The Great Railroad Revolution (56 page)

In the twentieth century, however, the roads were about to get their revenge, although at first progress was slow. The first paved road outside cities was not built until the early 1900s, and, although urban streets improved, there was little progress during that decade on building intercity highways, despite the growing number of cars and their greater range. It was, initially, the states that took the initiative by creating well-funded highway departments to upgrade roads and construct new paved highways. At the federal level, little progress was made until 1912, when at last the federal government, under pressure from campaigners within the automotive industry, began to consider building a transcontinental road. In 1919, a military convoy traveled from coast to coast using the partly completed road known as the Lincoln Highway and took sixty days to make the journey. It was led by Lieutenant Colonel Dwight D. Eisenhower, who was so appalled at the poor condition of the roads that, when he was president in the 1950s, he launched the program to build the interstate network that would have such a devastating effect on the railroads (see next chapter). The thirty-three-hundred-mile Lincoln Highway, mostly called US Route 30, was not actually completed until 1923, but support for the project showed that the federal government was at last taking an interest in the issue, despite the fact that the Constitution, as mentioned in
Chapter 1
, notionally prevented federal funds from being spent on national infrastructure. Somehow in the rush to roads, this was forgotten, and in 1916 President Woodrow Wilson signed into law the Federal Aid Road Act, popularly known as the “Good Roads Bill,” backed by a generous initial appropriation of $85 million in its first year, ostensibly to help farmers bring their produce to market.

A series of technological improvements further tilted the balance in favor of trucks. As well as the greater reliability of engines and added power allowing bigger payloads, the key development was the introduction of the
heavy-duty pneumatic tire by both Goodyear and Dunlop in 1919 that reduced fuel consumption as well as the number of breakdowns caused by punctures. Trucking had the built-in advantage of flexibility, since trucks could go right to the door of farms and factories. Moreover, the industry was entirely unregulated until 1935, whereas the railroads were constrained by the rules imposed on them by the Interstate Commerce Commission, most important the requirement of a minimum charge per mile. This prevented the railroads from offering the same door-to-door price as the truckers, who cannily charged for the whole journey the amount the railroads required for the railroad leg. The railroads complained that the truckers were effectively subsidized, as the roads they drove on were state funded and the lack of regulation—and initially unionization—allowed them to operate without restraint. According to Martin, trucking was “a classic form of self- employment of men ill-suited for closely supervised work, who must work illegally long hours and drive at illegal speeds to pay for their or their employers' increasingly expensive rigs.”
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Although in numerical terms the trucks at first made only minimal inroads into the railroads' business, they targeted the high-value freight that was the most profitable part of the trade, leaving the railroads with the mineral and aggregate traffic that was least lucrative. The other section of the business that was quickly lost to the roads was the transportation of what was known as “less than carload” freight, small loads that were uneconomic on rail but easily carried by truck. House moves, too, soon transferred, helped by the fact that trucking the contents did not require everything to be crated, as required on the railroads. Overall, the truckers had the great advantage of being able to pick and choose which loads they wanted to carry, charging what they wanted, whereas the railroads were under a legal obligation to take whatever was offered at regulated prices.

The railroads thought, with some justification, that they were unfairly treated. As the author of a history of the Burlington suggests, “U.S. railroads are the only transportation mode that owns, maintains and operates its own infrastructure—and pays
ad valorem
taxes for the privilege.”
¹⁰
This puts them at a great disadvantage when the going gets tough, as in the 1930s. Whereas trucking companies could quite easily simply take their excess vehicles off the road and therefore no longer contribute anything to the infrastructure, the railroads had far less flexibility. They had far greater
fixed costs than their rivals, as they were responsible for the stations, tracks, and terminals, on which they had the added burden of having to pay taxes, whereas truckers had only the cost of their trucks and relatively small depots. As roads got better, the truckers' costs reduced, as they could travel faster, further increasing their competitive advantage.

The truckers had already profited from the Depression, reducing their prices to meet their impoverished customers' needs, something the railroads could not do. The railroads compounded their bad situation by pushing for a rate increase in the early 1930s that, surprisingly, the commission, once so obdurate, now granted. This was poor timing on the part of the railroads, another indication that they could not see the bigger picture. Even the regulation finally imposed on the truckers in 1935 ended up helping the industry by preventing cutthroat price competition between them and consequently allowing the industry as a whole to be more profitable. The highway network, too, was ever expanding, with 3 million miles— fifteen times the length of the railroad system—by the outbreak of the war, connecting every little village and hamlet that had been ignored by the iron road. As a result, when America entered the war following Pearl Harbor in December 1941, the trucks had 10 percent of the intercity freight business, a good toehold from which to expand, but a figure that shows the railroads were still dominant, even if they had lost much of their profitable trade. Despite all their difficulties and handicaps, the railroads retained a natural advantage for heavy loads and for long-distance transportation.

It was the automobile that would be the ultimate railroad killer, particularly of passenger services. The bald figures are instructive. From a total of 3.3 million cars—for a population of around 100 million during the First World War—by the end of the 1920s, that total had increased to 23 million, albeit for a larger population. Henry Ford was the main instigator, or culprit, depending on how one looks at it. His Model T, the first car specifically aimed at the middle class rather than the rich and cheaper since it was the first built using assembly-line methods, had cornered the market, with 15 million being produced by 1927, when it was superseded by later designs. Cars, of course, created much extra travel, so although their use expanded almost exponentially during the 1920s, the number of passengers traveling by rail largely held up, thanks to growing prosperity and the rising population.

