The Great Railroad Revolution (43 page)

The completion of the line in January 1912 was marked by a special train, with the eighty-two-year-old Henry Flagler aboard, from New York to Key West, where it was met by a crowd of more than 10,000 people, many of whom had never seen a train before. Key West, later Ernest Hemingway's hangout, was actually nearer to Havana than Miami, and the main service, which was supposed to take four hours from Miami but often took six or seven because of the difficult conditions, was called, fittingly, the Havana Special. Flagler, who enjoyed nothing more than a ride in the cab between Miami and Key West playing folk tunes like “Long Caleb McGee” or “Old Dan Tucker” on the locomotive's whistle, died the following year, too soon to realize that the enterprise was a failure. Few tourists ventured all the way down the line, and the hopes that Key West would become a major freight port since it was the nearest in the United States to Central and South America never materialized, with the result that few freight trains used the railroad. The rail service lasted less than a quarter of a century, as yet another hurricane, on Labor Day 1935, destroyed the railroad. Flagler's work was not wasted, however. The railroad company gave up trying to run any trains on the line, which in any case had been reduced to just one service a day. Cars had begun to use the tracks, and now the arrangement was formalized. The rails were ripped out, and the line of the route remains today as the base for US Highway 1, running to a series of exotic resorts as well as the port and naval base of Key West.

If tourism was largely stimulated by the advent of railroads, so was the creation of professional sports. The railroads not only enabled matches between teams in major cities to take place by providing transportation, often overnight, for the big-league teams, but also allowed supporters of the away team to travel, greatly enhancing the atmosphere in the stadiums. Baseball was the pioneer. The game itself had started becoming popular during the Civil War, when troops on both sides played during lulls in the fighting, and it expanded rapidly after the war. Boston and Chicago were
the big hitters in the first professional league established in the early 1870s, and clearly such rivalry would not have been possible without the two teams being able to travel to each other's city by rail. In fact, “city size and railroad travel feasibility defined the major baseball leagues,” and generations of baseball players spent much of their time on the railroads.
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A whole culture of life on the rails developed, enlivened by practical jokes, such as the one played on Babe Ruth, the greatest ever baseball player, who was told to rest his arm on the little netting shelf that was next to the bed for personal effects. Ruth, a pitcher at the time, did so and found that in the morning he could barely move his arm.

It was, in fact, the limitations of travel by rail that prevented teams from the West from joining the Major Leagues before teams took to the air in the 1950s. Until then, St. Louis, the most westerly town reachable by overnight train from the East Coast, was as far west as the so-called national leagues could stretch. Other professional sports developed later than baseball, but also made heavy use of the railroads, for both players and spectators. Indeed, match and tournament schedules were arranged around railroad timetables. Circuses, too, traveled by rail in whole trains specially provided for them. In one much-recounted episode, an elephant managed to remove the pin between carriages, splitting the train without the driver realizing what had happened. Tragically, one of the country's worst rail disasters occurred on a circus train when 86 people died, along with numerous circus animals, and another 127 people were injured, after a locomotive engineer fell asleep and ran his empty troop train into the rear of the Hagenbeck-Wallace circus train in June 1918 near Hammond, Indiana. Many of the victims were burned beyond recognition and are buried anonymously in a special circus cemetery nearby. Another similar disaster, also in the Midwest, involving two trains of the Wallace Bros. circus, a predecessor of the Hagenbeck-Wallace, had occurred in 1903, with a death toll of 23 and numerous animals.
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Despite these tragedies, circuses have proved one of the most durable users of the railroad. Even today the Ringling Bros. circus travels around the United States in a pair of special mile-long trains of sixty cars each—carrying everything from acrobats and trainers to elephants and pythons. It has been using the tracks since 1872, except for a short break during a failed experiment with road travel in the 1950s.

The most significant and profound impact of the railroads was on the economy, where there was both a direct and an indirect effect. Quite simply, the railroads were by far the biggest business, and their need for basic materials was a stimulant for several other industries. Whole forests were cut down to provide millions of ties for the tracks, massive amounts of ballast on which they rested were quarried, unprecedented amounts of coal were mined to fuel the locomotives, and huge quantities of ore were needed to produce the iron for rails. Indeed, the whole method of production was transformed as a result of the huge demand for iron. Integrated mills were created where all the processes were carried out on one site, and the principal output of these early factories was rail. Other materials in great demand included copper, glass, and india rubber. The machine-tool industry also expanded rapidly to provide increasingly sophisticated tools required by the railroads.

The indirect effect was even broader. By bringing down the cost of transportation, the railroads stimulated demand for both manufactured goods and raw materials. Mass-production techniques had been constrained by the lack of constant supply and the cost of transportation. By ensuring that the supply of materials and parts was both cheaper and more reliable—since railroads, unlike the canals that froze up, operated year-round— manufacturers could now rely on a regular supply of parts and materials, revolutionizing the production process that, therefore, moved from small workshops providing for the local neighborhood to larger factories serving a state or even the whole nation: “These techniques [of factory production] were adopted to mass produce shoes, clothing, clocks, watches, locks, sewing machines, harvesters and other agricultural implements, and also guns and revolvers.” The railroads changed the nature of agriculture, encouraging the production of cash crops by reducing the cost of transportation and allowing produce to be carried over much greater distances to both domestic and export markets. Although economists have long argued about the precise impact of these changes, it is undeniable that “the railroad was a significant force in the growth of the American economy during the second half of the nineteenth century.”
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The railroads were also responsible for the development of modern business methods. The post–Civil War boom in the railroads brought with
it a change in their nature that was to have a lasting effect on the way that America conducted business. Indeed, the early large railroad companies were the nation's first modern corporations, and they were as expensive and complicated to run as they were to build, especially when they consolidated into far larger businesses. The many tasks of running a railroad necessitated a vast array of skills, a requirement that increased as train services became more frequent, faster, and more complex. To mention but a few of these: railroads needed technical expertise to maintain the infrastructure and provide the locomotive power, operating skills to establish and keep detailed timetables, sophisticated management techniques to deal with the scattered workforce, and, of course, a wide variety of financial skills, whether it was assessing capital needs or determining freight rates and ticket prices.

