Future of American Railroads

March 10, 1978

Report Outline
State of Present Difficulties
Development of Public Policy
Directions of Rescue Efforts
Special Focus

State of Present Difficulties

Government's Reappraisal of Its Rail Aid

No form of transportation is more deeply ingrained in the national consciousness than the railroad. Trains evoke in most of us a sense of romance, a yearning for freedom and movement. Even after three-quarters of a century which has become increasingly dominated by other modes of transportation, trains still hold doggedly to their unique and symbolic role. Nevertheless, America's railroad industry is in trouble. During this decade, seven lines serving the Northeast and parts of the Midwest have tumbled into bankruptcy. The most highly publicized of these bankruptcies, the financial collapse of the Penn Central in 1970, was the largest business failure in American history. Its effect was magnified by the ensuing collapse of the six other carriers. This domino-like string of railroad failures left the most heavily populated and industrialized section of the country with the threat of no rail service.

In 1973 Congress stepped into the situation, establishing the Consolidated Rail Corporation (Conrail) to replace the seven defunct companies that had served 16 states, two Canadian provinces (Ontario and Quebec), and the District of Columbia over a 17,000-mile network. This intervention was not the first time Congress had acted in this decade to retain rail service. For years the railroads had complained of financial losses they suffered from passenger service. Congress responded in 1970 by creating the National Railroad Passenger Corporation (Amtrak) to take over most of the remaining passenger service. Though Amtrak is governed by a private board of directors, its principal funding comes from Congress and through the Department of Transportation.

More recently two other occurences — another bankruptcy and a rash of fatal accidents — have illustrated the shaky position of the nation's rail system. Last December a midwestern line, the Chicago, Milwaukee, St. Paul & Pacific, filed for bankruptcy. In doing so it joined the Chicago, Rock Island & Pacific which had done the same two years earlier. As was the case with the Penn Central, the failure of the Milwaukee provoked speculation that the government would have to step in again.

ISSUE TRACKER for Related Reports
Oct. 14, 2022  Passenger Rail
May 01, 2009  High-Speed Trains Updated
Oct. 18, 2002  Future of Amtrak
Apr. 16, 1993  High-Speed Rail
Mar. 10, 1978  Future of American Railroads
Mar. 07, 1975  Railroad Reorganization
Jun. 20, 1973  Railroad Nationalization
Nov. 17, 1961  Railroad Subsidies
Aug. 24, 1960  Railroad Mergers
Jan. 01, 1958  Condition of the Railroads
Jan. 31, 1951  Railway Safety
Oct. 04, 1944  Railroad Freight Rates
Jun. 12, 1939  The Government and the Railroads
Apr. 21, 1938  Government Ownership of the Railroads
Dec. 07, 1937  Railroad Rates and Revenues
Jul. 17, 1937  Advances in Railway Passenger Service
Sep. 27, 1934  Railroad Rates And Federal Regulation of Transportation
Jan. 11, 1933  Railroad Receiverships and Reorganizations
Aug. 26, 1932  The Railroads and the Depression
Oct. 13, 1931  Wages of Railroad Labor
Jul. 09, 1931  Railroad Freight Rates
Feb. 14, 1931  The Railroad Consolidation Controversy
Sep. 19, 1927  The Problem of Railroad Valuation
Mar. 30, 1927  Railroad Consolidation and Prospective Legislation
Mar. 26, 1927  Principles of Railroad Consolidation
Mar. 08, 1926  Railway Labor Disputes Legislation
May 04, 1925  The Baltimore and Ohio Cooperation Plan
Sep. 12, 1924  National Railroad Consolidation and the Van Sweringen Merger
Aug. 14, 1924  Automatic Train Control in Relation to Railroad Casualties
May 28, 1924  The Condition of American Railroads