Ayn Rand put her finger adeptly on the jugular vein when she focused attention on the railroads in her novel about the economic breakdown in the United States, Atlas Shrugged. Surely, the colossus of the Western Hemisphere, the United States, rose to eminence in the world on the grid-work of steel rails that spanned its length and breadth and reached out like fingers to touch the farthest corners of a vast half-continent. Before the coming of the railroads, to speak of a United States was to speak in the hyperbole of politicians and dreamers. These United States were separated by great chains of mountains, by formidable bodies of waters, by natural obstacles which carved the country into regions, sections, isolated valleys, and vast well-nigh untappable hinterlands. Railroad builders sought out the mountain passes, followed the cuts made by streams through the ages, bridged the rivers, and laid the rails across the stretches of flatland. They united the states commercially, politically, and, may-hap, fraternally.
Indeed, the American railroad system is one of the marvels of the modern era. There were 23 miles of track within the United States in 1830; by 1920 there were 252,845 miles. Most of the track age was laid between 1870 and 1910, in one of the most propulsive construction programs ever undertaken in history. By the early twentieth century, virtually every town and hamlet in the country was either on or within a few miles of a railroad, and most towns of any size had service by two or more railroads. Cities were frequently served by a half-dozen or more companies, two or more of these frequently connecting with the same distant points. Peoples and goods moved over these lines with speed and safety which a few generations before could hardly have been conceived.
In a recent advertisement, the Association of American Railroads attempted to evoke a sense of the marvelous character of this means of transportation. It read, in part:
Suppose that everybody in the United States were to learn for the first time about a marvelous method of transportation called a railroad.
The idea would be sensational.
High-speed tractors running on steel rails laid on privately-owned rights of-way, with minimum curves and grades, would be capable of pulling long processions of trailers full of merchandise. Imagine!
Trains of trailers would be kept rolling day in and day out until they reached their destinations. They would be shuttled into and out of marshalling yards, where the trailers would be grouped in the right combinations. Of all things!…
The high-speed tractors on their twin ribbons of steel could even haul human beings, in addition to freight. If necessary, the human being could be bedded down and hauled from one place to another in special cars with comfortable seats and all the comforts of home.¹
A Waning Romance
Americans have not always been oblivious to the marvels of the railroads, of course. On the contrary, many have long been fascinated with this way of transporting people and goods. A good case could be made that many Americans have had a long romance with the rails. The story of the railroads is deeply entangled in American lore, legend, and history: the buffalo hunters, the clashes with the Indians, the rush of the railroad crews to lay rails into the West, the driving of the golden spike at Promontory Point to celebrate the linking of the Union Pacific and Central Pacific, the bigger-than-life gangs of train robbers — epitomized by the James boys —, the ballads such as “Casey Jones” and “Wabash Cannon Ball.” The steam engine was itself a thing for wonder and awe: steam spouting from its sides as it stood in the station, its lonely whistle in the night, the huffing and puffing as it made a long grade, its long sigh to let off steam as it came to a halt. Even the mighty diesels, while not so romantic as the steam engines (probably because they are still with us), could cause heads to turn and voices perforce to cease or be unnaturally raised as they roared by.
The railroads capitalized on this interest and tried to build excitement by the names they gave to their crack passenger trains in the twentieth century, names which suggest that the trains soar, ramble, move swiftly, and fly as they rush to make their destination against the clock, names such as Twentieth Century Limited, Silver Star, California Zephyr, Spirit of St. Louis, City of Los Angeles, South Wind, Sunset Limited, Empire Builder, Super Chief, and Rocky Mountain Rocket. Even some freight trains have been given special names; the Milwaukee Road calls a westbound fast freight the XL Special and its eastbound counterpart the Thunderhawk.
Even so, the railroad advertisement is probably right in what it implies: the American people are no longer generally enamored of the railroads. They have spurned many of the rail services with alacrity and taken much of their custom elsewhere. Even the mention of railroads evokes a faint nostalgia in response. The impression grows that they are obsolete, that their ribbons of steel stretching off into the distance are becoming mute monuments to days gone by, their passenger stations relics of other times, their forms about to be reduced finally to toys in the basement and Sunday rides on narrow gauge lines to old abandoned mines. At any rate, the railroads are in trouble. As one writer puts it: “There can be no doubt about the severity of the railroad problem facing the nation in the sixties.”2 The railroads have had a long-term trend of declining traffic, both passenger and freight, though the decline in freight has sometimes been only in the proportion of total freight hauled. Service has been increasingly curtailed. Railroad stocks have long failed to respond even to proportionally higher dividend-to-cost ratio than most other stocks. These are the almost invariable signs of a dying industry.
