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United States Railroad History


  America’s railway system has undergone many changes since the first locomotive was tested in New Jersey in 1825.  The railroad building boom that followed successfully replaced the canal system that was used as the country’s primary mode of transportation.  In 1869 the first transcontinental railway link was completed by the Union Pacific and Central Pacific Railroads at Promontory Summit, Utah.    



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  In 1887, the Interstate Commerce Commission (ICC) was created to regulate railroads and establish fair pricing.  During the 1920s and 30s the railroads saw a decline in ridership because of the growing popularity of automobiles and airplanes.  This was reversed during the 1940s with the outbreak of WWII and the large amount of US troops that railroads would transport.  Once the war ended however, railroad travel continued to decline.  This was exacerbated by the fledgling US Interstate system that was originally heavily subsidized to encourage travel on the nation’s highways.  During this period, many railroads attempted mergers and closing down lines.  The ICC stepped in and would not allow many of the attempts at discontinuing services and closing down lines.  During the first 60 years of the 20th century, railroads provided the country with freight and passenger travel.  This included everything from consumables, the mail and packages to automobiles.


 In 1959, a major change in the public/private railroad ownership began with the ICC’s approval of the Virginia Railway merger into Norfolk and Western railroad.  Less than a decade later the Pennsylvania and the New York Central railroad merger would result in bankruptcy by Penn Central in 1970.  This resulted in two actions by the US government;


·        In 1970, Conrail was formed by the government to consolidate Penn Central and several other bankrupt northeastern freight railroads. 

·        By the end of 1970, President Nixon and Congress created Amtrak.  This was and still is a government subsidized passenger service. 


The first action by Congress to form Conrail is a good example of public/private ownership and its drawbacks/benefits.  Although the funds provided for by Congress helped Conrail stay afloat – it wasn’t until the passing of the Staggers Act in 1980 that a turnaround in the industry was made.  The Staggers Act deregulated the industry and abolished the Interstate Commerce Commission (formed in 1887).  This allowed the railroads geographical (right-of-way) and financial freedom to charge customers what they wanted.  Conrail turned a profit the next year and no longer needed government investment after June of 1981.  By 1987, the government sold its ownership in Conrail.  This sale was at the time the largest initial public offering of stock in US history.  It produced almost 2 billion dollars for the taxpayers and returned the Midwest-Northeast freight railroad to the private sector. 


With the passing of the Rail Passenger Service Act of 1970 - Amtrak was created as a government subsidized company whose preferred stock is owned by the government and not traded (although common share transactions sometimes occur between early shareholders).  Congress has hoped that Amtrak would be able to become self sufficient like Conrail, but due to poor appointments and inept leadership – Amtrak has not been able to pay its own operating budget since its inception.  Additionally, Amtrak is dependant upon freight railroads ‘right-of-way’ track usage.  This has meant that Amtrak needs the freight railroads to maintain the tracks and continue operations on the sections that Amtrak uses.  Because of this and the additional competition Amtrak brings – the freight railroad companies have opposed somewhat the extra passenger traffic on their rails.


Since freight railroad companies are privately owned, they control their own property (freight yards, etc.).  Their security plans can use different tactics and applications to insure security.  Public owned (Amtrak) have to abide by federal and state regulations for public access.  Amtrak must rely on both political appointees and climate for operational funds and more often than not – the people appointed to head Amtrak have had little or no experience in railroad operations.   



Historically, there have been various security issues that railroads have had to deal with;


  In the 1870-1880’s strikes broke out against the railroads and the Pullman manufacturing company (passenger cars).  The railroads hired Pinkertons to help restore order but many were injured and killed along with damage to much of the railroads infrastructure.


  During the 1920s (prior to agencies like the FBI) there were over 36 US Mail robberies netting criminals over six million dollars in the first year of the decade.  Since railroads were the primary means of delivery for the mail - the US Marines were called upon to guard the mail.  They were divided into two separate sectors (east and west regions) of the United States, serving in two separate time periods from 1921 to 1927.  They completed their mission without firing a shot and not one train being robbed.