Railroad Competition After World War I
During World War I, so much war traffic clogged the railroads that a young Army officer by the name of Dwight Eisenhower was ordered to attempt the cross-country transport of vital materials by road. His trucks pounded the fragile pavement between Maryland and California to dust, but he proved a point: Roads were effective for long-distance travel. After the war, as more people bought automobiles and wanted to "see America," popular support for a network of all-weather highways became irresistible. Tens of thousands of miles of new road went down each year as roads first linked metropolitan areas, then started off for more distant points.
At the same time, the Army Corps of Engineers stepped up its programs to improve rivers and canals, which greatly benefitted the barge lines in direct competition with railroads. The Post Office began letting air mail contracts in 1918, and transcontinental air mail routes were well established by 1925. That formed the basis for the civil aviation industry, which used publicly funded facilities and accumulated a yearly total of 73,000,000 passenger miles by 1930. Perhaps most worrisome to the railroads were the diversions to roads. Passengers began deserting passenger trains for automobiles in earnest, and buses competed directly on some routes.
Worse yet, for the price of a truck and a tankful of gasoline (at 18 cents a gallon), anyone could be in the freight business, with the road provided free of charge. The railroads were not opposed to good roads or lively competition. They were, however, very much aware that the playing field was not level. They could not fairly compete with other forms of transportation that were both lightly regulated (if at all), and at the same time were heavily subsidized by the government. That theme would echo throughout the railroad industry for 50 years before Congress finally addressed the situation.
The railroad industry was not without fault. Had it been more astute in its assessments, it might have raised more powerful objections sooner, perhaps helping to shape national transportation policy to a greater degree. But on the whole, the 1920s were good years, and the industry grew comfortable, if not complacent.