Clear Track: The New Spirit in American Railroading

I

A CENTURY ago about fifty short, unconnected steam railroads carried passengers over rough roadbeds at rates up to ten cents a mile. Most of them were adjuncts of water transport surveyed to connect canal with canal or river with river. Only a few seers believed that the rails would soon become the chief transportation medium, replacing stagecoaches, canalboats, and river steamers with a swifter, cheaper, and more dependable service which would bind all the corners of the continent together.

Infant-like, the pioneer railroads crept from the seaboard to the Mississippi. Gradually they established interconnections. Because of faulty engineering and insufficient capital, and because they were built as pioneer enterprises in advance of population and trade, many of the projects failed, only to be reorganized and come into better times as population and trade increased. The fight for railroad service welded communities together, providing the first incentive to local public spirit. On a broad front the rails penetrated the West, catching up to the old frontier, pushing on and on into Indian country on their way to California. When the golden spike united the east and west sections of the first transcontinental railroad, America knew that it was a nation in command of a continent.

Then railroading rose to full stature as a young giant to whom nothing seemed impossible. Railroading became the driving ambition of American youth; the term itself took on this color of power, fortitude, loyalty to the collective endeavor of moving men and things on the face of the earth. Mileage multiplied prodigally; every county seat must have a railroad. Optimism frequently overdid itself. Rails were laid in areas where profitable operation proved impossible. Competition for new territory sometimes duplicated facilities. When reduced traffic and depressions clamped the screws down on easy credit, railroad receiverships became commonplace and mergers took place for mutual protection. Gradually, out of the jumble of myriad small roads emerged great systems of main trunk lines and branches — the Class I railroads of the present, 143 in number. Giants though some of these are, it is worth noting that none of them spans the entire country from East to West or from North to South.

The third phase — from roughly 1900 to the present — is marked by intensive development of existing mileage rather than by territorial expansion. Laying of new track decreased, slowly at first, but so rapidly of late that track abandonments have exceeded new mileage. But the rising trade of the country called for intensive development of main lines and chief feeders. One-track roads were double-tracked, double-tracked roads were four-tracked. The heaviest traffic arteries into great cities were electrified. America’s growing industrialism called for more and larger sidings, its increasing tonnage for better roadbeds and more powerful locomotives. As the tempo of life grew faster, railway schedules improved for both freight and passengers.

II

Down to the end of the century, railroad stocks and bonds were the chief securities available in American markets, the premier investments for banks, insurance companies, trustees, and thrifty investors. This primacy resulted in wide ownership. The railroads are owned by stockholders and bondholders of various classifications. While many of these names are duplicates, the indirect ownership of railroad securities is so broad as to be incalculable, nearly every insured person and savings-bank depositor having a stake in railroad solvency.

In 1887 the Federal Government entered the railroad equation with regulations which, mild at first, have since become increasingly binding. Except for the war period, when the Federal Government operated the roads at deficits chargeable to the general taxpayer, improvements had to be made by the roads under all the risks of private operation and with rates rigidly regulated. Under this system, taxes and costs tended to rise faster than revenues, and more efficient operations of the last fifteen years could not always take up the slack.

Highway competition — trucks, buses, and the private automobile — throve on ever-improving roads built and maintained at public expense, for which the railroads as taxpayers had to pay their share. Even before the depression began in 1929, the railroads were ailing to an extent which cast doubt upon their ability to remain solvent under such rigid regulation. Would the Federal Government, in order to preserve the keystone of the national transportation arch, be forced to take over the twenty-six-billion-dollar railroad structure? The depression was to prove the acid test.

Car loadings register promptly and completely the impact of unemployment, reduced industrial activity, declining payrolls. Nevertheless railroading is relatively a stable industry; it must go on and does go on against all obstacles and under all conditions. The bottom was reached in 1932, when only 28,000,000 cars were loaded with revenue freight as against nearly 53,000,000 in 1929, a 40 per cent drop. Revenue passenger traffic went off even more, nearly 50 per cent. Since the trough of 1932, the railroads, as will be detailed later, have made a substantial recovery, well up to the average for all industries, which, unlike the railroads, have free opportunity to fix their own prices and standards of service. Everything considered, 1937 may be as good a year as 1931. Having gone so far in redressing losses and gaining public good will, the whole industry is heartened and encouraged for the long pull ahead.

