Railroads During the Depression

Before air conditioning, when fans stirred the summer air of offices, paperweights such as this were both functional and a reminder that "the business of America was business."
John B. Corns

The period between 1930 and 1945 was a time of contrast and change. The railroad industry, shrunken by economic crisis and competition from the automobile, developed new ways, to lower costs and attract passengers. Meanwhile, diesel locomotives began to replace steam engines as the nation prepared for war. Literally everything moved by rail during the conflict, leaving the railroads exalted but exhausted as they approached the postwar era.

The railroad industry entered the 1930s in a state of deep pessimism. While most business and government leaders proclaimed that the national economy was in good condition, unemployment had risen from 1.5 million in late 1929 to an estimated 4 million by the spring of 1930.


Railroads had not come through the 1920s in very good condition. Nationalization during World War I left the major railroads worn out, and reinvestment was hampered in the capital markets, which favored more lucrative -- and speculative -- outlets for investment. Railroads also suffered the effects of restrictive governmental regulation, public investment in competing transportation systems, and the loss of passenger business to the automobile. The national economic collapse that began in 1929 only sharpened the predicament faced by railroads since 1920.

Unemployment had risen to nearly 5 million by January of 1931. The Depression reached a low point in mid-1932, with unemployment standing at 12 million, the overall economy having contracted by 40 percent, and industry producing at half of 1929 levels. Railroad employment fell by 42 percent during the same period. Employees who weren't furloughed had to bump fellow workers with lower seniority or accept demotion in order to keep working. Increased freight tariffs were granted in 1931 to shore-up falling revenues. This proved to be a disaster, as shippers diverted traffic to lower-cost trucks. In January of 1932, railroad management and labor agreed to a 10 percent reduction in wages for one year. The net income of railroads plummeted from $977 million in 1929 to a loss of $122 million in 1932; the industry would not be profitable again until 1937.

Capital investments were cut, and maintenance was deferred to the greatest extent possible. Locomotive sales plummeted during the early 1930s, and most railroads had long "dead lines" of locomotives collecting dust in storage yards.

Unused engines and cars tied up substantial amounts of capital, had costs associated with bond interest, and weren't earning any money to pay these costs. One third of the nation's railroads went into bankruptcy during this period, and the cruel realities of railroad economics spelled the demise of many companies in the 1930s.

The "New Deal" of President Franklin Roosevelt sought to stabilize the economy in a number of ways. The Reconstruction Finance Corporation had been chartered during the Hoover administration to loan money to essential businesses, including banks and railroads, but had accomplished little before 1934. Despite Roosevelt's skepticism about the economic benefit of federal public works spending, his new Public Works Administration funded schools, courthouses, hospitals, highways, bridges and other transportation improvements. Though thousands of miles of highways were built, the largest railroad project of the era was the RFC/PWA-financed electrification of the Pennsylvania Railroad between New York City and Washington, D.C.


The Pennsylvania Railroad

Every dining car on the Pennsylvania Railroad carried sugar bowls like this one in the 1930s.
John B. Corns

The Pennsylvania Railroad began to experiment with electrification in 1895 and by 1906 had electrified its Long Island Railroad and West Jersey & Seashore Railroad subsidiaries. Electric power pulled as many as 1,000 trains a day under the Hudson River to New York City's Pennsylvania Station, opened in 1910. Suburban lines around Philadelphia were electrified before World War I, and there was serious discussion about adopting electric power for mainline freight and passenger trains.

A number of steam railroads tried electric traction during this period. The technology was new and intriguing, and electric locomotives promised operating advantages over steam locomotives. They were faster, easier on track, cost only one-third as much to maintain, would last twice as long, could run in either direction, and never had to be removed from service for monthly boiler washes. Electricity also eliminated smoke and cinders, fuel and water stops, roundhouses, and turntables.


The Baltimore & Ohio, New Haven, New York Central, Boston & Maine, Milwaukee, Great Northern, Virginian, and Norfolk & Western railroads all developed substantial mainline electrification projects, but the Pennsylvania's plan was to be the biggest of them all. In late 1928, the railroad announced its intent to electrify 1,300 miles of track over the 325-mile route between New York City and Wilmington, Delaware. This ambitious scheme was expanded a year later with a plan to extend the electrified territory past Washington, D.C., to Potomac Yard north of Alexandria, Virginia.

The B&O logo featuring the nation's capitol dome was first developed in the 1890s as an appeal to the patriotic fervor of Americans wishing to see Washington, D.C. This version of the company icon highlighted the services of the newly air-conditioned Capitol Limited of 1934.
Hans Halberstadt

The timing of this second announcement coincided with the start of the Great Depression. There were serious concerns about the wisdom of attempting such a project in the face of the national economic collapse, but the Pennsylvania saw great future benefits from electrification and decided to continue. The railroad had sufficient capital resources to get work under way and carry the project through 1931, when financing for any railroad project -- even the "Standard Railroad of the World" -- dried up. A $27.5 million loan was received from the Reconstruction Finance Corporation to continue the work. Another loan, for $80 million, was provided by the Public Works Administration to finance the Washington, D.C., section.

