Amtrak, America's Railroad

Transportation's Orphan and Its Struggle for Survival

Geoffrey H. Doughty, Jeffrey T. Darbee, Eugene E. Harmon

• Publisher: Indiana University Press
• Year: 2021
• ISBN:
  9780253060655
• Topic: Technology & Engineering
• Subtopic: Rail Transportation
• Index: Technology & Engineering

Discover the story of Amtrak, America's Railroad, 50 years in the making.

In 1971, in an effort to rescue essential freight railroads, the US government founded Amtrak. In the post–World War II era, aviation and highway development had become the focus of government policy in America. As rail passenger services declined in number and in quality, they were simultaneously driving many railroads toward bankruptcy. Amtrak was intended to be the solution.

In Amtrak, America's Railroad: Transportation's Orphan and Its Struggle for Survival, Geoffrey H. Doughty, Jeffrey T. Darbee, and Eugene E. Harmon explore the fascinating history of this popular institution and tell a tale of a company hindered by its flawed origin and uneven quality of leadership, subjected to political gamesmanship and favoritism, and mired in a perpetual philosophical debate about whether it is a business or a public service. Featuring interviews with former Amtrak presidents, the authors examine the current problems and issues facing Amtrak and their proposed solutions.

Created in the absence of a comprehensive national transportation policy, Amtrak manages to survive despite inherent flaws due to the public's persistent loyalty. Amtrak, America's Railroad is essential reading for those who hope to see another fifty years of America's railroad passenger service, whether they be patrons, commuters, legislators, regulators, and anyone interested in railroads and transportation history.

This Is What We Had

1

Monopoly vs. Competition, 1840 to 1945

By about 1840, American railroads had stopped being a curiosity and were an accepted means of transportation. Explosive growth of the system east of the Mississippi in the two decades preceding the Civil War made railroads an essential component of economic life. The Union’s railroads helped to defeat the Confederacy, but in the period to century’s end, the South also participated vigorously in the expansion of the national network from coast to coast and border to border. It was a time when the railroad both connected and created communities and dominated as an economic and social force. Through efficient transportation of people and goods, the railroad induced economic development, and economic development made railroads ever more necessary. Author Robert Selph Henry noted the pace of change: “From the beginning of American railroad history to the period after the First World War, traffic on the rails consistently doubled every fifteen years, on the average.”¹

It was also a time of minimal regulation of business, and in this climate, the railroads’ domination led to abuses. By 1887, they were powerful monopolies led by legendary moguls and financial speculators: Jay Gould, J. P. Morgan, Cornelius and William K. Vanderbilt, and James J. Hill, among others. Their reputation as inflexible and ruthless earned them membership in a sinister pantheon—the “Robber Barons.”

Monopoly in the railroad industry should not have been a surprise. It had no competition; no other land transport mode matched its capacity, efficiency, and reliability. So, of course, its masters sought maximum financial benefit, often in conflict with each other. To be honest, the history of the industry would be pretty dull but for fascinating tales of corporate combat, thievery, and skulduggery.

These men are legendary in our nation’s history, but their ghosts haunt the railroad industry even today. While there were instances when monopolies actually were beneficial, this did not matter to a government attitude that any monopoly should be broken up for the public good. Not every railroad owner or manager was greedy and corrupt, but the rail monopoly led politicians into a crusade that resulted in increasing regulation of the industry. Farmers in particular, who were a large constituency and had to rely on rail transportation, raised enough protest to spur legislation curbing both real and perceived railroad excesses.

The federal response was the 1887 Interstate Commerce Act, which specifically targeted the railroads. It created the five-member Interstate Commerce Commission (ICC), which began as a regulator but under subsequent laws gained exclusive power to approve or disapprove railroad services and rates.² When it was a matter of continuing or discontinuing passenger train service, under its provisions, the Commission relied upon an ill-defined concept of what constituted “public convenience and necessity,” and this phrase was often invoked in discontinuance proceedings. How this standard was determined was not always consistent and often involved multiple public hearings in communities served by the service involving rail officials who had to defend their petitions with financial disclosures. Hearings officers’ decisions were not always based on the economics of operations.

Commenting on the ICC’s governance of the industry, Burlington Route’s president Harry Murphy stated in 1963 that train discontinuance procedures for the Burlington were based on trains that actually lost money for the railroad. “That’s what’s at the heart of the railroad passenger problem,” he noted. “I doubt if passenger business nets much for the railroad. Of course, I don’t know how much passenger business would be left if the ICC formula were used. As a matter of fact, when we appear before the public commissions for taking trains off, if we used the ICC formula there would be objections and our case would have to be restated. Whenever we take off service, we cost-analyze what it would cost out-of-pocket to continue operations. Until a train actually loses money, we don’t attempt to take it off.” Murphy pointed out what passenger executives had contended for a long time: “If any other form of business operated under ICC rules such as have been set up for the passenger business, they’d go out of business, fast. But we’re obligated to perform. We can’t escape it—you have to have due regard for the public.”³

Over time, ICC governance severely hampered the railroads’ ability to earn a profit because their monopolistic grip had been significantly weakened by a new early twentieth-century transportation technology: cars, trucks, and paved highways.

