Future of American Railroads

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.