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Ad*Access Research Guide: Railroads

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Brief History of the U.S. Passenger Rail Industry

The railroad revolutionized transportation and business practices in the United States. At the beginning of the 19th century, rivers, canals and horse-drawn coaches were the options for moving people and goods within the country. Railroads enabled an efficiency and carrying capacity that had never been seen before. They linked the nation, carrying people and raw materials and agricultural products. The "Best Friend of Charleston," the first steam powered train, carried 141 people six miles on its initial run in 1830. Boston and Baltimore, with Charleston, led the way in establishing major railroads in their regions to tap into the inland markets that had begun to bypass them due to the lack of connecting rivers into these same areas.

The relative speed and ability to travel regardless of the weather made rail travel attractive to travelers and businesses. By 1840, 2,818 miles of track were laid down; by the start of the Civil War 30,000 miles of track had been laid. This increase reflected the increasing federal government loans to railroad companies and the availability of free land grants through which to extend tracks. In 1869, the first transcontinental railroad was completed where tracks of the Union Pacific met those of the Central Pacific at Promontory, Utah. One train from the east and one from the west ran each week, sufficiently meeting the travel demands at that time. The practice of government subsidies of railroads was terminated in the 1870 after accusations of corruption and bribery led to general public dissatisfaction.

Even without government subsidies, 70,000 additional miles of track were laid in the 1880s, linking increasing numbers of towns and cities. Rail travel tripled between 1896 and 1916, and trains carried "95% of all intercity transportation through 1910." (Itzkoff). The pinnacle for rail travel in terms of numbers was 1920, with trains carrying 1.2 billion passengers. In that year railroad fares were increased by 20%, and the decade saw an almost threefold increase in the number of automobiles registered in the U.S. As a result, intercity transportation by trains had fallen by 18% by 1929.

Railroad passenger travel further dropped during the first few years of the Depression, gaining back ground only after the 1934 debut of the Burlington, Chicago and Quincy's streamlined, diesel-powered Zephyr and the Union Pacific Railroad's gasoline-powered M-10,000. Both trains were an attraction at the Century of Progress Exhibition in Chicago that year. The Zephyr reflected a variety of technological advances: shot-welded stainless steel, a General Motors diesel engine with aerodynamic design, air- conditioning, and recessed fluorescent lighting in the passenger cars. The "streamlined" stainless steel look of these two new trains influenced designs in architecture, consumer products (even streamlined coffins) and other types of transportation. The Zephyr also had a significant 'role' in the 1934 motion picture The Silver Streak.

The greater efficiency of diesel engines quickly eclipsed steam. The lending of $3 million through President Roosevelt's New Deal program, the Public Works Administration, assisted in the switch to diesel for many railroad companies. By the end of the 1930s there were 90 diesel streamliner trains operating around the country. As a reflection of the great popularity of the new streamliners with the public and increased speed of intercity travel, by 1939 passenger rail travel had increased 38% in six years. The actual number of passengers, however, was still less than half of the 1920 numbers.

1939 also marked the beginning of World War II in Europe. During World War I the federal government had 'nationalized' the trains, creating a Railroad War Board in 1917. In addition, each railroad company was guaranteed a net operating income regardless of their actual income. Any amount above the net income went back to the government. As WWII expanded in Europe, U.S. railroad executives argued against the government nationalizing the trains again and won, retaining control of their companies and their profits. 1942 and 1944 saw record-setting increases in both passenger and freight volume, and profits were good overall during the war years. Passenger trains became overloaded, with the massive movement of troops to and from various forts and staging areas around the country. Railroad companies attempted to inform the public throughout the war of specific times of reduced schedules, cramped spaces, and longer waits at stations. Advertisements used images of fighting men returning home on trains to encourage the public to delay personal travel unless absolutely necessary.

Many railroads recognized that the increase in passenger travel during the war would probably be temporary, but most executives were not prepared for the extent of decline in passenger travel that would occur over the next decade. New diesel engines and thousands of passenger cars were ordered soon after the end of the war in 1945, reflecting the hopeful outlook of the railroads for the future of passenger travel. Production problems postponed delivery of a large number of these newer cars that were to replace well-worn cars that had been in service during the war.

In addition to the delay in production and the resultant inability to immediately capture the post-war boom in travel andtrade, a variety of other factors contributed to the decline of the railroads. The railroads were perceived as trying to discourage passenger travel in favor of the more lucrative freight business, e.g. fares were raised and service on trains was decreased. Advertising by the railroads was significantly less than by airlines: during the first seven years of the 1950s, airline advertising doubled, as compared to the drop of one-quarter in advertising by railroads. Automobiles, buses, and planes, of course, made further in-roads in the intercity travel business. Government subsidization of highways and airports greatly aided those transportation developments and kept costs low. Railroads did not receive government assistance after the war. In fact, a war-time 15% excise tax on tickets meant to discourage wartime civilian train travel remained in effect, keeping fares higher than necessary. This tax, reduced slightly in 1954, was not completely removed until 1962. Government regulations, increasing municipal property taxes, and small towns using these property taxes to help subsidize new airports, added to expenses for railroads and hindered their ability to make improvements in passenger travel. The large number of independent railroad companies aggravated the situation by competing amongst themselves, undercutting each other's ability to effectively compete against emerging transportation industries.

Bankruptcies, mergers, and acquisitions of many railroad companies occurred during the second half of the 20th century, due to a decrease in passenger travel and freight and mail service. By 1970, airlines carried 73% of passenger travel. Railroads carried a scant 7.2%. A national rail passenger system - Amtrak - was created in 1971. Seen as a way of providing some balance to transportation options and with a view to reducing automobile traffic congestion. Amtrak's image rose during the oil embargo of the mid-1970s, but the increase in ridership was not maintained. The government- run agency hasnot appeared to be the answer for revitalizing the passenger train industry. Research and development of high-speed trains, especially for the northeast commuter corridors, is progressing. Overloading of highways and airlines at the end of the 20th century is providing increased incentive for further expansion of passenger train service.

Research and text by Lydia Boyd and Lynn Pritcher


  • Background on Amtrak. Washington, DC.: National Railroad Passenger Corporation, 1978.
  • Casey, Robert J. and W.A.S. Douglas. The Lackawanna story. New York: McGraw-Hill, 1951.
  • Charleston Chapter; National Railway Historical Society. The Best Friend of Charleston.
  • Colby, Frank Moore, ed. The New International Year Book. New York: Dodd, Mead & Co., 1918.
  • Heil, Scott and Terrance W. Peck, eds. The Encyclopedia of American Industry, 2nd ed. Detroit: Gale Research, 1998.
  • Itzkoff, Donald M. Off the track: the decline of the intercity passenger train in the United States. Westport, Connecticut: Greenwood Press, 1985.
  • Reutter, Mark. "The lost promise of the American railroad." The Wilson Quarterly. 18(1) (Winter 1994): 10-37.
  • Robbins, Michael. The Railway Age. London: Routledge and Kegan Paul, 1962.
  • The New Encylopaedia Britannica, 15th ed. Chicago : Encyclopaedia Britannica, 1998.
  • Vranich, Joseph. Derailed: what went wrong and what to do about America's passenger trains. New York: St. Martin's Press, 1997.
  • Wilson, Neill C. and Frank J. Taylor. Southern Pacific: The roaring story of a fighting railroad. New York: McGraw-Hill, 1952.

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