By 1900, America's railroads were very nearly at their peak, both in terms of overall mileage and employment. In the 20 years leading up to World War I, however, the foundations of railroading would change drastically. New technology would be introduced, and the nation would go to war, during which time the railroads would be run by the government. Most significantly, the railroads would enter the age of government regulation.
The dawn of the twentieth century was, for the most part, eagerly anticipated by America. There was much to celebrate. Things were going well for business, and that meant there was employment for almost everyone.
Railroads capitalized on the prosperity with colorful brochures promoting top-notch passenger trains. The West was glorified as the nation's wonderland, regularly being featured in railroad-commissioned paintings and in the pages of numerous magazines. Posters featuring dreamy damsels lured vacationers to exotic destinations like California, while fast "Limiteds" raced business travelers across the land.
The nation's railroads were still growing. By 1900, more than 195,000 miles of track were in service, and there were still another 16 years of expansion ahead. The biggest opportunities existed in the West and in the South, where large portions of the landscape were still lightly populated.
During the years preceding World War I, the Florida East Coast Railroad extended its rails all the way to Key West; the Union Pacific reached Los Angeles by crossing through the Utah, Nevada, and California deserts; the Western Pacific completed its line from Salt Lake City to Oakland, California; and the Chicago, Milwaukee, St. Paul & Pacific linked the Midwest to the West Coast.
It was around this time that the passenger train achieved levels of dependability, comfort, and speed that rail passengers would generally enjoy for the next 50 to 60 years. Trains became so reliable as to encourage entire generations of business travelers to schedule meetings in distant cities the next day, and the basic amenities of train travel -- a comfortable lounge, impeccable dining car service, sleeping cars with restrooms and running water, and carpets throughout -- were here to stay. Railroads even began to regularly operate their finer trains at speeds that even today's travelers would consider "fast" -- 80 to 100 miles per hour.
Nowhere was the railroad more evident than in the newsworthy events and popular culture of the day, which often featured colorful tales of railroading and railroaders. Take the story of Casey Jones, for instance. Although apparently due to Casey's own misjudgment, the famous wreck of his passenger train in 1900 at Vaughan, Mississippi -- in which he perished -- resulted in the deaths of no passengers. By sticking with his locomotive until it was too late to save himself, engineer Casey was able to slow the train appreciably, minimizing the collision's effects. The resultant publicity painted Casey as a hero; here was the story of a "brave engineer" who gave his life to save those of his passengers. The tale -- and the popular song that soon followed -- remain a permanent part of American folklore and history today.
With the rise of motion pictures and movie theaters, railroads and railroaders would enjoy a lengthy stay in the cinematic limelight. The success of the 1903 film The Great Train Robbery -- a simple, fast-paced "shoot-'em-up" Western -- guaranteed that more train-related movies would follow.
In 1905, a record-breaking dash by train, from Los Angeles to Chicago via the Santa Fe, was another railroading event that captured the nation's attention. The instigator, Walter Scott -- popularly known as "Death Valley Scotty" and widely remembered for his colorful claims about his mining exploits -- apparently hired the train purely for publicity's sake.
Periodicals, literature, and even the Post Office featured railroads in ways that could not escape public notice. Following its celebrated dash in 1893 at a top speed of 112.5 miles per hour. New York Central's famous locomotive, No. 999, had its likeness reproduced on a two-cent postage stamp. From accounts of cross-country rail travel in Harper's Weekly to Frank Norris's emotional, less-than-flattering fictional account of the struggle between farmers and the railroads in "The Octopus," the nation's train system was constantly being observed and scrutinized.
Threats to Early 20th Century Railroads
Of course, there had to a be a downside, too. And indeed there was, in the form of a growing uneasiness among Americans about the ownership and management of the nation's biggest business -- which the railroads had collectively become -- being concentrated in the hands of a relative few. How much power was too much? Was government regulation or control necessary, or were market forces the best way to keep these empires in check? Widely talked about by citizens and politicians alike, and discussed in books such as "The Railroad Question," these were issues that would not go away in the first decades of the twentieth century.