Ironically, one of the reasons the railroads enjoyed such a boom in freight transportation in the 1920s was that they were carrying vast quantities of material for road building and for car manufacturing. Much of this would disappear once the roads improved, but they also carried huge quantities of iron ore, coal, and other minerals for the booming heavy industries. The months leading up to the Wall Street crash of 1929 were in many respects the apogee of the railroads in the United States, at least statistically. There were more than 20,000 daily passenger trains serving the 130 million population, a staggering 2.6 million freight cars (more than at any time in the railroads' history), and 57,500 locomotives, nearly all steam engines. The industry employed 1.6 million people, and although mileage had begun to decline from the peak of 1916, there were still nearly 230,000 route miles. Track miles, which include sidings and count both lines in double-tracked sections, had actually risen considerably in the period, demonstrating the level of investment undertaken by the railroads. Although most of the additions to the rail network were small branch lines serving a particular mine or factory, or creating useful connections, one remarkable new railroad came to be opened during the interwar years, with the completion in 1923 of the Alaska Railroad. Railroads had come late to the territory—which would become a state only in 1959—with construction not starting until the 1900s, stimulated by the Klondike gold rush, when several early efforts led to the bankruptcy of the companies that had built the lines. It was not until the federal government, seeing the value of a railroad in the mineral-rich territory, took over the lines in 1914 that work resumed and the railroad could be completed. In 1923, President Warren Harding drove in the traditional golden spike that completed the 470-mile line, from the sea at Seward to Fairbanks in the interior, which, unusually, was government run as part of the Department of the Interior (and survives today under the ownership of the State of Alaska, carrying both passengers, especially in the summer, and freight). As with many American towns, Anchorage, Alaska's biggest city, owes its existence to the railroad, since it was created when the federal government took over the line and realized it was the most convenient transfer point between ship and rail.

Despite the railroads' financial difficulties and the incursions into their market by the new modes of transportation, they still dominated transportation in the interwar period. An example of the scale of the passenger
rail operation at this point was the success of the New York Central's Twentieth Century Limited, which, when launched in 1902, consisted of just one train with a handful of cars. Now, on the eve of the crash, the Central had a dedicated fleet of 122 coaches and 24 locomotives for the service, which typically ran as six or seven separate trains, each carrying a hundred or so passengers in luxurious conditions. Crucially for the company, the prestigious service was a vital part of its economics, earning revenues of $10 million annually.

The railroads were still booming when the Wall Street crash of October 1929 ended thoughts of growth and ensured that the 1930s would be an agonizing time for the railroads. Inevitably, the increased competition combined with the effects of the Great Depression that followed the crash plunged many railroad companies into the red. During the 1930s, companies responsible for more than a third of the overall mileage fell into bankruptcy, including such famous names as the Erie (yet again), the Missouri Pacific, the Rio Grande, and the Wabash. Even the major eastern lines, such as the Pennsylvania and New York Central, only just managed to stay afloat. As ever with railroads when times get tough, the government had to intervene, as they were still a far too important part of the infrastructure to be allowed to go to the wall. Under Franklin D. Roosevelt's New Deal, the Reconstruction Finance Corporation was created that was intended to bail out organizations deemed essential to the national interest, and railroads became the second-biggest beneficiaries after the banks.
¹¹
In 1932, the initial payments were made, with the Baltimore & Ohio and the Van Sweringen group of companies being among the first recipients of this cash, which was used to reduce bank debts that the railroads could no longer service. Throughout the decade, hundreds of millions of dollars from the fund were used to pay off railroad debts.

The New Deal was, however, ultimately more helpful to the highways than the railroads. Highway construction had already been a great generator of jobs in the Keynesian mood of the 1930s, and in 1938 the Public Works Administration, created under the New Deal, agreed to fund construction of the Pennsylvania Turnpike, the nation's first superhighway. With a huge workforce of thirty thousand, it was completed just two years later and would be the model for the forty-eight-thousand-mile interstate system built between the 1950s and 1980s.

Despite the stringencies resulting from the Depression, the 1930s would see the major railroads embark on one last brave and flamboyant attempt to counter the threat from cars and planes in an effort to try to retain the passenger market. Technology had developed on the railroads, too, and they could now call on a formidable new weapon, the diesel locomotive. Even before the introduction of diesels, the railroad companies had started to realize that providing their rich customers with new wallets and putting on modeling shows was not all they wanted. More powerful steam locomotives, fewer station stops, and improvements to the track all enabled them to speed up their services. The country's most prestigious trains, the two rival New York–Chicago services, the Twentieth Century Limited and the Broadway Limited, finally cut the timing on the service from twenty to eighteen hours. However, because of the effects of the slump, other services were consolidated, which resulted in some expresses extending their times, as they had to call at more stations. In 1933, only forty-three daily US train services were timed to average more than sixty miles per hour on any part of their journey. America, which a generation before had boasted the world's most consistently fast services, was now falling behind Europe, where various countries were using modern steam technology or diesels to speed up their trains. Indeed, embarrassingly, it was Canada that could now claim to have the fastest expresses in North America. This was, though, about to change with the advent of the diesel in the United States the following year, which would prove to be a real game changer in terms of speed and would give the passenger rail services a new lease on life.

The rail companies' pre-1914 interest in electrification schemes suggested that they had begun to recognize the limitations of steam, but changing traction methods required courage, commitment, and deep pockets. As a result, few railroads continued with electrification programs in the uncertain climate following the First World War. The Pennsylvania was a key exception, embarking on an ambitious scheme to put up the wires on its lines to Philadelphia and later farther on to Harrisburg, as well as down to Washington, creating what was at the time one of the biggest electrified networks in the world. The other mainline long-distance railroads did not follow its example because of the cost and a reluctance to move away from steam. Electrifying the vast swaths of the sparsely populated Midwest or the virtually empty West was simply uneconomic.