Main Lines: Rebirth of the North American Railroads, 1970-2002

Published by EH.NET (April 2004)

Richard Saunders, Jr., Main Lines: Rebirth of the North American Railroads, 1970-2002. DeKalb, IL: Northern Illinois University Press, 2003. xxi + 436 pp. $49.95 (cloth), ISBN: 0-87580-316-4.

Reviewed for EH.Net by William R. Childs, Department of History, Ohio State University.

About ten years ago, a wholesaler in Columbus told me that he could deliver a boxcar of fresh fruit from the Valley in Texas to central Ohio in twenty-four hours — faster than truckers could do it. Fifteen years before, when I was a truck driver, that was not possible. The wholesaler’s claim reminded me that the summer before, while driving out West, I had come across some incredibly long freight trains — and lots of them and none with cabooses. Something was going on with railroading, something I had not encountered in my own research on the pre-World War II era. Apparently the railways had finally put it all together to realize the inherent scale economies that their industry held over trucking. Even today few outside the transportation industries are aware of just how efficient and central to the American economy are the railroads.

Richard Saunders, Jr., who teaches history at Clemson University, offers in Main Lines a sprawling narrative to explain how and why the revolution in railroading occurred between the mid-1970ss and 1990s. The book furnishes two general contributions. First, it lays out the contours of the revolution in railroading, narrating how the various interests interacted with technology and politics to help the railways become once again a significant artery in the nation’s transportation system. Second, it furnishes railroad buffs detailed stories of numerous railways, many of which disappeared into necessary mergers or were abandoned entirely.

Saunders claims he is giving “readers the tools — the factual foundation — to create their own synthesis or theory if they so wish” (p. xii). Saunders’ bibliography lists important government records (ICC and congressional hearings especially), and it is clear that he is familiar with the key industry journals and “cultural” studies in management and business history. His sometimes engaging narrative, however, does not always fully develop some of the key points.

Nonetheless, he offers some cogent analyses. He establishes the industry’s economic structure and follows the interests — management, labor, shippers, local communities, and politicians — as they struggle to save the industry from itself. He does not shy away from concluding who was right and who was wrong at particular points in time. His narrative includes examples of managers who were farsighted and those who were not in the use of technology and in negotiations with labor. He understands better than most the various constraints under which the Interstate Commerce Commission (ICC) operated. On numerous occasions he chastises free-market ideologues, carefully noting that it was a combination of private and public sector efforts that created the railroad revolution.

The book has twelve chapters. Chapter 1 is a summary of his award-winning book, Merging Lines: American Railroads, 1900-1970 (2001). It and the next chapter chronicle the period before the revolution when the Penn Central went bankrupt, numerous approaches to dealing with the railways were debated (from nationalization to dissolution), and Amtrak became a reality. (Saunders argues that even though Amtrak has had its problems, its creation relieved a great burden from the freight railways.) By 1970, the railways’ problems included lack of capital for upkeep and expansion of the rails, management’s inability to master technology, labor’s intransigence in the face of change, generally poor service to shippers, and lack of flexibility to abandon inefficient routes.

Chapters 3 through 6 are the heart of the book. The crisis in railroading peaked in 1973 even though the rails were carrying more freight than ever before. The Regional Rail Reorganization Act of 1973, or the 3R Act, laid the groundwork for future progress in rehabilitating the railways. Congress established the United States Railway Association (USRA), a nationally chartered non-profit corporation, to plan an efficient and smaller-scale rail system in the Northeast and arrange financing for it. In effect, it was creating Conrail, the successor to the Penn Central. The midwife role of the USRA was not without complications, as Congress included various entities in the process. Much of the detailed planning fell to the ICC, but the Department of Transportation (DOT) also intervened. All of this occurred, moreover, during the Nixon and Ford administrations, both of which preferred more reliance on the private sector. Labor continued to resist change and various communities that would lose rail service protested to their congressional representatives. With Conrail, which began operation in spring 1976, “Government was godfathering a for-profit corporation that would have no choice but to inflict a lot of pain on a lot of communities before it could earn a profit” (p. 114). Meanwhile, Congress enacted the Railroad Revitalization and Reform Act of 1976, or 4R Act, not only to furnish temporary aid to the rails but also to ascertain the long-term requirements for the entire national railway system and to loosen restrictions on rate making (which, Saunders correctly noted, harkened back to post-World War I discussions). After decades of neglect, the politicians were mixing private and public approaches to solve the railroads’ problems.

Saunders focuses on the major economic forces (technology, investment, and productivity) and the necessity for the private sector executives to have more freedom to set rates, merge with other lines, and abandon outdated lines in order to enhance profitability. He shows how intermodal traffic (truck trailers and containers on flatcars) and transportation control systems (TCS) formed the technological bases of the revolution. He outlines how the Carter Administration, within the context of deregulation of other industries, particularly airlines, pushed successfully for the Staggers Act of 1980, which further loosened the regulations over rail rates and operations. This deregulation left only antitrust and safety issues to be monitored by the government.

Saunders is less successful in showing how expanded investment opportunities were a necessary contribution to the revolution. Increased investment in refurbishing rails and incorporating new technology (e.g., cranes to lift the containers onto and off flatbeds) was essential if the rails were to serve shippers’ needs and become profitable; but railroading historically had a very thin operating margin to create profits to plow back into enhancing service. Saunders argues that the 1981 Economic Recovery Tax Act (ERTA), especially its provision that enabled firms to sell depreciation deductions to other companies, added more investment funds to the railroad industry. While I think his point is well-taken, he should have developed this argument more fully in the text and notes. Noting which railways benefited and how much money each spent and on what (new rails, TCS, and other technology) is needed here.

Saunders consistently follows the labor thread through his sometimes complex narrative to show that management and labor did finally cooperate to improve rail operations. The break point came in 1991 when, ironically, congressional Democrats forced labor to make concessions. Saunders notes, however, that in several instances it was the arrogance and ignorance of management, not labor intransigence that had prevented productivity growth.

Chapters 7 through 10, which focus on the various regions, offer important if often dry information on how the railway industry operated through the “Super Seven” systems from the mid-1980s to the mid-1990s. Individuals and the problems of mergers are highlighted. Chapter 11 recounts the reduction from seven to six systems and the problems the mega-mergers faced during this time (antitrust fears, captive shippers, and combining different corporate cultures into efficient service). The concluding Chapter 12 notes that while the narrative reveals a success story, it does not follow that the future will repeat the past. With government support, the railways had successfully married technology with effective management approaches and improved management-labor relations, but in order to remain viable in the nation’s transportation system, the railways needed more capital. And it is not clear where that investment is going to come from.

In conclusion, Main Lines is an important book that transportation historians should read. Saunders has met his purpose of presenting a narrative of an important story in late twentieth century economic history. Other historians may read it for the context before they pursue related topics, such as the advent of intermodal operations, the economic and subsidy relationships between all transport modes, and the impact of the deregulation movement on the economy.

William R. Childs, author of Trucking and the Public Interest (1985), will publish with Texas A&M Press next year a history of the Texas Railroad Commission and economic regulation in the U.S. to the mid-twentieth century.