Still Essential for Transport
Yet, the railroads remain an essential method of transport in America. Not only were they once crucial to the commercial unity of America; they still are. It is true these United States are now linked together by highways over which gasoline engines pull trucks and automobiles, that these highways, presently being supplemented by an interstate system, reach more places than the railroads, and that any city of any size has many which form junctions within its borders. But these vehicles which travel on the highways are an increasing source of trouble themselves. They pollute the air; they converge on the cities at certain hours of the day constricting movement and raising tempers; parking places for them become ever more costly and difficult to find. Trucks increase in number and size on the highways, vying with automobiles for travel space and increasing the peril of travel. The carnage on the highways is so great that anyone sensitive to the propaganda about it must set out even on a vacation trip in an automobile with considerable apprehension.
If that portion of the freight now carried on trains should suddenly be shifted to the highways, the pace of traffic would be drastically slowed and much that now moves that way could hardly find a place. We are already experiencing the impact on highways of the shift of passenger traffic from trains to private cars, for the most part; what it would be like when freight should be as preponderantly shifted to the highways as are the passengers can only be left to the imagination. As things stand, many cities probably could not survive such a shift; many of them are already marginal as places to live, and transport is one of the major reasons. This is why the railroads remain an essential method of transport for America. Yet, the long-term trend in a shift away from them is now well established.
Deterioration in Quantity and Quality of Service
Why should this be? To the casual observer or unwitting customer it often appears that the railroads are their own worst enemies, that the management and personnel are directly to blame. Those who use the railroads frequently get the impression that the roads are determined to be rid of them. This is most noticeably the case with passengers, but users of freight service of certain kinds may get a similar impression. Anyone who has ridden the trains often in the last decade or so probably has his own list of complaints. The list will most likely include such items as reluctant ticket sellers, difficulties in acquiring information, late departures of trains, late arrivals, surly employees, inconvenient schedules, dilapidated equipment, long walks to cars past a long line of cars for mail and parcels, lackluster surroundings from beginning to end of journey, and so on.
Stories abound of horrendous treatment of passengers by the railroads. The present writer has seen a restroom in a passenger station to which entry could be gained only by dropping a coin in a slot, has heard a porter utter such streams of profanity about the difficulty of getting a woman’s luggage from one train to another that she offered to carry it herself to shut him up, has had his rest disturbed by noisy “deadhead” railroad employees on several occasions, and has seen any number of waiting rooms suff¹ciently gloomy to discourage all but the most intrepid traveler by rail.
Some of these might be only individual instances of poor service which can happen in any undertaking. But there is much testimony that they are of a kind that occurs all too frequently on the railroads. One writer notes that
“except for a few crack transcontinental and other trains, the quality of service rendered has deteriorated compared with prewar [World War II] years…. Trains are frequently late; coach equipment is often old and sometimes dirty and poorly ventilated and heated. Many prewar standards of courtesy have gone, even in parlor and sleeping cars….
On some of the best coach routes, the railroads use obsolete passenger train cars and treat customers as though the carriers were doing travelers a favor to transport them.”3 Another says, “The public sees the railroads as old fashioned…, and as common carriers who hate passengers.”4
It certainly looks as if the railroads were trying to commit suicide. They have low advertising budgets compared with other businesses; the uniforms of their personnel appear to date back to the beginnings; their passenger stations frequently appear to be a combination of late Victorian grandeur gone squalid and early government housing projects; their freight stations are often a poor imitation of a down-at-the-heels hardware story. The following are instances of how railroads have alienated passengers:
Take, for example, the process of calling on the telephone for some scrap of information about a passenger train…. Some railroad clerks are evidently instructed to take their phone from its cradle, or hook, and then to forget it…. Other railroad clerks, themselves impervious to minor irritations, simply ignore a ringing phone, hour after hour….
Another stratagem is the disruption of train schedules…. Suppose you wish to travel overnight by train from Washington to Memphis. There is no through service, but the Southern Railway has a Birmingham Special that arrives in Chattanooga at 8:10 A.M. or ten minutes after the train to Memphis has left. The Southern Pacific’s Sunset Limited has been so rescheduled that, eastbound, it no longer connects at New Orleans with the Gulf Wind…, westbound, the Sunset leaves stranded in New Orleans for about fifteen hours those passengers coming from the east on the L and N’s Crescent or the Southern Railway’s Southerner.5
While freight traffic is not so cavalierly treated, many small communities have lost their agents, and many kinds of package freight do not appear to be much wanted.
