Collectively, railroads spent nearly $7 billion for improvements and boosted efficiency tremendously. There were also new technologies, such as the diesel locomotive (introduced commercially in 1925), lightweight car construction, and new types of air-brake systems that promised great economies-someday. Railroads were in no great hurry to fix a system that worked well, even if it had a more than a healthy amount of excess "fat."
As early as 1926, Harvard professor William Z. Ripley, a respected expert on railroad finance and business, warned of the "honeyfugling, hornswoggling, and skulduggery" he saw on Wall Street and in corporate board rooms. Not all of American business was as conservative as the railroads, and after years of speculation, fraud, and self-delusion, the stock market began to wobble in early 1929. The country had just elected Herbert Hoover president; he was a good man, following two ineffectual presidents, but despite his reassurances that the economy was sound, 13 million shares of stock changed hands on October 24, 1929, the day that became known around the world as "Black Thursday."
Over the next few weeks, the economy began a slide that would last two years and obliterate hundreds of millions of dollars of wealth. Railroad traffic dropped immediately, and the companies found themselves desperately attempting to reduce expenses while they, too, tried to see the market's bottom. Canada was not to be spared; before it was over, one out of every two adult Canadian males would be unemployed.
After a pleasant few years of boom, North America's seemingly invincible railroad industry faced an unprecedented bust. There was nothing to do but ride it out as best they could.