Railroad Competition and its Management in the United States and Britain before 1914

This paper offers a brief excursion into the comparative history of competition in the railroad industries of the United States and Britain. It starts from the observation that when faced with the unprecedented dynamics and costs of duopolistic and oligopolistic competition, railroad leaders in both countries searched for stability. The response in America appears to have moved from informal cooperation to pools and finally, once these had failed, to large-scale consolidations. In Britain the response and outcome were somewhat different. Having sought stability through pools, rates agreements, leases, working agreements, and corporate investment, and having found these wanting in certain respects, railway leaders were unable, for political reasons, to contemplate mergers. In any case market conditions in Britain set a close boundary on the operating economies that were achievable through cooperation. The major factors here were coastal shipping competition, especially for long-haul traffic after 1870 when sea freight rates fell, and a high level of dependency on small traders who offered small, often short-haul consignments. There were, however, a number of similarities. For example, in both countries pooling agreements could not readily contain or accommodate changes' in the shares of traffic carried by the partners. And in both countries there were legal and political problems, although their character and impact on the railroads differed significantly.