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TEXAS TRAFFIC ASSOCIATION

TEXAS TRAFFIC ASSOCIATION. The Texas Traffic Association, organized in Galveston in July 1885, was a railroad pool. Jay Gould, who controlled the Missouri Pacific's leased lines in Texas (primarily the International-Great Northern, the Texas and Pacific, the Galveston, Houston and Henderson, and the Missouri, Kansas and Texas), and Collis P. Huntington, whose Southern Pacific controlled the Galveston, Harrisburg and San Antonio and the Texas and New Orleans, were the prime movers in the formation of the pool. The companies controlled by these men, along with the Houston and Texas Central, the Gulf, Colorado and Santa Fe, and the Texas and St. Louis, formed the nucleus of the pool. Rate wars and poor cotton crops had reduced railroad revenues so drastically that several railroads were either already in the hands of court-appointed receivers or headed in that direction. The purpose of the association was to stop rate wars on freight and passenger business both within Texas and to and from Texas points. At towns (common points) served by two or more competing rail lines, identical rates were set and joint agencies were established. All revenues collected were placed in the pool to be divided according to a formula based upon each road's 1883 earnings. Competition was eliminated. The association began operations in 1885. Newspapers reported the formation of a "Texas railroad pool," but the details of the pooling agreement were never revealed. Comments from shippers were generally favorable because the association's rates were lower than existing published rates. Rates were practically the same throughout the state. At twenty-one of the twenty-eight common points in 1885, the cotton rate to Galveston was $3.50. At two western points the rate was $3.75, and at the remaining five points closer to Galveston the rate was less than $3.50. Rates from towns with only one railroad (noncompetitive points) could not be higher than those from common points without violating the state law. Because the association's rates were published in the newspapers, discrimination against shippers and long haul-short haul discrimination against towns were strongly discouraged. Because all revenues were now placed in a pool, it was not in any railroad's interest to offer reduced rates to attract business.

Certain state and national officials took dim views of such railroad pools. Governor Lawrence S. Ross thought that railroad rates should be set by competition between railroads, not by cooperation among them. Texas attorney general James S. Hogg took action against the pool in 1887, hoping to destroy it. He won his case in 1888, but by then the United States Congress had passed the Interstate Commerce Act, which outlawed all railroad pools. On February 4, 1887, the day the act was signed into law, the Texas Traffic Association resolved "to comply in good faith" with the new law. The commissioner was instructed to cease the compilation of statistics on earnings. Resolutions to continue the practice of dividing business at competitive points and to have members send in waybills solely for the purpose of checking rates failed. After the pooling provisions were eliminated it was difficult for the association to live up to its purpose of preventing competition in rates. Later in 1887 there was a new outbreak of rate wars on Texas railroads. A new agreement including several out-of-state railroads was signed on September 16, 1887, but this compact was not long-lived. The association collapsed the next year and was replaced first by the International Traffic Association, then by the Southern Interstate Association, the Southwestern Steamship and Railway Association, and, finally, the Southwestern Traffic Association. These associations were not pools but functioned to set standard, noncompetitive railroad rates with the approval of state and national regulatory commissions.

BIBLIOGRAPHY: 

Austin Statesman, August 5, 25, 26, 1885. John Martin Brockman, Railroads, Radicals, and Democrats: A Study in Texas Politics, 1865–1900 (Ph.D. dissertation, University of Texas at Austin, 1975). Robert C. Cotner, James Stephen Hogg: A Biography (Austin: University of Texas Press, 1959). Jean D. Neal, A History of the Interterritorial Freight Rate Structures Affecting the Southwest (Ph.D. dissertation, University of Texas, 1942).

John Martin Brockman

Citation

The following, adapted from the Chicago Manual of Style, 15th edition, is the preferred citation for this article.

John Martin Brockman, "TEXAS TRAFFIC ASSOCIATION," Handbook of Texas Online (http://www.tshaonline.org/handbook/online/articles/eat04), accessed July 31, 2014. Uploaded on June 15, 2010. Published by the Texas State Historical Association.