The Railroad Capacity Crisis: After Cutting to the Bone and More, Trains Are Back

Abstract

During the Era of Railroad building (primarily the last half of the 19th century), it was far more profitable to lay track than to operate railroads due to the subsidiesfrom various levels ofgovernment and the competition between cities to be located on as many lines as possible, and the overcharging of the railroads by the construction companies. Railroads compensated for this glut by cross-subsidizing the unprofitable branch lines with revenues from the main lines. But as competition from other modes took hold, this was increasingly difficult to do. Therefore, by the early 20th century, railroads began to slowly shed some of the lightly trafficked lines. Regulatory changes in the 1980s made abandonment easier, and wholesale discarding of lines, including former mainlines, became common. But by the turn of the century,foreign imports put a greater demand on rail transportation, and lack of capacity caused many of the remaining lines to become very congested, in turn, causing extensive delays.