The great project was complete by 1940, giving the Pennsylvania Railroad the largest -- and the last-electrified common -- carrier mainline railroad in the nation. The result was a 20 percent increase in operating efficiency, which would pay substantial dividends during World War II, when traffic on the electrified lines reached an all-time high.



The Effects of Depression on the Railroads

As horseless carriages gave way to reliable automobiles like this 1925 Chevrolet, nearly everyone wanted to buy one. All-season paved roads increased in number and, as a result, short-haul business for steam railroads, streetcar systems, and electric interurbans began to drop.
Collection of Publications International, Ltd.

The Pennsylvania Railroad's electrification was one of the few truly bright spots on the railroad landscape during the Depression. A more general trend was for railroads to cut service on lightly used lines and abandon routes that had no hope of recovery. Inroads from automobiles and trucks made the situation worse, but a number of smaller lines, though uneconomical to operate, were able to hang on because they represented the only reliable means of reaching isolated parts of the West. Other small railroads made ends meet with federal mail contract subsidies.

The Depression magnified the effects of competition from other modes of travel. For the first 50 years of its existence, the steam railroad enjoyed an unchallenged position as the principal form of public transportation. Two alternative propulsion technologies became commercially viable during the 1890s, shaking and then toppling the steam railroads' preeminent position. The first of these was development of electric street and interurban railroads; the second was the rise of the automobile.


Henry Ford did not invent the automobile or the assembly line, but he had a Populist conviction that private automobiles were a democratic force, and he developed ways to make and sell them in the millions. In what has been described as possibly the most expensive litigation in American history, he fought an eight-year battle with the licensees of George Selden, who had been issued a patent on the automobile in 1895. The 1911 decision confirmed that literally anybody, Ford included, had the right to build automobiles.

Ford's Model T cost more than $900 when it was introduced in 1908, dropping to $345 by 1916 and $280 in 1927, when production stopped after more than 15 million cars had been produced. Not only had Ford made the automobile a mass commodity, he and others created a new economy based on the installment financing of newly invented consumer products. The manufacture of automobiles surpassed all other industries by 1926 and was described by Alfred P. Sloan of General Motors as " . . . the greatest revolution in transportation since the railway." Indeed, it was. By 1930, one in every five Americans owned an automobile, and the consequences to the railroad industry would be profound.


Railroads vs. Automobiles

The introduction by Ford of its first light-duty pickup truck as an optional body for the 1925 Model T Runabout proved a bellwether for the automotive industry. Suddenly, less-than-carload traffic could be carried far less expensively by road than by rail.
Collection of Publications Internatonal, Ltd.

The new automobile culture increased the government's role in public works development. There were only 161,000 miles of surfaced roads in the nation in 1905. The total jumped to 521,000 miles in 1925 and 1,721,000 miles in 1945. Nearly all of this investment was made by the government.

This governmental involvement reflected a shift in public attitudes toward transportation. Prior to the rise of the automobile, it was taken for granted that public transportation would be provided by private companies, and most specifically by the railroads. This was an obligation assumed by the railroads in their capacity as a "natural monopoly." Railroads could develop and expand as economic need dictated, and investors would assume the risks and the benefits. The role of government was to ensure that the public's interests were served, and the railroads were expected to accept this regulation in exchange for business opportunities.


Railroads had long been viewed -- with varying degrees of accuracy -- as being abusive in the exercise of their power and gradually came under oppressive regulation by state and federal authorities. Grangers, Progressives, and any number of other "reformers" took advantage of the railroad industry as a convenient political target.

In the age of the automobile and the airplane, railroads strove mightily to convey the sense that they, too, were "Ahead of the Times."
Sanderson Photography, Inc.

The automobile arrived as a practical consumer item at the same moment the nation and its political leadership were looking for an alternative to the railroad. The Good Roads movement channeled government monies into highway construction on a larger scale than ever before. More roads led to a larger market for cars, which increased political pressure to build even more and better roads, and so it went until a new public works philosophy became established.

The job of the government shifted from regulation to the actual provision of services-specifically, the building and maintenance of roads. Indeed, the social philosophy of transportation itself moved from public transportation being something available to anyone who could afford it to that of a personal right that should be provided to all by the government.

The Great Depression created an environment in which additional types of transportation began to receive permanent government support. Airlines, barge operators, and even pipelines were subsidized by federal investments, leaving the railroads in the unique and unenviable position of being subjected to greater regulation than any competing transportation mode, but without any resulting benefits. This, in essence, is "the railroad problem" that began to take form during the late 19th century and remains with us even today.