Before the turn of the century, railroads were engaged in an ongoing process of innovation, expansion, and consolidation. Railroads shaped the nation, and were in turn shaped by it.
The new century was no different in a basic sense; the changes continued. But while some of the changes offered promise others seemed of less use, at least to the railroads. There were even innovations that, down the road, would pose competitive threats to railroads, though these were largely unrecognized at first.
Consider the telephone, for instance. In the early 1900s it was supplanting the telegraph on American railroads. The idea was the same -- electrical impulses carried over wires -- yet "telephony" represented a way to make these transmissions accessible to everyone. Previously, the station agent in many small towns was often the only person who had the "power" to translate telegraphic messages sent in Morse code.
The telephone held tremendous possibilities for business as well. It offered a way to communicate in real words, in real time -- and at a moment's notice. Some observers speculated that there would be less need for traveling and face-to-face meetings in the future; there was even the possibility that telephones might prove useful in the home.
The internal-combustion engine also held promise for railroads. As early as 1890, a primitive 18-horsepower gasoline engine was used near Chicago to demonstrate the usefulness of self-propelled railcars. Just after the turn of the century, primitive gas-mechanical and gas-electric cars (the distinction being manifest in the transmissions) were built for such railroads as the Erie, the Pennsylvania, the Union Pacific, and the Southern Pacific.
As it turned out, self-propelled cars offered savings in the form of labor, but were generally quite troublesome to keep functioning properly. The gasoline engine would turn out to be better suited to the personal automobile, which was also being developed at this time.
Then there was the diesel engine. In the early years of this century, the diesel -- named for Rudolf Diesel, its German inventor -- was already being put to work in a variety of industrial uses.
The Corliss Engine Works, considered the world's largest in 1902, ran its huge manufacturing plant entirely with diesel power. Brewer Adolphus Busch built the first diesel engine constructed in America for use at his brewery, eventually forming a new firm, Busch-Sultzer, to manufacture diesel engines for American and Canadian users. Even mighty American Locomotive Works, the nation's second-largest builder of steam locomotives, had tested the diesel with favorable results. Still, it would take American locomotive builders another quarter of a century to begin a serious program of building and testing these prototype designs.
Railroad Passenger Improvements
The railroad passenger benefitted greatly from technology's advance. For example, the introduction of steam heating got rid of the coal stove, always prone to uneven warming and unsafe in the event of collision. Following Edison's successful demonstration of the incandescent light bulb, electric lighting was introduced aboard passenger trains (although only on the finer trains; it would take until World War II for many railroads to fully convert to electricity for lighting). Tanks for fresh water would be introduced as well, allowing drinking and washing to be undertaken in good hygiene. And the all-steel passenger car's introduction in 1906 helped to assure greater safety in the event of a collision, at the same time reducing the likelihood of fire if such a misfortune did occur.
Electricity eventually provided clean, safe lighting aboard passenger cars, but a related event in Richmond, Virginia, in 1887 was almost immediately of concern to America's steam railroads. When inventor Frank J. Sprague successfully electrified that city's street railway system, the stage was set for the large-scale application of street railways to towns and cities of all sizes. Up to this time, only the largest cities could support the necessary high ridership or large capital investments required for horse- or cable-propelled railway systems.
In a pre-automobile age, Sprague's success meant that city workers could now get to and from their jobs much more efficiently; it also meant that development was spurred to the edges of cities, a precursor to our modern-day pattern of suburban living.
Soon the new technology of the trolley car was being applied to elevated railways as well, allowing large cities such as New York, Chicago, and Boston to continue to grow rapidly. As the century-turned, the boom was on. The electric railway industry mushroomed in size until by 1920 it was the fifth largest industry in the United States. In 1890, street railways carried two billion passengers; by 1902, the number had risen to five billion, more than several times the number carried on the nation's steam railroads.
