American Railroads

American Railroads

ROBERT E. GALLAMORE
JOHN R. MEYER
Copyright Date: 2014
Published by: Harvard University Press
Pages: 523
https://www.jstor.org/stable/j.ctt7zswtq
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  • Book Info
    American Railroads
    Book Description:

    Overregulated and displaced by barges, trucks, and jet aviation, railroads fell into decline. Their misfortune was measured in lost market share, abandoned track, bankruptcies, and unemployment. Today, rail transportation is reviving. American Railroads tells a riveting story about how this iconic industry managed to turn itself around.

    eISBN: 978-0-674-36936-8
    Subjects: Economics, Transportation Studies, Political Science, History

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. PREFACE
    (pp. vii-x)
  4. RAILROAD COMPANIES AND ABBREVIATIONS
    (pp. xi-xvi)
  5. 1 THE ENDURING AMERICAN RAILROADS
    (pp. 1-19)

    American Railroadsis the story of a great industry that dominated US freight transportation over land at the beginning of the twentieth century, lost its leadership and much of its economic power over the next eighty years, and then, almost miraculously, was reborn in the last two decades of the century. We characterize railroads asenduringbecause as the century wore on, theysurvivedmore than theydominatedtheir rivals. They persisted as a fundamental part of the US freight transportation system more than they succeeded financially.

    At the turn of the twentieth century and for decades before and after,...

  6. 2 THE ILLS OF GOVERNMENT REGULATION OF RAIL RATES AND SERVICES
    (pp. 20-41)

    In this chapter,American Railroadsexplores central issues of economic regulation of railroad rates and services; the next chapter then addresses regulatory oversight of the competitive organization of US railroads in the first decades of the twentieth century. The two chapters are connected in many ways, as we will make clear. The issues are jointly rooted in the fundamental economics of competitive behavior, both where it succeeds in creating functioning markets, and where it fails and must be replaced with regulatory substitutes.

    The fundamental justification for public regulation of industry is always the assertion or determination that markets have failed...

  7. 3 THE POLICY DILEMMA OF COMPETITION AND CONSOLIDATION
    (pp. 42-71)

    In every decade of the first half of the twentieth century, it seemed, something was always amiss with the capacity of the US railroad industry or the size of its constituent firms. This was the era of government intervention in the affairs of business, and politicians seemed never to be happy about the performance of railroads—still the dominant means of surface transportation in the United States. In the previous century, railroads had been constructed to within a short distance of nearly every arable acre on the continent, and over nearly every passable transcontinental route to the Pacific Ocean. Railroad...

  8. 4 THE IMPACT OF RIVAL FREIGHT MODES ON RAILROADS
    (pp. 72-99)

    This chapter ofAmerican Railroadsexplores the competitive impact on railroads of the maturation of rival modes for transporting freight. The chapter focuses on competition among railroads and two other modes (waterway barges and highway motor carriers) for which traffic can switch back and forth, a definition largely excluding pipelines. These competitive modes are central to our story of the dominance, near-demise, and renaissance of the American railroad industry in the last century. While each alternative mode developed at its own pace and according to its own economic destiny, together they offered formidable challenges—often providing superior service and undercutting...

  9. 5 THE DECLINE OF RAILWAY PASSENGER SERVICE, 1900–1970
    (pp. 100-129)

    At the turn of the twentieth century, railroads held a virtual monopoly over intercity domestic passenger travel. Only an occasional riverboat or coastal steamer would provide competition, and if it did, at costs roughly equal to rail and at elapsed times usually three or four times as great. The rail share of intercity travel by common carrier in 1900 was almost certainly at the 90 percent level or greater, and the rail share of service by all modes was probably not much lower (as the mass market automobile had yet to appear in large numbers). The economic and political forces...

  10. 6 MERGERS AT MIDCENTURY AND THE PENN CENTRAL DEBACLE
    (pp. 130-158)

    This chapter ofAmerican Railroadscontinues from Chapter 3 the story of how consolidation of railroad firms affected performance of the industry in the middle part of the twentieth century. It covers the period from World War II through the Penn Central merger in 1968 and bankruptcy in 1970.

    Merger (or horizontal combination) of firms was a remedy almost reflexively proposed for virtually any business problem in a wide range of American industries throughout the twentieth century. Folklore has it that the dominant message conveyed to business school students was (and may still be): “if in doubt, reorganize.” Of course,...

  11. 7 TWO RAILROAD REFORM AND REVITALIZATION ACTS AND THE NORTHEAST RAIL CRISIS IN THE 1970S
    (pp. 159-190)

    As indicated by the amount and quality of work done by congressional committee staff members from 1969 to 1972, the dreadful problems of the Penn Central merger described in Chapter 6 were quite apparent to Congress. The issue soon became not whether but when and in what form legislative action would be taken. Already in 1970, Congress had enacted the Nixon administration’s proposal to charter a National Railroad Passenger Corporation (see Chapters 5 and 11).

