The Iron Horse and the Windy City: How Railroads Shaped Chicago

Published by EH.NET (September 2005)

David M. Young, The Iron Horse and the Windy City: How Railroads Shaped Chicago. DeKalb, IL: Northern Illinois University Press, 2005. ix + 270 pp. $39.95 (cloth). ISBN: 0-87580-334-2.

Reviewed for EH.NET by Louis P. Cain, Loyola University Chicago, Northwestern University, and the University of Chicago.

This is former Chicago Tribune transportation writer David Young’s fourth book on Chicago’s transportation history for Northern Illinois University Press. The first three covered maritime trade, commuter railroads, and aviation. Given the existence of entire books on specific roads, including several from his publisher, Young cast this book as what the railroad contributed to Chicago’s development, a topic that immediately resonates with economic historians.

Young has referenced the relevant literature on Chicago’s history and railroad history, but he does not seem to have discovered much written by economic historians. His story has a great deal to do with the direct and indirect effects that are involved in the debate over the railroad’s role in economic development, but he does not reference that debate. This is not to say Young’s story would be substantially different, only that it would have given his arguments substantially more perspective and power.

The first chapter addresses Chicago’s initial railroads, which, as elsewhere, were built as spokes out of the city. In particular, the first two were “built to function as an overland extension of the Great Lakes” (p. 3). For eastern roads, the attraction was straightforward. The journey from Buffalo to Chicago was 893 miles by steamship, but approximately 350 of those miles represented the trip up Lake Huron and down Lake Michigan. Before the Civil War, Chicago attracted what Young calls a critical mass; the city had become “a magnet for railroads in all directions of the compass that needed access to its growing rail hub to be competitive” (p. 37). Thus, “the organizers of railroads from around the country spent considerable sums to build lines to the Windy City, and many of those that did not have the money to do so added Chicago to their corporate names because they had connections to that city over other railroads” (p. 4). Indeed, “in the first century and a half of railroading in Chicago, more than 110 standard railroads … had the word Chicago in their name” (p. 38). In ensuing chapters, Young details Illinois’ railroad plans and focuses on its early railroads, particularly the Galena and Chicago Union Railroad, the Rock Island Line (the first to bridge the Mississippi River), and the Illinois Central. He then turns to the critical mass itself as well as the many (mostly unsuccessful) attempts to bypass Chicago.

The fifth chapter, “Shaping Chicago,” is one that would have benefited from the economic history literature. Young puts considerable emphasis on the back haul, which he claims is “rarely covered in the historical literature” (p. 64). Chicago, he notes, was in a better position on the Great Lakes to develop relatively equal traffic in all directions, and he analyzes the components of that traffic. He does not discuss this in terms of the rightward shift in demand and the larger rightward shift in supply that reduced the cost of transportation services. He does discuss the role the railroad played in developing corporate governance, which he argues (with little explanation) was one of railroad’s “strongest influences on Chicago” (p. 75).

The chapters that follow examine Chicago’s early suburbs, the construction of its six major rail terminals, the hotels that served them, and the bottleneck that was created when belt lines, switching and terminal railroads, the freight subway, and interurban railways all made use of the same space. Before World War II, there were “5,710 miles of railroad, 160 freight yards, and 76 freight stations … in a 400-square-mile area” (p. 109).

The ninth chapter develops Chicago’s railroad supply industry. Like the discussion of the development of Chicago’s hotel industry (and ultimately its convention business), this is a place where Young expands an economic historian’s understanding of the railroad’s secondary effects. Pullman was one of many Chicago car manufactures; GATX was one of many Chicago-area firms involved in car leasing; the Electro-Motive Division of GM produced diesel-electric locomotives; and the Western Railroad Supply Corporation produced signals. Rand McNally began by printing railroad tickets and schedules, while Nalco began by treating steam boilers on locomotives. Further, it is in this chapter that Young moves the story toward the railroad industry’s decline, and the decline of these associated industries.

The following chapter on government involvement would also have benefited from the economic history literature. While there are references to Al Chandler’s The Visible Hand and Albro Martin’s Enterprise Denied and Railroads Triumphant, little of the flavor of the conventional telling of the ICC’s emergence is present here. The role of Munn v. Illinois in Young’s telling is quite different from what one finds in Hughes’ The Governmental Habit: “By the 1880s, the railroads had exploited the Commerce Clause of the U.S. Constitution to free themselves from state regulation to the point that Congress was finally forced to create an agency to deal with the railroads on a national basis” (p. 139). Neither Kolko’s nor Stigler’s theories are in evidence. The representation of the Grange is a narrow legalistic one that ignores the many other roles that organization played. Grangers were concerned with more than “hauling agricultural products” (p. 144); Montgomery Ward was their official supply house, bringing a wide variety of goods to rural American on the “back haul.” Young notes that, from 1896 to 1916, when prices began to rise once again, railroad costs increased at faster than the fare increases allowed by the ICC — “the timing of railroad regulation could not have been worse for the industry” (p. 189). By my reckoning, the average annual inflation rate between 1895 and 1915 was only 1.8%, and the ICC didn’t get effective control of rates until halfway through that period.

Young’s chapter on railroad crossings includes a discussion of safety regulations, but neither Mark Aldrich’s nor Steve Usselman’s research is in evidence. His chapter on decline emphasizes that the decline is relative. Between 1929 and 2000 freight trains got longer, heavier, and faster. Consequently, the number of ton-miles tripled, while the number of roads and track mileage dwindled. His chapters on “Liquidation, Consolidation, and Diversification” and “Redevelopment” bring matters to the present.

The Iron Horse and the Windy City is an outstanding book for someone interested in the history of Chicago and the railroad industry. After all this time, Chicago is still “the third busiest city in the world in intermodal traffic” (p. 5). Scholars attempting to analyze why that is true or any of the other themes tying urban development and the railroads will find this book an interesting place to begin their research.

Louis P. Cain is Professor of Economics at Loyola University Chicago, Adjunct Professor of Economics at Northwestern University, and Visiting Professor at the University of Chicago’s Graduate School of Business, where he is serving as Visiting Co-Director of the Center for Population Economics. With the late Jonathan Hughes, he is author of American Economic History (2003). And, by the way, Hong Kong and Singapore rank one and two in intermodal traffic.