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.