Februrary 1968 | Volume 19, Issue 2
Without the American railroads there could have been no American business. With a web of rails we bound our continental spaces together and spurred them into production; on a skeleton of rails we Hesliecl out our commerce and hardened our industrial muscles. It is not too much to say that the railroads hauled an underdeveloped nation out of debt and carried it much of the way toward industrial supremacy in the world.
The men who administered the affairs of the railroads were lordly fellows who acknowledged or flouted the law as it fitted their convenience, who trafficked in congressmen like so many chattels, who dangled state legislatures like seals from their watch fobs, who took it for granted that the U.S. Army would squash any strike by their workmen, and who deigned in their spare time to instruct Presidents in the conduct of national affairs.
By 1995, when the American railroads were only seventy-five years old, no other industry approached them in capital investment, in revenues, or in power. A competent observer estimated that their officers controlled one sixth of the wealth of the United States and that their capital was “ten times that of the combined banks and trust companies of the country.”
But in the sixty years since then, while the national economy has steadily expanded, the fortunes of the railroads, except in wartime, have as steadily shrunk. During the late 1930’s, several railroad companies gave up the struggle and raced to see which might first be run through the wringer of bankruptcy; these companies operated one third of the nation’s total mileage of railroad tracks. Many other companies contrived to avert receivership only by virtue of fat federal loans.
The railroads can no longer be usefully measured against other industries. Today there are several corporations (General Motors, Standard Oil of Xew Jersey, and American Telephone and Telegraph), each of which boasts greater revenues than the entire railroad industry, and each of which clears a net profit that puts the net profit ol the entire railroad industry to shame. Today the railroads haul less than half the nation’s freight and only a ludicrous three per cent of its passengers—fewer people than travel by automobile, by airplane, by bus, fewer than by any other mode of public transportation.
What has happened to the railroads? In 1905 they were ogres, feared and detested, collectively portrayed as an octopus or as a school of man-enting sharks. Today they seem to be more like a kitten, not a playful kitten with claws that can scratch, but a poor, bedraggled kitten that has lallen down a well and mews and whimpers pitcously to be pulled out.
What has become of the railroad executives who once swaggered about, entertaining Presidents and senators in their private cars? Today they have forsaken their own railroads, preferring to travel on airplanes, for after all, they still deem themselves men of consequence for whom every millisecond is a matter of transcendent importance. Today they snivel in the public market place, begging state governors for a free handout.
It is an extraordinary transformation and, as might be expected, the spokesmen for the railroads, who have had a long period of leisure in which to scratch their heads and puzzle over the matter, know just whom to blame for what they insist is a national crisis in transportation. They have levelled a whole fistful of accusing Rngers: at the Interstate Commerce Commission; at their employees, the members of the railroad brotherhoods: at their competitors, the automobile, the airplane, the bus, the truck, the barge, and the pipeline: b first, last, and always most passionately, at the federal government.
That there is a modicum of truth in these plaints must be admitted; not much, to be sure, but enough to measure on n torsion balance.
For example, the Interstate Commerce Commission, which regulates the railroads, affords a fair example of how successive Congresses, in their infinite wisdom, can contrive a truly impressive bureaucratic snarl. In 1887 the commission comprised five commissioners and a stalf not much bigger. In response to “the public necessity and convenience,” the commission has bloated up to eleven commissioners and a secretariat of nearly 2,500 persons: the law under which it operates has swollen from a lean statute of ten pages to one of more than four hundred pages: its responsibilities have multiplied like bunnies, and so have its regulations: today its procedures are labyrinthine in method and glacial in dispatch. But if the railroads are to some extent hobbled by regulations dating from the days when a spittoon was still a useful and elegant accessory in the depot, the officers of the railroads have themselves cannily opposed revision or repeal of some of those regulations. And if, on matters of substance, the commission has been known to waver and wobble for as long as nine years before making up its collective mind what it should do. this bureaucratic indecision had its origin, once again, in the conference rooms of the great railroads.
But the railroad men reserve most of their indignation for the government policy that has allocated vast sums of public funds ( i.e. , taxpayers’ money) lor the construction of airports, highways, and inland waterways, and lor research to improve the technology of aviation and motor transport. In the last twenty years, federal, state, and local governments ( i.e. , the taxpayers) have spent some two hundred billion dollars on highways, cloverleafs, overpasses, underpasses, tunnels, and bridges for the use of automobiles, trucks, and buses. More billions have gone for airports, air navigation systems, and subsidies to companies operating helicopters.
The anguish of the railroad executive may he imagined. No wonder, say the railroad men, that their freight revenues have dwindled and their pasall but disappeared. Moreover, the railroad companies arc obliged to pay taxes on their tracks, depots, and other real estate, while highways, airports, and waterways get oft scot free.