Another variation, the interurban electric railway, competed directly with steam railroads for the first two decades of the twentieth century. These interurbans, as they were called, followed major streets in urban areas, then set out -- often paralleling existing railroads -- across the countryside to serve nearby towns.
Although the trip often was slower than the paralleling steam road's service, it was offered more frequently. Thus the interurban grew to its biggest proportion in regions that had scattered towns and suburbs surrounding a major metropolitan core -- such as Los Angeles and Indianapolis -- or had concentrated development along a population corridor, such as those connecting Chicago-Milwaukee, Cincinnati-Day ton, or Oakland-Sacramento-Chico (California).
The interurban turned out to be little more than a transitional step between sole reliance on the steam railroad for intercity transit and almost sole reliance on the personal automobile (which was still several decades in the future). Although a few interurban systems actually prospered -- usually due to the fact that they also carried freight, in direct competition with steam railroads -- few industries have grown so rapidly or declined so quickly, and no industry of its size ever had a more dismal financial record.
Not surprisingly, the interurbans began their precipitous decline on the eve of World War I -- as the automobile was becoming available to all -- and during the Depression the industry was virtually annihilated.
Early 20th Century Railroad Competition
Competition is expected to be keen in a free-market society, but railroads prior to the turn of the century were engaged in a particularly cutthroat version. Railroad mileage was expanding, but particularly in the East and Midwest -- where the railroad network by 1900 was densely packed -- this new mileage was often built at the expense of competing lines. "The day of high rates has gone by; got to make money now on the volume of business" said W. H. Vanderbilt, eldest son of "Commodore" Vanderbilt and head of New York Central.
Controlling costs was one way of helping make railroads more profitable, and the many improvements in technology around the turn of the century helped to accomplish just that. At the same time, the American railroad system was going through a period of consolidation that was unprecedented. By 1906, seven major interest groups controlled approximately two-thirds of all railroad mileage in the United States.
The Harriman lines -- Union Pacific, Southern Pacific, and Illinois Central -- comprised 25,000 miles; the Vanderbilt roads -- New York Central and Chicago & North Western -- 22,000; the Hill roads -- Great Northern, Northern Pacific, and the Chicago, Burlington & Quincy -- 21,000; the Pennsylvania group -- the Pennsylvania Railroad, Baltimore & Ohio, and Chesapeake & Ohio -- 20,000; the Morgan roads -- Erie and Southern systems -- 18,000; the Gould roads -- Missouri Pacific and several other southwestern systems -- 17,000; the Rock Island group -- Chicago, Rock Island & Pacific system -- 15,000.
Consolidation, interestingly, went largely hand-in-hand with a trend toward less expansion. By 1910, the nation's railroads aggregated 240,293 miles; by 1916, the total reached 254,037 -- America's all-time record for railroad mileage.
Railroad employment grew as well, to a 1916 peak of 1.7 million persons, but the trend would be downhill from there. The era of the big-name "empire builders" was also coming to a close; the last, James J. Hill, died in 1916.
Increasingly, business managers and bankers -- rather than entrepreneurs -- would assume the challenges of running the nation's railroads. And difficult though it may be to comprehend today, a number of forces were at work to drastically alter the competitive picture -- just as the railroads, it seemed, had reached some kind of equilibrium.
Those forces had actually been at work for some time.
Early 1900s Railroad Laws
As early as 1871, railroad regulation had been enacted within individual states, in response to agitation by farmers for rate controls. The first significant federal regulation -- the Interstate Commerce Act -- followed in 1887; even then, the railway industry had little to fear, since "supervision is almost entirely nominal," wrote Attorney General Richard S. Olney in 1892.
The following year, President Benjamin Harrison signed the Railroad Safety Appliance Act into law, requiring air brakes (replacing manual ones cranked down "at speed" by brakemen atop swaying railroad cars) and automatic couplers (replacing the infamous "link and pin" variety that was responsible for the crushing of dozens of brakemen each year, and the loss of thousands of their fingers) to be phased in on most locomotives and cars around the turn of the century.
