Railroads, the Free Enterprise Alternative

By Daniel L. Overbey | Go to book overview
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During the nineteenth century the railroads adopted a structure which successfully met the competition of horse-drawn wagons and steamboats. In the face of modern competition it has not proven so successful. Passenger traffic which once moved largely by rail has been taken by the automobile, bus, and airplane. More importantly trucks, pipelines, and water carriers have inflicted severe losses on the railroads in the battle for freight traffic.

A simple indication of the shift away from the railroads is found in a comparison of rail and highway mileages (Figure 1). Throughout the last half of the 1800's the railroads dominated the national transportation scene. At the turn of the century, the automobile, truck, and surfaced highway were just coming into their own as a transport mode, but the change was rapid. By 1914 surfaced highway mileage surpassed railroad mileage: 257,000 highway miles versus 252,105 railroad miles. Railroad mileage peaked in 1916 at 254,251 miles and a steady decline followed. In contrast, highway mileage grew throughout the following years.

At first highways attracted only local traffic. With the automobile it was no longer necessary to have railroad stations located every ten miles along the line as it was with horses and wagons. Many branch lines which crossed and paralleled the main rail routes were made obsolete. Passengers and small shipments formerly handled by branch line trains moved more efficiently by automobile and truck.

The creation of state and federal highway networks extended the range and capacity of automobiles and trucks. Larger trucks and truck-trailer combinations competed successfully for less-than-carload (LCL) rail traffic and began taking carload rail shipments. Pipelines and water carriers provided cost-based competition for low-rated bulk shipments. In far too many cases, the attitudes of the previous monopolistic era prevented the railroads from meeting their new competition head-on with aggressive strategies in pricing, service, and marketing. Instead, they reacted defensively and sought the extension of railroad regulatory practices to the newer modes. Only in the


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Railroads, the Free Enterprise Alternative


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