Isn’t it scandalous, and a shame?
Well, no; or, at most, not much.
There is nothing new about federal assistance to those who would travel to and fro. The sovereign power of the United States of America, pursuant to Article 1, Section 8, paragraph g of the Constitution thereof, has been aiding and abetting private enterprise to stimulate transportation between and among the several states ever since 1802, when Congress appropriated money for the building of the Cumberland Road.
If there is one mode of transportation whose way was smoothed by public funds and by grants ol public lands, it is the railroad. The iron horse was fed and watered at the public trough for more than fifty years. No man knows precisely how much of the public s funds was handed over to the railroad promoters by one or another set of politicians: a conservative student of the matter estimated that by 1870 the states alone had given $228,500,000 in cash, while another $300,000,000 had been paid over by counties and municipalities. The federal government and the various states gave, in addition, about 184,000,000 acres of the public lands to the railroads; this represents nearly one tenth of the land area of the continental United States. To this day several railroad companies are profitable concerns thanks only to those land grants. Some companies are making more money by exploiting the mineral rights in the lands given them seventy-five years ago than they are by operating their railroads.
In the sweet spirit of conciliation, however, let us suppose that the railroad men are right: they are fettered by archaic regulations and they arc harshly and inequitably treated by an arbitrary, exigent government. Good. Let us postulate a sinister plot by a government probably socialist, certainly creeping toward socialism, the leaders of which have sworn to bring the railroads to their knees. But can even such a paranoid fantasy begin to explain the long, steady decline of the railroad industry from its pre-eminence fifty or sixty years ago?
Here is a puzzle. For it is a fact that the railroad is a remarkably efficient form of transportation, and why its operators have not easily, even derisively, squelched their competition is hard to see.
A railroad is a device for rolling people or commodities from one place to another. When it comes to rolling many people in a short time, as in hauling commuters to a city, the railroad is incomparably superior to all other such devices: cheaper, quicker, safer, cleaner, quieter; it needs less real estate and fewer operators to do the joli: it can keep rolling in fair weather or foul. On one track, a railroad can haul fifty thousand persons an hour. To haul the same number in the same time over a highway requires ten thousand cars travelling in four lanes and requires further that the weather be fair, that there be no accidents or mechanical breakdowns, and that each driver carry four passengers.
When it comes to rolling commodities, the railroads’ competitive edge is even more startling. A diesel train averages 192 ton-miles to the gallon of fuel, while a truck gets only 58 ton-miles to the gallon. But perhaps the most telling advantage of the railroad lies in manpower. A train hauling one hundred freight cars has a crew of five. To haul a comparable load by truck takes hundreds of drivers.
Nevertheless, the railroads’ share of freight revenues has steadily declined. There are some categories of freight (the products of mines, the products of forests) that have traditionally been considered a captive property of the railroads. Yet even here the tonnage is down, the revenues are down.
From first to last, it is a remarkable phenomenon. The men who run the railroads seem to have positively booted the commuters, and the passengers generally, away from their ticket windows and off their trains. They seem to have totally ignored the shippers of freight or to have taken them too much for granted.
Their plant dwindles. “There is much surplus railroad mileage in this country today,” Stuart T. Saunders said in 1962. (Mr. Saunders is chairman of the board of the Pennsylvania Railroad, the biggest in the country.) When a railroad company rips up a mile of track, it stands to gain as much as five thousand dollars in cash for salvaged material and will annually save three thousand dollars in maintenance costs and as much as two thousand in taxes. Moreover, the land can then be profitably sold, perhaps to the government ( i.e. , to the taxpayers) for use as a highway, after which the press agents for the railroad can complain bitterly about tax-free competition from trucks, buses, and automobiles. The total mileage of track diminishes steadily, from 430,000 in 1930 to less than 373,000 today.
Their industry’s share of the gross national product dwindles, too. In 1930 railroad revenues accounted for 5.9 per cent of the gross national product; in 1966 they accounted for only 1.4 per cent.
Enough of these somber statistics. The picture seems plain enough: a giant industry, vital to the national economy, has for a half century been on the skids to—what? Receivership? Bankruptcy? Nationalization? The signal blocks ahead are hard to make out.
Any examination of the strange and foolish plight of the railroads will uncover vaulting ambition, dumb luck, sly cunning, gross stupidity, incomprehensible arrogance, and naked greed—in short, all the characteristics that have caused the American to be so universally loved and admired. One further statistic, however, emphasizes the curious contradictions inherent in the industry: despite the fact that the railroads seemed to have been staggering along on very unsteady pins, in 1966 their shareholders were paid $502,000,000 in cash dividends, the highest in the industry’s history.