Business View - July 2015 93
not served by the larger railroads. They operate and
maintain 30 percent of the country’s railroad mileage
– approximately 50,000 miles - and account for nine
percent of its freight revenue and 12 percent of all rail-
road employment.
But for decades throughout the 20th century, the sur-
vival of short line railroads was far from assured. Hard
times began in the 1920s. Trucking competition was
increasing, and the legislative agenda in Washington
was tilting toward the newer way of delivering goods
and services, imposing burdensome regulations on
railroads, while subsidizing the trucking industry with
government-built highways. At the beginning of the
Great Depression, 50 percent of all short lines report-
ed net losses. By its end, that number had increased
to 65 percent.
The downward trend continued into the 1970s, largely
because of the country’s new Interstate Highway Sys-
tem, which further eroded rail traffic in favor of trucks
and automobiles. In addition, punitive taxation poli-
cies and burdensome federal regulations helped drive
many independent lines into bankruptcy. As the situ-
ation worsened, ASLRRA membership continued to
decline, even as the organization persevered in its ad-
vocacy role, trying to get Congress to ameliorate what
was clearly seen by many as the last dying throes of a
once profitable and vibrant American industry.
Finally, in 1976 Congress passed the Railroad Revital-
ization and Regulatory Reform (4R) Act and, in 1980,
the Staggers Act, two pieces of legislation that ended
most of the economic regulation on the rail industry
and gave the larger railroads a viable exit strategy for
divesting themselves of their unprofitable lines.
All at once, the major railroads began to market these
lines to short line operators and independent entre-
preneurs, and America’s small railroad industry was,
in essence, reborn, returning to its early 19th cen-
tury roots of serving local customers with efficient
LOGISTICS
