e, rather preferred
state to centralized regulation, because of the necessary inefficiency
of the former. Inter-state railroad companies usually exercised a
dominant influence in those states under the laws of which they had
incorporated; and this influence was so beneficial to them that they
were quite willing for the sake of preserving it to subsidize the
political machine and pay a certain amount of blackmail. In this way the
Pennsylvania Railroad Company exercised a dominant influence in the
politics of Pennsylvania and New Jersey; the New York Central was not
afraid of anything that could happen at Albany; the Boston and Maine
pretty well controlled the legislation of the state of New Hampshire;
and the Southern Pacific had its own will in California. Probably in
these and other instances the railroads acquired their political
influence primarily for purposes of protection. It was the cheapest form
of blackmail they could pay to the professional politicians; and in this
respect they differed from the public service corporations, which have
frequently been active agents of corruption in order to obtain public
franchises for less than their value. But once the railroads had
acquired their political influence, they naturally used it for their own
purposes. They arranged that the state railroad commissioners should be
their clerks, and that taxation should not press too heavily upon them.
They were big enough to control the public officials whose duty it was
to supervise them; and they were content with a situation which left
them free from embarrassing interference without being over-expensive.

The situation thereby created, however, was not only extremely
undesirable in the public interest, but it was at bottom extremely
dangerous to the railroads. These companies were constantly extending
their mileage, increasing their equipment, improving their terminals,
and enlarging their capital stock. Their operations covered many
different states, and their total investments ran far into the hundreds
of millions of dollars. In the meantime they remained subject to one or
several different political authorities whose jurisdiction extended over
only a portion of their line and a fraction of their business, but who
could none the less by unwise interference throw the whole system out of
gear, and compromise the earning power of many millions of dollars
invested in other states. Moreover, they could, if they chose, make all
thi