Whatever our national fascination with decay, when it comes to railroads, Americans seem decidedly to prefer the history of our boom years—of mustachioed barons and valiant strikers, Promontory Point and the Iron Horse—to those of subsequent decline. Books on the early years of rail are ubiquitous; those of more recent years are as common as Pullman cars.
Passenger rail occupies an outsized share of public attention, and its Magnificent Ambersons-like tale of the automobile’s triumph often occludes any awareness of the very different afflictions and fortunes of freight rail over the 20th century. Competition from other modes of transport was unquestionably the ruination of most passenger rail, but, thanks to Robert E. Gallamore and John R. Meyer, we are reminded that the real villain in the lengthy decline of freight rail was a scheme of Progressive-era pricing regulations that serve to make any affliction of Taggart Transcontinental look realistic.
An assortment of legislative acts between 1893 and 1910, in response to the presumptive predatory nature of the railroads, granted the Interstate Commerce Commission (ICC) a shocking number of powers to regulate nearly every aspect of the railroad business, including (most ludicrously) the setting of rates for different commodities on a uniform basis by region. A carload of wheat would cost a given price for any carrier across a whole region; a carload of coal would similarly cost a fixed price. These rates were adjusted stutteringly—and were quite deliberately rigged—to favor the cheap transport of agricultural goods as opposed to manufactured products or components. Rail companies were forbidden to enter into contracts otherwise.
This system, absurd in any scenario, was at least possibly the product of some genuine market concerns in the early age of genuine railroad monopolies. However, it soon became an immense millstone around the fortunes of American rail in an age of growing competition from trucking and waterway transportation. High-value goods soon forsook opportunistic rail pricing, leaving railroads reliant upon clients paying artificially low values. The ICC employed thousands of rating clerks to keep this charade going: Here was Frank Norris’s octopus, its regulatory tendrils slowly choking the life out of American rail.
While it’s not quite true, in the realm of regulation, to quote Lady Macbeth (“What’s done cannot be undone”), change will generally take a lifetime and usually won’t occur without some calamity as prompting. The 1970 Penn Central bankruptcy proved a shock to the political system, yielding a number of stabilization measures during the Ford and Nixon administrations. Still, in 1976, Conrail lost more money than all the rest of American rail companies combined, a situation that propelled even the Carter administration to decisive, useful action in the form of the Staggers Rail Act (1980), which liberated American rail from its immense burden of price regulation—and rapidly returned a moribund industry to health.
This tale has been told before, most notably in Martin Albro’s Railroads Triumphant (1992), but it deserves a retelling, especially one as substantive as this. The authors, both of whom worked either in the rail industry or as consultants, are frank in their sentiments from the start:
A central theme of this book is that railroads, throughout their history, were so important to the US economy that politicians could not leave them alone, and when governments did intervene in transportation markets, they usually made a mess of things. Government regulation distorted consumer choices, found awkward and costly ways of subsidizing competing modes of transportation, taxed or regulated away profits needed for reinvestment or capacity expansion, and—while generally contributing to greater safety—typically fell far short of stimulating optimal safety performance for all transport modes.
If that isn’t a welcome message, I’m not sure what is.
Along the way, American Railroads is fascinating and idiosyncratic, a history balanced between anecdotal color and rigorous accounting of the unique and changing economics of the industry. It’s a story of considerable ingenuity and change, even in the face of dolorous bureaucratic burdens; of innovations—from the diesel electric locomotive to computerized train controls—and the considerable shifts in rail ownership between the turn of the century’s panoply of lines to the current Big Four.