    Our story in this chapter ofAmerican Railroadsbegins three decades earlier. Economic forces contrary to railroad prosperity had been gathering since before the Great...

  12. 8 THE BRIEF, MAINLY HAPPY LIFE OF CONRAIL, 1976–1999
    (pp. 191-217)

    Where you stand often depends on where you sit. In response to a Staggers Rail Act reporting requirement, the Reagan administration’s new transportation secretary, Drew Lewis, and recently hired Conrail CEO, L. Stanley Crane, both gave their outlook for Conrail on its fifth birthday, April 1, 1981. The two powerful, well-placed, and well-informed men could hardly have had more dissimilar views. Stanley Crane wanted to apply more federal funding to complete Conrail’s needed infrastructure rehabilitation, skate through the so-called Reagan recession, and give the Staggers Rail Act regulatory reforms time to catch on. Drew Lewis and his newly appointed federal...

  13. 9 THE MAKING OF THE STAGGERS RAIL ACT, AND EXPERIENCE UNDER DEREGULATION
    (pp. 218-256)

    In America’s bicentennial year, the railroad industry was still in complete shambles, although several important steps had been taken in public policy to recognize the problem and begin working toward solutions. The Penn Central, after its catastrophic bankruptcy in 1970, had undergone total financial and ownership reorganization through a federally sponsored planning process created by the Regional Rail Reorganization (3R) Act of 1973 (see Chapter 7). The core of the Northeast’s rail system emerged from reorganization in the form of the Consolidated Rail Corporation (Conrail) on April 1, 1976, as ordained by the Rail Revitalization and Regulatory Reform (4R) Act...

  14. 10 HOW RAILROADS GOT THEIR FINAL SIZES AND SHAPES
    (pp. 257-311)

    This chapter ofAmerican Railroadsfocuses on the nature and consequences of the wave of large railroad consolidations, often called megamergers, initiated and approved in the last quarter of the twentieth century.¹

    The first part of the chapter describes the megamergers proposed in the initial deregulatory period, from just before passage of the Staggers Rail Act² until 1995. The second part of the chapter continues the narrative with an analysis of four transactions that rounded out the twentieth century and completed the American railroad industry structure as we know it today.

    This last group of mergers, which we call the...

  15. 11 THE ENDURING PROBLEM OF RAIL PASSENGER SERVICE IN THE AMTRAK ERA
    (pp. 312-342)

    This chapter tackles the controversial subject of Amtrak—whether it has been a good thing for the country, whether it could have been managed to better results, and whether it should be continued in its current or some altered form.

    The Rail Passenger Service Act of 1970 authorized establishment of a new publicly owned entity—formally, the National Railroad Passenger Corporation (NRPC). At the time, NRPC was informally called RailPax. Later, its trade name and marketing moniker became Amtrak. This corporation was to assume responsibility for providing the nation’s rail passenger services over a “basic system” as initially specified by...

  16. 12 ADVANCING TECHNOLOGY FOR AMERICAN RAILROADS
    (pp. 343-395)

    The nineteenth century brought about a splendid flowering of the mechanical arts and the bending of machines to the labors of humankind. Among the greatest of these was the innovation of the railroad itself—unknown before 1800 but soon to become the dominant method of moving people and cargo almost anywhere on civilized land. Before the end of the nineteenth century, railroads had grown to be the largest employer in the United States and the most managerially sophisticated business enterprises anywhere—a model for many other entrepreneurial and governmental endeavors.²

    In the same historical vein, however, railroads are often thought...

  17. 13 DECLINE AND RENAISSANCE OF AMERICAN RAILROADS IN THE TWENTIETH CENTURY—PULLING INTO THE TERMINAL
    (pp. 396-425)

    For the venerable railroads, the twentieth century brought great changes. Yet those changes did not entirely camouflage the enduring constants bequeathed to them from railroads’ first century. American railroads in 2000 would be easily recognized by a visitor from Victorian times: They still operated on track with a gauge of 4 feet 8½ inches, and still used locomotives to pull freight cars or passenger coaches. The federal government, not the states, still held the fundamental authority to regulate the industry’s rates and services, though regulation had greatly and repeatedly changed during the century. Similarly, labor unions had risen and fallen...

  18. AFTERWORD: FUTURE POLICIES FOR US RAILROADS
    (pp. 426-436)

    This book has been an economic and policy history of a key American industry experienced over an entire century. We have shared policy perspectives rooted in economic theory, our reading of the events of the period, and sometimes our personal experiences from participation in these events. Until now we have, for the most part, shied away from making bold prognostications or policy prescriptions requiring congressional action.

    As fun as it is to speculate about the future, it is inherently risky. The trouble with nostalgia, someone said, is that “it ain’t what it used to be.” In the same vein, the...

  19. NOTES
    (pp. 437-496)
  20. ACKNOWLEDGMENTS
    (pp. 497-498)
  21. INDEX
    (pp. 499-506)