Streamliners During the Depression

The Milwaukee road's crack Hiawatha trains were homegrown streamliners. The cowling on the locomotive suggested speed and made it resemble a diesel locomotive. These trains routinely hit 100 mph.
Railroad Museum of Pennsylvania

During the 1920s, some railroad designers became conscious of the developing public interest in the automobile and the fledgling commercial aviation industry. They sought to make the American railroad more contemporary, looking to modern, design-inspired trains in Europe as examples. Otto Kuhler took it upon himself to modernize the steam locomotive, and he published drawings in 1928 that resulted in his appointment as an industrial designer for the American Locomotive Company.

By the early 1930s, a competition was under way among the railroads and carbuilders to discover the best -- and most marketable -- way to combine the technical innovations of streamlining, internal combustion power, and lightweight construction. Over the next few years, a series of streamlined and air-conditioned motor trains were produced to test and demonstrate these concepts.


First of the new "streamliners" was the Union Pacific's Pullman-built M-10000, announced in 1933. Made entirely of aluminum alloy, its three articulated cars weighed less than a single conventional sleeping car and could accommodate 110 passengers. Powered by distillate -- a low-grade petroleum fuel -- the train was inaugurated in February 1934 as a harbinger of things to come.

The Budd Company of Philadelphia produced the Zephyr for the Chicago, Burlington & Quincy two months later. The Zephyr's engine was fueled with diesel oil, which proved to be much superior to distillate and established the pattern for subsequent diesel-electric locomotives. Pullman built another motor train in 1936 for the Illinois Central's St. Louis -Chicago Green Diamond, and others for Union Pacific, while Budd began producing streamliners for the Burlington line.

The Union Pacific christened its trains the Cities, while the Burlington had various kinds of Zephyrs, Trains like the City of Portland and the Twin Zephyrs influenced public attitudes about passenger travel, creating a demand for even more comfortable and flexible streamline service.

Although striking in appearance, articulated motor trains had serious limitations. The cars were permanently coupled together, making it extremely difficult to adjust capacity in order to meet demand. If the power car needed repair, the entire train was out of service, and the great length of some trains taxed yards and terminal facilities. The solution was to apply the materials and construction techniques used in the motor trains to individual locomotive-hauled cars.

Pullman built a pair of aluminum observation cars in 1933, and the Milwaukee Road started to build lightweight coaches the next year. Budd turned away from articulated motor trains in 1936 and began to produce individual cars to its distinctive fluted stainless-steel design. Aluminum and lightweight high-tensile-strength steel alloys allowed the new cars to weigh as little as 37 tons -- although 50 tons was more customary -- compared with 85 tons or more for conventional, or "heavyweight," cars. The new cars could be pulled by conventional locomotives and offered greater adaptability than the motor trains, while effecting a considerable weight savings over conventional equipment.

Integral to the lightweight car concept was mechanical air conditioning and air circulation. No more would the comfort of passengers be dependent on outside air temperature, and cinders were permanently banished from clothes and bedding.

Railroads that were reluctant to invest in motor trains saw potential in the new lightweight cars, and it wasn't long before they began to plan new, high-capacity streamline trains. Many of these would be pulled by diesel-electric locomotives, marking a nearly complete break with the tradition of heavyweight cars being pulled by steam locomotives.

Pullman-Standard, Budd, and American Car & Foundry were the principal commercial builders of new cars. Seeking less costly alternatives, some railroads rebuilt older cars in the streamline style or constructed their own lightweight equipment. The, Milwaukee Road built distinctive lightweight cars in the Milwaukee Shops and in May 1935 introduced the Hiawatha, the first steam-powered streamliner, which it preferred to call a "speed-liner." Not to be outdone, the Baltimore & Ohio "streamstyled" heavyweight cars for its 1938 Capitol Limited.

New cars and streamlined diesel-electric locomotives transformed the passenger train and established new standards for passenger comfort and amenities. The great names of the early streamline era still resonate: the Coast Daylight, the Rocky Mountain Rocket, the City of San Francisco and City of Los Angeles, the Hiawatha, the 400, and dozens more. First-class "name" trains captured the public imagination.


The Twentieth Century Limited

Even as a paperweight, Henry Dreyfuss's rendering of the 4-6-4 "Hudson" suggests speed and power.
John B. Corns

New York Central billed The Twentieth Century Limited, operating between New York and Chicago, as "the most famous train in the world," and indeed it was. The New York Evening World effused that the train was "so magnificent that it should never be printed save in capital letters." Re-equipped as an all-bedroom streamliner in mid-1938, the train was a picture of stately refinement in shades of silver and grey as it sped on its 16-hour run. Industrial designer Henry Dreyfuss integrated every detail of the train, from the locomotive (whose bullet-pointed nose was split by a scimitar-shaped flange) to the china in the dining car.

