A Quintessential American Success Story
While railroads have played a pivotal role in the growth and expansion of the United States, this spectacular American success story almost had a premature ending.
The Baltimore & Ohio, which began as a 13-mile stretch of track in 1830, is generally recognized as America’s first railroad.1 However, the first cars on the Baltimore & Ohio were drawn by horses and thus hardly qualified as what most people think of as trains.2 The first American-built steam locomotive, Best Friend of Charleston, which pulled its first train for the Charleston & Hamburg railroad in December 1830,3 met a tragic end six months later when it became the first steam locomotive in the U.S. to suffer a boiler explosion.4 The explosion was apparently caused when one of the engine’s firemen, annoyed by the whistle produced by the steam pressure release valve, sat on the valve, thus causing an explosion that killed the fireman and injured the engineer.5 An operable replica of the Best Friend of Charleston is currently on display at the Atlanta office of Norfolk Southern, next door to SGR’s Atlanta office.
Some 20 years later, more than 9,000 miles of railroad track were in operation in the U.S. – more track than in the rest of the world combined.6 Of course, the expansion of the railroads opened the door for a variety of train robbery occurred when two armed men boarded a passenger train in Indiana.7 The gunmen emptied one safe, threw another overboard and jumped off after tricking the engineer into slowing down the train.8
As the railroads expanded, so did their impact on American lives, often in surprising ways. For example, it was the railroads that were responsible for the establishment of our time zones in the United States. Prior to the use of time zones, every town kept its own time according to the sun, which obviously created problems for the railroads and rail passengers.9 On November 18, 1883, four standard time zones were instituted by the railroads.10 Despite the resistance of some who felt that the use of railroad time was an affront to the laws of God and Nature, the use of the railroad time zones soon became widely accepted.11 By 1917, U.S. railroads operated approximately 254,000 miles of track and employed more than 1.8 million people – more than any other industry in the nation.12
During World War I, the federal government seized control of the railroads. When they were returned to private control in 1920, they needed substantial repair and maintenance.13 However, the Great Depression intervened, and like many other industries, the railroads suffered greatly and were not able to make the necessary capital improvements.
After a brief resurgence spurred by increased rail traffic during World War II, the railroads entered a long period of decline.14 The growth of truck and barge competition, losses incurred in providing passenger service, and excessive government regulation all contributed to the decline.15 While the creation of Amtrak in 1970 relieved the railroads of some of the losses they had sustained providing passenger service, the decline continued in the 1970s.16 Many large railroads went bankrupt, and the survivors faced declining market shares, and an inability to raise capital and to maintain infrastructure.17 Many observers felt that the American rail industry would have to be nationalized to survive.18
In the face of this crisis, Congress passed the Staggers Rail Act of 1980. The Staggers Act, which limited the government’s authority to regulate rates, legalized contracts between railroads and shippers, and authorized industry consolidation,19 revitalized the industry. Annual return on equity rose from approximately two percent in the 1970s to 10 percent in the 1990s.20
Now able to invest in infrastructure, railroads expended $511 billion in capital improvements between 1981 and 2009.21 The train accident rate has been reduced 76 percent while the rail worker injury rate has been reduced 84 percent.22
Railroads are not the only ones to have benefited from the Staggers Act – rates to rail users (measured by inflation-adjusted revenue per ton/mile) were 45 percent lower in 2011 than in 1981.23
America’s railroads today provide one of the most efficient and environmentally responsible methods of freight transportation. In 2011, railroads moved a ton of freight an average of 469 miles on one gallon of fuel.24 On average, railroads are four times more fuel efficient than trucks.25 They save energy, reduce emissions and reduce highway congestion. It would have taken approximately 10.3 million additional trucks to handle the 184.7 million tons of freight that originated in, terminated in or moved through the State of Georgia by rail in 2010.26 Nationwide, freight railroads account for just 2.2 percent of U.S. greenhouse gas emissions from transportation-related sources and just 0.6 percent of emissions from all U.S. sources.27
A member of the Georgia Railroad Association, Billy counsels and represents railroads in litigation. SGR has long represented both Class I railroads as well as short line regional railroads.
1, 6, 12, 14, 15, 16, 22, 23.
A Short History of U.S. Freight Railroads (Association of American Railroads, July, 2012).
2, 3, 4, 5, 11.
Christian Wolmar, The Great Railroad Revolution: The History of Trains in America (PublicAffairs, a member of the Perseus Books Group, 2012).
7, 8, 13.
Chronology of Railroading in America (Association of American Railroads, May, 2011).
A Brief History of Time Zones, found at: www.timeanddate.com/time/time-zones-history.html.
17, 19, 21.
Joel Palley, Impact of the Staggers Rail Act of 1980 (Federal Railroad Administration, March, 2011).
Clifford Winston, The Success of the Staggers Rail Act of 1980 (AEI-Brookings Joint Center for Regulatory Studies, October, 2005).
24, 25, 26.
Freight Railroads in Georgia (Association of American Railroads, May, 2012).
Freight Railroads Help Reduce Greenhouse Emissions (Association of American Railroads, July, 2012).