Writing in the middle of World War II, Robert Selph Henry stated the issue: “There was a time when the problem, to some minds at least, was how to keep railroads from making too much money. The problem for the past quarter of a century has been how railroads might make money enough to enable them to finance the improvements they had to have if they were to stay in business as solvent, self-supporting enterprises. That is the real railroad problem of modern times—how railroads can make a living.”⁴ Henry further noted that war traffic brought new prosperity but also that “the problem” would return and be worse after war’s end. Indeed, overregulation would not be seriously addressed until 1980, and since then the regulatory and economic climate for the railroads’ freight operations has been vastly improved. Up to that point, highway and even air freight competition, onerous taxation, constraints on ratemaking, loss of mail contracts, and battalions of federal and state regulators had weakened but fortunately did not kill the industry.

There has always been something of a love-hate relationship between the railroads and the public. In the absence of highway and air competition, railroads had to do little to attract passenger traffic. Indeed, other than the introduction of the air brake, all-steel passenger car, and enclosed vestibules, there were few significant innovations in services up to around 1920. Prior to that, passengers were knocking down the doors, with passenger-miles and revenues increasing steadily.⁵ There was no incentive to increase patronage since it was so great already. Even the Pullman Company, which operated most of the comfortable, even elegant, sleeping cars on America’s railroads, took passengers for granted to a certain degree.

This changed when the country entered the Great Depression following the stock market crash in October 1929. As the economic calamity worsened through the 1930s and ridership declined, the railroads and Pullman had to make greater efforts—such as introducing ice-sourced air conditioning and streamlined trains—to attract passengers.

In the meantime, Henry Ford’s innovative method for producing inexpensive automobiles had spread to other firms. By the eve of the Depression, automotive technology had so improved, and the car had been made so useful by the introduction of publicly funded paved roads, that rail passenger traffic had declined by more than a third.⁶ People still rode the trains, especially for long-distance travel, but it was becoming apparent that the private auto’s effects on the rail passenger network would continue.

In the 1930s, the railroads confronted another challenge: a precipitous decline in freight traffic and revenue—the lifeblood of any railroad. Oddly enough, their passenger trains helped ease the problem. Those trains generated a significantly smaller percentage of railroad revenues than freight trains, but passenger ticket sales provided immediate cash while settlement of freight charges took much longer. Passenger service remained marginally profitable during the 1920s, but by 1930, the traffic decline was accelerating; by 1933, passenger-miles were two-thirds and passenger revenues were three-fourths of what they had been in 1920. Revenue per train-mile was $1.28, less than half of the 1920 figure.⁷ Even so, railroads avoided large reductions in service in order to keep passenger cash coming in.

Looming over the railroads was a real danger that alarmed both labor and management—the threat of nationalization. With large segments of the industry in bankruptcy, there was serious discussion of government ownership. Many outside railroading saw it as a viable option, but the railroads wanted to avoid it at all costs. The Burlington’s Ralph Budd (1879–1962), one of the industry’s most influential leaders at the time, did not mince words, saying that such a move would increase costs, lower productivity, and worsen service. All this had happened during federal government operation of the railroads during World War I but, even so, Depression-era nationalization might actually have evolved if the rails’ fortunes did not improve.⁸

Expression of confidence: New York Central’s Great Steel Fleet was lined up at La Salle Street Station on October 23, 1949, specifically for the company’s photographer, Ed Nowak. Left to right: the Wolverine, Pacemaker, New England States, Commodore Vanderbilt, and 20th Century Limited. A decade later, that confidence had evaporated.

NYC photo, Geoffrey H. Doughty Collection

Budd also declared that further regulation of the industry would only make matters worse.⁹ He cited the Emergency Railroad Transportation Act of 1933, which restricted the railroads’ ability to reduce costs by eliminating jobs. Further, a bill limiting freight train length to a maximum of seventy-five cars, “full crew” laws, and another bill providing a six-hour period to calculate a day’s pay were proof that government ownership would increase the cost of transportation. Such restrictions would make it impossible for the railroads to compete unless comparable constraints were enacted for their competitors.¹⁰ All the railroads wanted, in the words of actress Greta Garbo, was “to be left alone.”

The Great Depression actually was beneficial for railroad passengers because it forced some companies to think differently about that business. In the Northeast, passenger-heavy lines such as the New York Central, the Pennsylvania, and the New Haven, and on some lines running westward from Chicago—the Union Pacific and the Burlington—became aware that their trains would not attract travelers unless the railroads got in touch with the times. Appealing to current aesthetic tastes could make traveling by train popular again. Because of this, beginning in the mid-1930s, the railroads engaged prominent industrial designers such as Henry Dreyfuss, Raymond Loewy, Otto Kuhler, and Walter Dorwin Teague to make their trains appealing through exterior streamlining and innovative interior design.

These efforts, often kicked off by parading the new equipment around the country and allowing public walk-throughs, brought a rewarding blend of good press and increased patronage. The Burlington’s 1934 Pioneer Zephyr was one of several such trains and generated many column inches of ink with its dawn-to-dusk dash between Denver and Chicago. More importantly, it proved the viability of all–stainless steel construction, which ensured a long service life and would prove of great benefit to Amtrak.¹¹

Even more was to follow. After the bombing of Pearl Harbor and the country’s plunge into war, traffic increased exponentially and railroads began earning unprecedented profits, even in their passenger services. The wartime surge seemed to suggest that passengers had come back and would not abandon trains for ca...