Although the Interstate Commerce Commission was largely ineffectual prior to 1900, the onset of the Progressive Movement revived the issue of regulation. Most Americans were of the opinion that more stringent controls were needed to prevent abuses such as those perceived within the financial markets -- and which on occasion had led to great collapses of railroad systems, as well as the resultant loss of investor fortunes. It was obvious that something needed to be done to restore the public's confidence.
In this light, President Theodore Roosevelt in 1901 directed his attorney general to file suit -- under the provisions of the Sherman Anti-Trust Act -- against Northern Securities, a giant holding company formed by railroad consolidationists Edward H. Harriman and James J. Hill. The company was outlawed in 1904, and later that year Roosevelt was reelected to a second term. Before the year was out, Roosevelt asked Congress to increase the powers of the I.C.C. This was done overwhelmingly with passage of the Hepburn Act, which empowered the commission to establish "just and reasonable" maximum rates.
"Within two years of [the Hepburn Act's] passage, more rate complaints -- some 1,500 -- were made with the I.C.C. than had been filed in the two preceding decades," writes historian John F. Stover in his book "The Life and Decline of the American Railroad." A related bill strengthened the I.C.C.'s powers in 1910, requiring railroads to prove that any future rate hikes were reasonable and necessary. A related piece of legislation in 1913 provided for the regulatory agency to begin assessing the true value of each railroad, information that was needed if rates were to be established that would provide a fair return for investors.
Not unexpectedly, rate increases requested by the railroads were not always granted by the I.C.C. Rates between 1900 and 1916 dropped slightly, even though the nation's general price level increased by almost 30 percent.
Investment in railroads fell; maintenance standards went down; and new freight and passenger equipment was not ordered in sufficient quantities to keep up with the ongoing demands for replacement and modernization of railroad fleets. The nation had succeeded in regulating its railroads, but with unintended results.
Railroads During World War I
On the eve of World War I, America's railroads were afloat in a sea of dramatic contrasts. On the one hand, the railroad's influence could still be felt in the towns and cities of America, and long-distance travel was still almost exclusively the domain of the passenger train.
And yet, in contrast to these healthy signs, wooden passenger cars were still in use on many railroads, as were outdated and underpowered locomotives. Freight-car fleets still were made up, in large part, of older, lower-capacity (30-ton) cars, even though the increasing use of steel had made the 40-ton car a reality by now.
The outbreak of war in August of 1914 at first resulted in decreased American industrial activity. Rail ton-miles decreased four percent in 1914 and another four percent the following year. It was not until 1916 that the allied nations began to draw upon the economic resources of the United States. That year, ton-miles increased dramatically -- 32 percent -- and soon the nation's railroads were feeling the strain. As the flow of traffic was mostly eastward, serious congestion was experienced in the yards, terminals, and ports of the Northeast and New England.
A car shortage developed as a result, primarily in the West and South. Car shortages were not unusual during peak periods of business prosperity, and a number had occurred before this time. Yet this one would he different. Things went from bad to worse, and in January of 1917 the Interstate Commerce Commission reported that, "The present conditions of car distribution throughout the United States have no parallel in our history . . . mills have shut down, prices have advanced, perishable articles of great value have been destroyed. . . . Transportation service has been thrown into unprecedented confusion."
By the time war was actually declared by the United States, in April of that year, the situation had grown intolerable. American railroads experienced their heaviest traffic in history during the preceding eight months, and the onset of war simply increased the burden. Yet the American spirit of individualism prevailed, and an executive committee called the Railroads' War Board was formed by industry leaders. This body succeeded in lessening car shortages and other problems. Unfortunately, the winter of 1917-1918 struck with a vengeance. That, plus a series of conflicting "priority shipment" orders from the federal government's own war agencies, finally brought things to a standstill.