III

Railroad revival can be measured accurately by the yardsticks of safety, speed, comfort, operating efficiency, and economy. Some of these register directly on the public mind — for instance, safety. While the hazards of other forms of travel are daily advertised in headlines, the safety record of the railroads makes an impressive contrast. In 1923, only seven passengers were injured in train accidents per 100,000,000 passenger miles; in 1929, 5.7; in 1935, only two. Employee safety rose equally, reportable accidents per million hours worked declining from 30.9 in 1923 to 13.8 in 1929 and 6.8 in 1935. These figures cover the whole range of accidents down to a mere scratch requiring medical attention for passengers, or a certain loss of time for employees.

At the end of 1935, 130 of the principal 142 American railroads had a clear record of no passenger fatalities for five or more years, 114 had a clear record for ten years or more. Risk of life and limb for passengers has been reduced to negligible proportions; ask your insurance man for a rate for insurance against accident on an all-rail journey, with no other common carriers involved, and you will have a business rating on railroad safety.

The gain for safety is equally impressive in freight. Each year since 1922 your freight shipments stood a better chance of reaching destination on time and undamaged. Average freight loss and damage per revenue car loaded declined steadily year by year from $1.11 in 1922 to 55 cents in 1935, a social loss cut squarely in two by increased efficiency, with corresponding savings to the railroads and the greater convenience of shippers and consignees. In a fast-moving country like America, a service gain like this soon becomes pyramided into massive profits for industry and savings to consumers.

IV

Gains in speed are even more impressive. Twenty years ago a mile-aminute train was a curiosity; to-day it is a commonplace. Mile-a-minute trains, which from start to stop maintain speeds of sixty miles per hour or more, number 644. These trains clip off nearly 30,000 miles daily. In certain parts of their runs, some of these crack trains reach tremendous speeds. Top speeds of more than one hundred miles an hour, average speeds of more than seventy miles an hour over long distances, are not uncommon. These speeds are reached and maintained by various sorts of trains — streamlined or of conventional design, powered by steam, electric, or diesel engines.

In striving for speed, the railroads, needless to say, must consult safety as well as the stop-watch. The limiting factor is never motive power, on which there is practically no ceiling under modern engineering practice. What counts is the conditions surrounding the application of motive power. To attain high speeds with safety requires heavy rails on smooth roadbeds, wide curves, and an exquisitely coordinated system of traffic control along every mile traveled by a crack flyer.

To some extent all these crack trains are maintained to catch and hold the custom and attention of a people keen on speed. All have definite advertising value as a daily demonstration of prowess to a people that responds quickly to demonstrations of progress in efficiency. Every part of America likes to feel that it is being served by an up-and-coming railroad eager to win patronage. In the changing railroad picture, the new passenger trains, with their modern designs, increased speeds, and greater conveniences, have been the spear points which cracked the ice of public sympathy. Under their impact America suddenly roused to a new appreciation of the drama of modern railroading.

But after all the steady, dependable railroad wheel horse is freight traffic. Freight meets the payroll, foots the bills, earns the dividends. Of more moment to the investor in this matter of speed is the rate at which freight rolls across the country. You may not have noticed it, but freight trains travel faster than they did. Not only do they make better mileage on their runs; they also spend less time on sidings and in yards. Cars are sorted out more rapidly and new trains are more quickly assembled for their journeys. Counting all stops for switching, picking up, and setting out cars, and so forth, the average speed of American freight trains has increased 45 per cent in fourteen years, from eleven miles per hour to sixteen miles per hour. This is a stupendous achievement, unmatched by any other nation at any time in the history of railroading. Door-to-door pickup and delivery of freight, recently begun, will still further speed up service and decrease costs to shippers and consignees, by cutting delays in tracking and handling.

