Railroads of the 1920s

1920s Railroad Regulation

Even if the railroad was not everyone's "life," it made their lives possible. In the years when central heating meant a coal furnace in the basement, that coal came from distant mines by rail. Similarly, the radio advertisements for Nabisco crackers and other emerging national brands of food and other products were predicated on the fact that boxcars could deliver consumer goods to stores in the most remote corners of the continent. And with an irony lost on railroaders of the day, trains hauled the raw materials for the roads, automobiles, and air-planes that would wreak havoc upon the industry-and nearly cripple it-over the decades to come.

The 1920s represent a period in which the government and the railroads settled into a highly regulated working relationship, even while new competitors arose as real threats. Railroad companies, for instance, could only compete on the basis of service; rates were strictly controlled, and underpricing another carrier was illegal. The Interstate Commerce Commission oversaw almost every facet of the railroad business, and its officials were continually busy with complaints ranging from the highly technical to the absurd. Thousands of railroad clerks kept a mind-numbing array of statistics so that the government could "protect" the American people.

To the north, the newly formed Canadian National Railway was itself a Crown corporation, owned by the Canadian government. Its rival, Canadian Pacific, was a private corporation, but both were closely regulated, as were the nationalized railroads of Mexico beginning in the late 1920s. Such close attention would have worked fine had it not been for the competition.