The growth and financial success of early railroads in America were a key element of what has become known as the “Gilded Age,” a time of economic change and extreme income inequality. Railroad robber barons like Cornelius Vanderbilt and Jay Gould accumulated massive fortunes through stock manipulation, rail consolidation, political corruption and predatory tactics. When Vanderbilt died in 1877, he had a net worth of $105 million, equivalent to over $3 billion today. Today’s America in many ways has come to resemble the Gilded Age with income inequality posing a challenge to a healthy society. Instead of Vanderbilt and Gould, in 2026 we have Bezos and Musk. Billionaires and as of last week, the world’s first trillionaire. The super-wealthy live in luxury while everyday Americans are forced to make do with less and less.
At the height of the Gilded Age, railroad workers struggled to make ends meet. Said Peter M. Arthur, Grand Chief Engineer of the Brotherhood of Locomotive Engineers, during the union’s 1874 national convention: “The highest wages paid engineers at the present time is $4.00 per day, and they are on duty 15 to 18 hours; and the average wages paid is $3.50 for a 100 miles run. No allowance made for the hours consumed in running the 100 miles.”
The BLET would become the first labor organization in the rail industry to right this wrong by obtaining contracts with railroads. Among the earliest was an agreement with the former New York Central in 1875. While gains were being made through the efforts of the Brotherhood, decent working conditions throughout the industry were yet to be obtained.
One of the reasons for this income inequality during the Gilded Age can be attributed to corporate greed and the monopolization of rail lines. Such practices eventually led to major economic reforms. In 1887, the Interstate Commerce Commission (ICC) was established as the first independent federal regulatory agency in U.S. history to oversee the railroad industry. Its aim was to eliminate the industry’s unfair and discriminatory rate practices. In 1890, the Sherman Anti-Trust Act became the first Federal act that outlawed monopolistic business practices.
E.H. Harriman, a major railroad magnate and President of the Union Pacific Railroad and a number of other railroads, was the central figure in two landmark antitrust disputes during this era. Harriman’s business practices and legal battles fundamentally shaped early 20th Century corporate regulation. His aggressive acquisitions designed to create corporate trusts that were anti-competitive and fixed prices were primary catalysts for the Roosevelt and Taft administrations using the Sherman Antitrust Act to rein in the monopolization of critical national infrastructure, including railroads, in what became known as “trust-busting.”
Echoes of this history ring familiar today. Monopolization of the railroad industry is once more an issue due to mergers and consolidation. Only a handful of Class I railroads exist today, with the Union Pacific’s proposed acquisition of the Norfolk Southern currently threatening to further consolidate and weaken the nation’s supply chain.
E.H. Harriman illustration courtesy of Library of Congress, originally published in the Chicago Daily News, October 18, 1907