Not all railroads have been so disdainful even to their passenger customers. But even those who have continued to serve long distance and commuter passengers well often say that they are losing money. Lately, a considerable movement has been mounted for governments to subsidize passenger trains, and some of this is already being done.
A Puzzling Performance
There are two enigmas here. In the first place, it is not usual for businesses to discourage customers and treat them as if they were not wanted. Private enterprise succeeds by serving customers and by gaining and keeping their good will. Even losses may be sustained to provide certain kinds of service in order to gain profitable custom. When businesses behave otherwise, this behavior requires explanation. The second enigma is why any good or service that is widely needed and wanted cannot be profitably provided. Commuter trains, for example, may be filled to overflowing during rush hours, but many railroads no longer wish to operate them. Transportation is not the only area where the provision of vital goods and services has sometimes become unprofitable (others would include food provided by farmers and rental housing), but it is certainly a crucial one today. This is, to say the least, enigmatic.
There is, of course, an explanation. To get at it, it is necessary to look into the history of the railroads. Even the most casual student of American history will recall certain facts related to railroad history. Even the most general history of the United States will probably mention land grants to railroads, the Railway Strike of 1877, the Interstate Commerce Act, the Pullman Strike, the Northern Securities Case, the government take-over of the railroads in World War I, and the Transportation Act of 1920. In short, what the casual student may discern with a little reflection is that there is a long history of government involvement with and intervention in the affairs of the railroads. Deeper examination will show the impact of this on the railroads and provide explanations for the strange situations that have developed.
A Vital Service in Decline Plagued by Intervention
There are three fundamental reasons, then, why anyone undertaking to write an anti-utopian novel about the United States, as Ayn Rand did, might well focus on the railroads; and they are reasons why a historical study of the railroads is warranted. First, the railroads were crucial in providing a means for commercially uniting the states, and are a still vital part of the transportation network of this country. Second, they have been in trouble for a considerable while and have suffered a long-term decline. This has brought in its wake a host of other problems already alluded to. And third, there is a long history of government intervention in rail transport with all its ramifying effects.
Indeed, the railroads are the classic example in American history of the impact of government intervention on a business. They have had the longest history of intervention by the Federal government of any modern business. Theirs was one of the earliest instances of extensive subsidies to more or less private undertakings. The first strike to have an impact on a goodly portion of the country was against the railroads — the Railway Strike of 1877. The first general act to regulate interstate commerce and the first national regulatory commission was aimed at the railroads — the Interstate Commerce Act and the Interstate Commerce Commission. One of the earliest applications of the Sherman Antitrust Act by the Supreme Court against a portion of an industry was made against the railroads in the Northern Securities Case. The railroads were the first private industry to be taken over and run by the Federal government for a time — during and after World War I. In short, except for banking and the delivery of the mails, the railroads have probably the longest history of intervention of any major business in the United States. Nor is there any better place to study the debilitating effects of this.
Since some may suppose that government subsidies and aids were helpful in getting the railroads underway, and since a new era of subsidies portends, it will be well to begin the account with the building of the railroads and explore some of the varied effects of this before taking up regulation and control.
Next: Aiding the Railroads — 1830-1871.
¹ Quoted in John F. Stover, American Railroads (Chicago: University of Chicago Press, 1961), p. 248.
2 Ibid., p. 47.
Learning by Doing
Ideas made possible our nation’s growth. We are a venturesome, valorous, risk-taking people who backed ideas with savings.
If the labor unions would back their ideas with the money collected from their dues-paying members and, instead of striking against business, go into a business for themselves and prove that they can operate it — can run full time at all times, pay higher wages than present management, have shorter hours, better working conditions, and make enough money to keep operating and pay their shareowners (dues payers) a fair return on their investment — they would get a better education in the relationship of profits to jobs and job security, to the standard of living, and of productivity to wage increases.
Steel men, automobile men, coal-mining men, mill owners, and hundreds of others have twitted unions to make good their claims to buy a company, run it, and prove they can do so better than those they now criticize and strike against. It’s wide open, and all can step in and try it. But, Mr. Unionman, don’t overlook the 52 per cent Federal tax on profits.
The big unions are reported to have millions of dollars on hand. Why not buy a company, and run it, and prove that wages can be increased without setting the stage for higher inflation?
E. F. HUTTON
Editor’s Note: This essay first appeared in the May 1970 issue of THE FREEMAN.
Clarence B. Carson was a frequent contributor to THE FREEMAN, and was Professor of History at Grove City College in Pennsylvania.
Copyright © 2014 Foundation for Economic Education. All Rights reserved. Used with the permission