On December 26, 1917, President Woodrow Wilson finally proclaimed: "I have excercised the powers over the transportation system of the country, which were granted me by the act of Congress of last August, because it has become imperatively necessary for me to do so." He addressed Congress just a few days later, on January 4, 1918, telling all assembled that he had excercised this power "not because of any dereliction on their [the Railroads' War Board's] part, but only because there were some things which the government can do and private management cannot."
United States Railroad Administration
The new United States Railroad Administration, headed by William McAdoo, Wilson's former secretary of the treasury, went about its work with dispatch. Duplicated services were trimmed or eliminated; hefty wage increases were granted by the government to avert strikes; standardized locomotive and car designs were introduced; and increases in freight rates and passenger fares were approved -- but not enough to cover the increasing costs of providing service during those troubled years.
The reasons for the inability of railroads to meet the needs of war went back at least a quarter of a century, largely revolving around their inability to make a reasonable return on investment due to burdensome regulations. Maintenance had already been deferred on the nation's railroads prior to the war's onset; by the time the armistice was signed in 1918, incredible amounts of traffic had been moved by rail, yet relatively little maintenance had been performed. The railroads were worn out.
Ultimately, government operation of the railroads may have been satisfactory from an operational point of view, but it was a financial disaster. It also violated American business ideology, and the general public by war's end was in the mood for a return to normalcy. Although a number of labor and other interests agitated for federal purchase and continuing control of railroads following the end of hostilities, this was not to be. The Transportation Act of 1920 returned the railroads to their owners as of March 1 of that year.
The Act greatly increased the power and scope of the Interstate Commerce Commission, while at the same time directed the Commission to prepare plans for the formal consolidation of railroads into a limited number of systems. Unfortunately, the Transportation Act seems largely to have ignored the fact that there were new forms of transportation on the horizon.
Rebuilding the Railroads
During World War I, the US. government had demonstrated for the first time the potential for long-distance motorized freight transport, which had been necessary to supplement the overburdened railroads. Following the war, the United States was left with battered roads -- much like its railroads -- and a huge postwar rebuilding program was begun with taxpayer dollars.
The railroads would enjoy no such rebuilding program. In some cases there would be years of haggling over the government's compensation for using the railroads (each was paid for the period of government control, but payments were based on pre-war freight rates). The entire saga of government control should have pointed to managed competition -- not nationalization -- as the answer to the woes of America's railroads, but it would take a good many more years for anything to be done in that direction.
As the 1920s dawned, so too did a time of recovery, general optimism, and social experiment -- especially with regard to the role of women in society. American railroaders could look back proudly at their accomplishments over the past two decades, even with the tarnish of wartime confusion and stifling government control. Yet the future held much less promise. A new era was dawning for the transportation systems of America, and railroads seemed likely to have a diminishing role.
Despite the less than favorable economic forecast, the 1920s would become the golden years for American railroading. The decade inspired a romantic image of the industry that persists to this very day.
Early Twentieth Century Railroad Timeline
Casey Jones' famous train wreck occurs at Vaughn, Mississippi. Jones pays for his miscalculation with his life, but no passengers are killed, and the engineer becomes an American legend.
The federal government files suit against Northern Securities, a giant rail holding company, for restraint of trade.
Two-thirds of U.S. railroad mileage is controlled by a handful of rail magnates. Congress strengthens the regulatory power of the Interstate Commerce Commission.
Henry Ford introduces his Model T gas-powered automobile.
Milwaukee Road joins the ranks of transcontinental railroads.
Penn Station opens in New York City.
World War I breaks out in Europe.
America's peak year for railroad mileage -- 254,037 -- and employment -- 1,701,000. U.S. industrial activity picks up for the war effort.
The United States formally enters World War I. The federal government assumes control of American railroads as a wartime measure on December 28.
Armistice is signed on November 11. U.S. Railway Administration Director-General advocates five-year "test" of government control.
President Wilson announces that railroads will be returned to private control within a year.