Albro Martin's Enterprise Denied

Abstract

* This volume,' a recent doctoral dissertation in history at Columbia, is an effort to identify the origin of the decline of the railroads in the expansion of the Interstate Commerce Commission's statutory body of authority in the Progressive period, and in the Commission's policy toward overall rate increases between 1910 and 1914. Specifically, Martin argues that the Hepburn Act of 1906 and the Mann-Elkins Act of 1910 represented a triumph of archaic Progressivism; that the two acts, through establishing maximum rate regulation and investigation-and-suspension procedures in rate actions, made possible a depression of the railroads' rate of return and induced a capital starvation after 1908 that rendered the railroads unable to meet the peak demands of World War I or to deal with the rivalry of the carriers which arose after 1920. Worse, in the author's view, the repressive nature of the regulation inhibited the spirit of enterprise among railroad executives so as to make them slow to respond to prospective changes in technology or other dynamic conditions. Martin considers this a revisionist interpretation of the history of the period; it has less novelty than he appears to recognize. John W. Barriger, variously president of the Monon, Pittsburgh & Lake Erie and Missouri-Kansas-Texas railroads, has vigorously argued this interpretation of railroad history for some 40 years, but Martin fails to cite his writings. Although this book won the first Columbia University Prize in American Economic History in Honor of Allan Nevins, it impresses me as a bad example of economic analysis and, less defensibly, a poor piece of historical scholarship. On the whole it amounts to a muddled treatment and a general misinterpretation of the origin of the decline of the railroads. The book's deficiencies stem directly from the author's methodology. Apparently, Martin gained an acquaintance with Marshallian analysis on an intermediate-price-theory level, but rejected it as inappropriate on the grounds associated with the followers of Thorstein Veblen and the older generation of institutional labor economists: an a priori deductive system is inadequately related to reality and likely to lead to erroneous conclusions. Similarly, he rejects the counterfactual method of economic history particularly identified with R. W. Fogel's Railroads and Amer-ican Economic Growth.2 Martin is left with a traditional methodology of inductive scholar-