Adams, however, neither the legislature, the corporations, nor the union saw the issue as he proposed. The railroad companies, having routed the union, showed no inclination to offer its members a welfare program. The union itself stuck to its strike tactics, moving on to do battle in other states.7

Rate Regulation

Adams approach to rate regulation was a three pronged approach:

First, any determination of a "reasonableness" or "fairness" of rates must inescapably remain a subjective undertaking. Scientific precision in rate setting is therefore a practical impossibility. Second, the pricing function is part of corporate management, a function jealously guarded by all business executives, and with good reason. Third, the rate question directly reflects the debate over competition versus monopoly.8

Adams was always against setting rates for the same reason railroads did he believed that the market should dictate the setting of price. The commission did little to discourage consolidation they felt that the mergers and acquisition of railways would produce a more efficient marketplace.

McCraw's description of Adams and the Massachusetts commission towards implementing regulation on the Board of Railroad Commissioners and state government was based on [t]rying to supplant them, the board endeavored to enlighten, assist, and prod. Thus it sought to bend state railroad policy closer toward rationality---or at least toward Adam's particular version of what made senses.9

Charles Francis Adams grew to be recognized as both muckraker and regulator, first by educating the public through agitation then creating regulatory policies for adoption. During his retirement years in the beginning of the twentieth century he grew to be a very bitter man realizing that his work in the sunshine commission had somewhat deteriorated towards the captured regulated interests.

Louis D. Brandeis

The depiction which is written on Louis D. Brandeis by McCraw in the Prophets of Regulation shows a man of extremely high intellect, withdrawn on personal matters and incredibly shrewd on social and business issues. He is a Jewish man who despite his alienation and prejudices from the elitist bluebloods of Boston grew his law firm