Cooperation, Capture, and Autonomy: The Interstate Commerce Commission and the Port Authority in the 1920s

"Historically, geographically, and commercially New York and the industrial district in the northern part of the state of New Jersey constitute a single community," declared the Interstate Commerce Commission in the New York Harbor case in 1917. In spite of that overwhelming fact, the railroads in the port region had never worked cooperatively to manage New York harbor. Instead, competition led them to invest vast sums in individual terminal facilities and prevented them from using those facilities jointly to solve the urgent transportation problems of the region. This failure to cooperate took on national importance during World War I, when the collapse of service at the port led President Woodrow Wilson to federalize the railroads. In light of the failure of private managers to coordinate their efforts more effectively, the ICC endorsed the idea that dramatic public steps should be taken to encourage greater cooperation among railroad companies: "It is necessary that the great terminals at the port of New York be made practically one," the commission affirmed, "and that the separate interests of the individual carriers, so long an insuperable obstacle to any constructive plan of terminal development, be subordinated to the public interest." ¹

With this apparent blessing from the ICC, the New York, New Jersey Port and Harbor Development Commission was created in 1917 to recommend a cooperative, bi-state solution for the port. Guided by Julius Henry Cohen, the lawyer who had introduced the idea of a regional planning agency to the ICC during the New York Harbor case, the Port and Harbor Development Commission concluded that the port problem was essentially a matter of railroad competition and called for the creation of a single Port of New York Authority. When the Port Authority was created by joint resolution of the state legislatures in 1921, it seemed to signal that the era of railroad competition had been replaced by a new age of cooperation. ²

The Port Authority was but one such sign of the triumph of cooperation over competition. At the federal level, the Transportation Act of 1920 inaugurated a new era of railroad regulation. Rather than focusing predominantly on protecting shippers from powerful financial interests as it had during the prewar years, the ICC turned its attention to creating and maintaining adequate transportation facilities for the country in order to avoid a devastating collapse of service like the one that occurred in 1917. Using new powers to encourage pooling, revenue sharing, and the joint use of terminal facilities, the ICC seemed prepared to usher in an era of cooperation among railroads, shippers, and urban commercial centers. ³

The new era continued with the ICC's 1922 decision in the Hastings Commercial Club case. There, the ICC affirmed its authority to encourage the joint use of terminals by requiring the Chicago, Burlington & Quincy Railroad Company to use the facilities of the Chicago, Milwaukee & St. Paul Railway to better serve the town of Hastings, Minnesota. The decision was welcomed by the Port Authority, then in the process of planning for unification of terminal facilities around New York harbor; indeed, Julius Henry Cohen, counsel for the Port Authority, had helped argue the Hastings case before the ICC. ⁴

In spite of these positive steps toward cooperation, the relationship between the ICC and the Port Authority deteriorated. In 1926, the ICC reheard the Hastings case and reversed its 1922 decision. Two years later, in the Hell Gate Bridge case, the ICC ruled against the Port Authority when it attempted to use the terminal-sharing provisions of the Transportation Act to allow the New York Central Railroad to use the Hell Gate Bridge (owned by the Pennsylvania Railroad) to transport freight more efficiently through shipping bottlenecks in Queens. This setback forced the Port Authority to abandon its plans for unifying rail facilities in the New York region and turn its...