The very notion of management grew symbiotically with the expansion of the railroads. No other businesses of the mid- to late nineteenth century were so complex nor spread over such a vast geographical area. None, either, employed so many people. At the time, manufacturing concerns were located on a particular site, with none of the difficulties entailed in running an organization extending hundreds or sometimes thousands of miles across the country. The assets the railroads had to manage were also extremely varied, ranging from bridges and tunnels to workshops and stations. The numbers of people required to carry out these tasks was also on a scale never previously encountered anywhere in the world, except, perhaps, for vast one-off construction exercises such as the building of the pyramids or the other “wonders of the world.” While factories of the time employed at most a few thousand people, the labor requirements of the railroads were far greater and more diverse. There were customer-facing people such as porters, conductors, and ticket clerks—the railroads were effectively the first mass service industry—and swaths of behind-the-scenes men (they were almost entirely male until the First World War) such as track workers, mechanics, engineers, signalers, and armies of clerks. To give an example, as early as the mid-1850s the Erie employed more than four thousand people, probably the largest workforce of the day in any industry, whereas a mere thirty years later the ever-growing Pennsylvania, which controlled around seven thousand route miles, had nearly fifty thousand workers on its books.
Again, no other company could match that figure. This gave rise to a host of new management techniques, especially given the fact that telephone communication did not become routine until the last fifteen years or so of the century: “Every day railroad managers had to make decisions controlling the activities of many men to whom they rarely talked or even saw.”
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Uniquely, running a railroad involved a myriad of vital and often safety-critical decisions to be made daily, often by quite junior staff. Working out the requirements of each station and freight depot and allocating the right resources and monitoring performance were new tasks that required both detailed management decisions and an overall strategic perspective. Even before the Civil War, the big trunk railroads of the East such as the Pennsylvania and the Baltimore & Ohio had begun to create sophisticated management structures involving, for example, the separation of sums of money allocated to investment, the capital account, from those relating to train operation, the revenue account. This may all sound banal, but was, in fact, the genesis of the corporate arrangements that are the basis of all modern-day business.

As the railroad industry became more competitive in the 1870s, there was a far greater emphasis on cost analysis, which suggests that the dominance of “bean counters” in modern business practice has far deeper origins than is generally realized. All this depended on much more sophisticated flows of information to enable managers to make informed decisions, rather than relying on instinct or experience. Statistics on all aspects of the business, whether the amount of tallow being used as a lubricant or the cost per mile for an engineer and fireman, were collected for the first time as the railroad companies strove for efficiency. In this respect, American practice was far ahead of contemporary European methods. As an illustration of the modern corporate thinking of the railroads, in 1856 Daniel McCallum, the general superintendent of the Erie who, as we have seen, would later play a key role in the North's railroad management during the Civil War, wrote to the president of the company, emphasizing the need for the collection of statistics on at least twenty different measures. He stressed that the real value of such information was “in its practical application in pointing out the neglect and mismanagement which prevail, thus enabling us to remedy the defect.”
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One can almost hear today's management studies
lecturers echoing such thoughts. These tasks, of course, became even more complicated and demanding when the great series of amalgamations and consolidations took place toward the end of the nineteenth century, creating even bigger organizations. The big railroads, therefore, were the first companies to develop modern business accounting methods.

Another aspect of the railroads that made them uniquely difficult to manage was that they could never stand still. During the whole of the nineteenth century, they were constantly expanding, adopting new technology (albeit reluctantly at times), investing in improvements, adapting to new demands that they had often helped to bring about, and dealing with a constantly changing political situation that inevitably affected them as the nation's most significant business. Change had to be built into the system, and that, too, was unique. The very nature of the business was mobile.

The vast number of people taken on by the railroads made them unwitting catalysts for the development of new patterns of industrial relations, stimulating the creation of mass labor organizations. The railroads were the first businesses to employ people in such numbers that the rigidity of the division between workers and management became entrenched. It was precisely because the railroads had far more sophisticated management techniques than other industries that it became possible for the two groups, management and labor, to bargain with one another. That transformed these mid-nineteenth-century railroads into the first modern corporations. The labor force was different, too. The men had a key advantage over their counterparts in other industries in that they had sellable skills that could not easily be replaced. The withdrawal of labor was a powerful weapon, and threats to strike were seen almost as a declaration of war. Strikes represented a real threat for companies with enormous fixed assets on which they needed to obtain a return in order to satisfy shareholders. Increasingly aware of their industrial muscle, railroad workers were among the first to form local unions and then, crucially, to expand these into national federations that “quickly became the most powerful and effective unions developed in the United States before the twentieth century.”
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