Speed of freight service would not be an unmixed blessing if to achieve it trainloads had been reduced, but volume has kept pace with speed and gone far beyond. With their passion for accurate statistics, the railroads have reduced this to what they call ‘tonmiles per train-hour,’ a measure of average freight-train service. The average 1935 freight train, for example, turned out service equivalent to hauling 11,718 tons of freight for a distance of one mile in an hour, while its fellow of 1922 did roughly half as much. Longer trains moving faster at less cost is the key to railroad recovery.

V

Off the rails it is broadly true that the faster you travel the more risk you run and the less comfort you enjoy. Neither is true of railroad travel. In comfort, as in safety, the gains have kept pace with increased speeds. The new trains which have attracted so much favorable attention from travelers make concessions to comfort beyond all previous standards, and these improvements run all the way from coaches to Pullmans. Thought has been given by designers to all the sovereign goods of life — rest, relaxation, reading, health, refreshment, conversation, entertainment. Forty-three million dollars has been spent on air conditioning and additional millions on improved ventilation. The new airconditioned cars, with deep-cushioned, adjustable chairs, provide really luxurious travel, which is rendered even more attractive by the existing low rates.

The drop in rates, now in effect for nine months, stimulated rail travel, but its net effect on rail revenues over the whole country remains to be demonstrated. Some roads are clearly gaining by the change, with the prospect that increase in passenger volume will offset both the rate reduction and increased operating expenses to cope with that volume. Others are not equally optimistic. The experiment will not be conclusive until the novelty of the new rates has worn off. It is clear, however, that the effect of passenger rate reductions, by themselves, would hardly have revived rail travel to its present point; fortunately they synchronized with other constructive achievements which caught and held popular attention — the speed and comfort factors described and the recognition by the public that these represented an earnest railroading desire to improve everyday service.

VI

Since passenger traffic is only the show window of railroading, it is too much to expect that any change in the passenger situation will materially change the ratio of cost to price for overall operation. What does change this ratio is operating efficiency, the skill with which railroaders use their $26,000,000,000 plant and 1,100,000 employees to produce revenue. The stern test of efficiency comes when income declines in a business with large fixed charges, for dollars must somehow be squeezed out of the enterprise if insolvency is to be avoided. The sharp traffic drops of 1930-1931 found the railroads in this position.

Wages could not be slashed deeply or promptly; a single cut of 10 per cent, obtained after long conferences, has since been restored. The rate structure could not be altered, either up or down, except with government consent. In spite of these handicaps, three quarters of the Class I railroads reached 1937 in a solvent condition, though some of these required RFC loans on the way. Not a bad showing, considering that from 1927 to 1933 Class I railroads as a whole lost more than half their annual gross revenue, taking in $3,184,000,000 less in 1933 than they did in 1927. Incredible as it seems, the depression set the comparatively steady-going railroad business back some twenty years in point of annual revenue and some thirty years in volume of traffic. Under this millstone of adversity, bankruptcy could be escaped only by effecting economies on a grand scale.

Corporate management simply had to save money or quit. For years operating efficiency had been increasing steadily; now it had to be pushed faster and harder in the face of traffic declines. The record shows that the Class I railroads reduced expenses in the five years from 1931 to 1935 by more than ten billions of dollars, as compared with the 1929 level. Thrift was one line of attack — putting off work not immediately necessary to service and safety, closing unprofitable stations and abandoning trackage, using the best equipment in hand and letting the rest lie idle.

These gains of precaution were more than matched by the application of new and better methods of operation. Among these innovations were the wider adoption of the assembly-line system in shop repairs on cars and locomotives; new chemical treatments for ties, bridges, and water used in boilers; increased use of modern alloys in shop tools and machinery; wider acceptance of the internal-combustion engine, laying of longer, harder, and heavier rails destined to longer life, and use of electric welding for building up the ends of worn rails, a process which prolongs the life of the rail by one third. Additional use was made of machines for laying and surfacing track, with savings running as high as two thirds over old methods. Overhead was cut by increasing the trackage in divisions and sections, increasing train runs, and decreasing shop time for repairs and overhauls. Millions were saved by reclaiming freight and engine parts, renewing them, and using them to replace worn parts in other assemblies. Under this pressure, the roads discovered ways of doing work cheaply and serviceably which will produce benefits for years to come.

