Railroad Consolidation and Prospective Legislation

Report Outline
Legal History of Consolidation
Progress in Consolidation Since
Prospective Legislation on Railway Consolidation

Consolidation of railroads a process which got under way soon after the first steam lines were established in the United States has played an important part in the development of the great American transportation systems. As early as 1853 sixteen railroad companies were consolidated to form the New York Central and provide a continuous line between Albany and Buffalo. Over 600 corporations have figured in the history of the Pennsylvania system, and 300 in the history of the Southern. The oldest company in the Southern system, the South Carolina Canal and Railroad Company, was organized in 1827 and disappeared by consolidation 16 years later.

Consolidation of railroad properties continued on a steadily increasing scale down to 1890, by which time over 2300 railroad companies established in earlier years had gone out of existence. Some of these companies had abandoned their lines, some had been replaced by other companies controlling the same extent of property, but most of them had turned over their properties to or been consolidated with larger railroad companies. After 1830 the process of consolidation was retarded by the new anti-monopoly statutes of the states and the federal government and the interpretations placed upon these statutes by the courts. In the two ensuing decades large scale consolidation was brought practically to a halt.

Policy of the Transportation Act

When the United States entered the war, the anti-monopoly laws stood as a serious obstacle to unified railroad operation under private management, and the transportation systems were taken over by the federal government, January 1, 1918, as a war emergency measure. The period of government operation demonstrated the advantages to be gained through joint use of terminals, trackage and equipment, the elimination of round about hauls, and the economies of unified management, with the result that when-the railroads were returned to private control, it was sought to continue these advantages for the future by permitting a resumption of the consolidation process.