Chicago, the Atchison, Topeka & Santa Fe Railway's Super Chief combined stainless steel and elegance in America's first all-Pullman diesel-powered streamliner. Making the trip to Los Angeles in 39 1/2 hours twice a week, the Super Chief was the flagship of the Santa Fe and a favorite of the Hollywood crowd and their publicists. Like other first-class, extra-fare trains, the Super Chief reflected the growing importance of design and style to the traveling public. Just getting there wasn't good enough any more; one had to get there in style.


Few could afford a ticket on one of the new first-class streamliners, and coach train service continued to erode under pressure from buses and cars. Thousands of dispossessed rode the trains nevertheless, hopping freights as economic hobos. Though illegal and dangerous, the practice was often ignored by sympathetic railroaders, and at other times brutally suppressed by railroad police and local sheriffs.

Those among the impoverished whose pride, respect for the law, or practicality prevented them from catching a freight train swarmed onto the highways in old cars and trucks, searching for a better life. It may be argued that the railroads' emphasis on speed, comfort, and luxury for the fortunate few alienated a substantial segment of the market and drove less affluent travelers permanently into the culture of the automobile.


Streamline Diesel Engines

By 1934, the Lima Locomotive Works in Ohio was turning out some of the finest steam locomotives ever built. Each proudly carried the distinctive, red diamond builder's plate on each side of the smokebox. But diesel engines were quickly catching up.
Sanderson Photography, Inc.

As important as lightweight cars to the creation of the modern streamline train was the introduction of a successful diesel locomotive for mainline use. Gasoline, naphtha, and distillate engines had been tried in motorcars and small locomotives with limited success. Most had mechanical drivetrains -- much like a truck -- which weren't well suited to railroad service. The General Electric Company developed an electric transmission system that had the engine drive a generator. The resulting electricity could be easily controlled and used to power motors on the axles, like those fitted to electric streetcars. This system was applied to gas-electric motorcars and, later, to small locomotives.

GE built three unsuccessful diesel-electric locomotives in 1918, and in 1925 began to furnish electrical equipment for Alco diesel-electric switchers. These were moderately successful and pointed the way to the production of several hundred diesel-electric switchers prior to 1940. Developing a diesel powerplant capable of surviving the rigors of mainline service was another matter, and it was here that the upstart manufacturer Electro-Motive Corporation had the edge.


EMC had been purchased by General Motors in 1930, as was the Winton Engine Co. Winton perfected a practical two-cycle diesel engine light enough for service on a road locomotive by 1932, and these companies experimented with ways of matching diesel engines and electric transmission for mainline purposes. EMC furnished the propulsion equipment for the Zephyr and most other motor trains of the era. This experience allowed EMC to develop a design for full-size passenger locomotives, which were placed into production in 1937, The E-series passenger locomotives dominated the market and pulled most of the pre-war diesel streamliners.

EMC had also commenced the manufacture of switching locomotives in 1936, and had a road freight locomotive, the FT, in production by 1939. Diesel production exceeded steam locomotive production for the first time in 1938.

In January of 1941, with the technologies of EMC and Winton developed to the point that their products were proving to be of substantial commercial value, the two subsidiaries were consolidated and merged into the General Motors Corporation as the Electro-Motive Division. EMD's FT freight locomotives were the only diesel-electric freight locomotives allowed to be commercially manufactured during World War II under War Production Board restrictions. This helped establish market preeminence and meant that the competitors -- all of them established steam locomotive manufacturers -- were building an obsolete product.


Depression Era Railroad Timeline

The vehicle that changed the thought and transportation patterns of Americans as surely as railroads had altered personal travel in the 1830s was the Ford Model T. Inexpensive and trustworthy, coupes like this 1919 model allowed travelers to go wherever and whenever they pleased.
Ford Motor Company


The Santa Fe Railway suffers the worst traffic losses in its history as the Midwest is transformed by drought into a "Dust Bowl."



In May, B&O's Columbian, the first completely air-conditioned passenger train, is put into service between New York and Washington.


Depression-era hardship causes industry leaders to lower railroad wages by 10 percent for one year. Despite that concession, the net income of railroads plummets to a loss of $122 million.


Roosevelt is inaugurated: He promises quick recovery as the United States enters "The 100 Days."


Union Pacific's M-10000 streamliner does a coast-to-coast run in 57 hours.


The Railroad Retirement Act of 1934 is declared unconstitutional.

The streamlined Challenger, running between Omaha and Los Angeles, introduces such luxuries as air-conditioning, free pillows, and attendants trained as nurses.


Santa Fe's Super Chief, America's first all-Pullman diesel-powered streamliner, begins twice-a-week service between Chicago and Los Angeles. Running time is less than 40 hours.


In September, a war emergency is declared in the United States.­