The yardstick by which this extraordinary effort in organization may be measured is the unit operating cost of moving a ton of freight a thousand miles. This was $10.78 in 1922. In 1929 it was $7.44. To hold this pace became increasingly difficult as volume of freight declined, but it was done, and another dollar chopped off by 1935. For 1936 the comparable figure was $6.33. Few old and stable industries can show as great gains in efficient operation. By holding this gain in operating efficiency as traffic returns to normal, the resulting gain in net revenues should be substantial.

Railroad interest in research, always keener than is generally known, became more intense under strain. Air conditioning is being studied in a joint laboratory maintained by all the Class I roads. Special research is being done with railroad backing on draft gears and couplings at Purdue University and on rails at the University of Illinois. Rails in tracks are being tested for hidden flaws by special electric ‘detector’ cars. All the important railroads maintain research staffs, busy on special problems of their own, and also in close touch with the laboratories of large manufacturers supplying railroad equipment. An example of these developments through the joint effort of railroads and suppliers is the steel mills’ new method of slow-cooling steel rails to correct internal strains and stresses in the interest of long life, a practice long in vogue in glassmaking.

Beyond question, the railroads, as one of their presidents recently said, ‘are coming out of the depression with a new reputation.’ In their century of effective existence they had never been tried as severely by any preceding slump. By meeting the situation intelligently and as vigorously as their peculiar legal status permits, they have advanced on three fronts — in competence of service, in methods of maintenance and operation, and in prestige with the public. Every railroad man from top to bottom is convinced of this, takes pride in the record, and, with that self-reliance which has given a special meaning of fortitude and skill to the very word ‘railroading,’ is looking upon the near future as a steady pull toward prosperity.

VII

Railroading in the forthright, ‘do or die’ spirit reached a new peak in the recent Ohio-Mississippi floods. With the usual means of transport swamped, stations flooded, and rails deep in water at every crossing between Wheeling and Cairo, the railroads battled night and day with the elements to save the stricken population. Deeds of railroad heroism and endurance under strain have already become part of the folklore of the flooded region. In dozens of out-of-theway corners, railroad men, disciplined to meet emergencies coolly, took charge of situations in small hamlets, established order, found food, distributed it, and kept heart in the people through long days and nights of weary waiting. From the surrounding country, volunteer trainmen from other areas were rushed into the flood zone to take over operations as fast as they could be resumed.

Dramatically the great interlocking rail system of mass transport stood revealed in all its strength. Nothing but the rails could have handled the masses of persons or the mighty bulk of goods to be moved. Train after train, until the tracks were congested, pulled out from the improvised railheads for the higher country, where the refugees could find food, shelter, and safety. From all quarters of the compass, train upon train converged upon the flood zone bearing food, tents, medical supplies, clothing. Red Cross cars, filled in thousands of hamlets and hundreds of cities, were yarded at convenient points, made up into trains, and sent free of charge toward the Ohio-Mississippi trough. Fortunately for the country, the railroads, in spite of their own losses through the flood, had ample reserves in motive power and rolling stock. Emergency traffic clicked through the yards in record time, with right of way over other freight. America’s superb and closely articulated rail system, tirelessly manned and efficiently directed through weary hours of strain, proved itself the tireless wheel horse of aid to humanity through those disastrous weeks.

To many thousands of Americans moving in and out of the devastated regions came a new vision of American railroading. They saw its systematic coolness under fire, its essential unity of operation. Probably few of the hastily recruited physicians, nurses, Coast Guardsmen, and police, rushed to the scene of action from other parts of the country, knew or cared what railroads were carrying them to the great task. They stepped into trains on the Atlantic seaboard, in the Great Lakes region, or elsewhere, and in due course were set down at the very edge of floodwater, all unaware that perhaps a dozen railroads had cooperated in bringing them there, by performing operating feats and delicate traffic adjustments which will be discussed for years wherever railroad men meet. That these special trains moved safely on congested tracks without interruption by a major accident is the latest triumph of American railroading.

