Railroad Revisionists Revisited: Stock Market Evidence from the Progressive Era

From 1910–1917, the Interstate Commerce Commission repeatedly refused to grant requested railroad rate increases despite rising input costs. An event study shows that several Commission decisions resulted in statistically significant and economically meaningful negative excess returns for railroad stocks. The change in regulatory regime signaled by the 1917 Nationalization of the railroads generated large positive excess returns, which strengthens the assessment that the preceding regime was unfavorable to the railroads. These findings challenge the revisionist view of regulatory history, and suggest the need for closer study of regulatory implementation and evolution, and not simply regulatory origins.