On the money side, the railroad contribution to flood relief runs into untold millions. Hundreds of thousands of refugees were evacuated without charge by train for distances up to two hundred miles from their homes. ‘No charge’ trains and cars poured into the flood zone from a radius of fifteen hundred miles. The whole relief organization, local, state, and national, was geared to the rails in instant recognition that the railroads would do their duty. They did — but it cost them a pretty penny and a desperate amount of grueling work, much of which remained to be done after the floodwaters subsided.

VIII

Now for the other side of the picture. The railroads function inside a rigid frame of regulations which do not apply equally to the competing factors in transportation, an inequity which is a heavy handicap to long-range railroad prosperity.

First, there is the steady pressure of taxation. Taxes consume nearly 7 per cent of the revenues of Class I roads, at the rate of approximately $650,000 a day. In 1935, when the total tax bill was $237,000,000, taxes exceeded earnings by $111,000. In the flush days, while taxes were higher, they were less burdensome. Now taxes are again rising.

Of course the railroads, in common with all other corporate and individual properties enjoying the protection of government, must pay their just share for that protection. All they ask is that taxes be reasonable and that competitors for traffic contribute on the same scale. At present the railroads pay enormous taxes on their roadways, built and maintained at their own expense, while the roadways used by competitors in highway and waterway transport have been financed out of general taxat ion. The sums paid by these competitors, even though they may be called ‘taxes,’ are in reality payments, more or less adequate, for the use of right-of-way values which they have received without other cost. Actually railway taxes go in part to build and maintain rights-of-way for their competitors.

The only excuse offered for this favoritism is that cheaper rates result; but are costs less merely because they are hidden in the general tax pool? Can canal transport be truly cheap when $336,000 per mile of public money has gone into the New York State Barge canal since 1903 for construction cost alone — besides nearly $6000 per mile per year in maintenance and operation? Can truck and bus transport be cheap unless the operators pay fair rent and repair charges for the use of public highways? As a matter of fact only railroads and pipe lines pay all the costs of their own rights-of-way, and both of these transportation means are taxed for the benefit of other interests. Equity requires that government should establish equality of burden and opportunity for all forms of transport, so that each can stand on its own feet. Not until that is done will the railroad future be reasonably secure.

IX

In the broader aspects of regulation, it is worth remembering that everything essential to public control of railroading had been written into law by 190G. By the end of that year Congress had clothed the Interstate Commerce Commission with power to prescribe maximum rates, had prohibited rebates, required all rates to be published and adhered to, and had prohibited the exaction of rates deemed unreasonable.

These regulations fully protected the public and established the quasi-public character of the industry, but under them scope was left for vigorous competition in the quality of service, for financing based on true worth and established credit, and consequent improvement in fixed property and rolling stock in line with each railroad’s ability to borrow and repay.

Since 190G, however, regulation has been broadened in scope and made increasingly rigorous in application until many of the natural incentives of competition between the roads have been lost. Once the railroads had been effectively harnessed, they were seized upon as a fertile field for political and social experiment. This culminated in the fiasco of government operation during the Great War, an experiment so expensive that the nation gladly returned the roads to private operation. After a short period of hesitation, the railroads surged forward again by investing another seven billions in plant and equipment. That huge investment, after being some years in jeopardy during the depression, has now been salvaged by drastic economy — made possible in large measure by the facilities created by this new investment — and by improved service and better operation, to the profit of millions of persons and the benefit of the whole social order.

The railroads to-day are in a better position with the people than they have been in years. A change, evidenced by widening good will, has come over the public mind. Apparently the public is ready to give private ownership full opportunity to realize on the fruits of recent achievement. The railroaders hope, too, that their situation is becoming so well understood that inequities of taxation and opportunity as between the rail services and other transportation will be gradually wiped out in the interests of fair play. In this hope and belief, the railroads of America move forward into their second century of serviceable achievement.

Copyright 1937, by The Atlantic Monthly Company, Boston, Mass. All rights reserved.