FreightWaves Classics: Railroads helped the U.S. expand and increased interstate commerce

America’s first common carriers are still relevant

 Scott Mall, Managing Editor of FreightWaves Classics

for freightwaves.com

Early beginnings

Railroads were first developed in Great Britain. The first railroads were horse-drawn wagons running on wooden and then iron tracks, or rails…

Wooden railroads were also built in the American colonies and were built exclusively to transport freight. Termed “wagonways,” the earliest were begun in the 1720s. In addition to the British and colonists using wagonways in North America, the French used a wagonway to haul construction materials to their fortress at Louisburg, Nova Scotia, in New France (now Canada) in 1720.

Prior to the advent of railroads, transportation was more difficult and much slower. In the early 1800s, people most often traveled by horse or stagecoach. There was a rudimentary network of roads or turnpikes in colonial America. Turnpikes at that time were privately owned roads that charged fees for their use. Horses, carriages and coaches navigated these roads and turnpikes (known primarily for their ditches, potholes and ruts), all of which made travel fairly uncomfortable. Moreover, the coaches of the time were cramped and offered little leg room.

At that time, freight also moved by road or turnpike on horse-drawn carts or wagons. Rivers also were used to move freight, where they were navigable. Where feasible, canals were built to move freight as well. However, canals and rivers were sometimes unnavigable because of droughts or low water, and in the winter season due to freezing.  

 

 

Colonel John Stevens, an American lawyer and inventor, also promoted the development of steam power for transportation. Following service in the American Revolutionary army, Stevens became interested in the work  of American steamboat pioneers James Rumsey and John Fitch. He developed a number of his own designs for boilers and engines. To protect his inventions, he submitted to Congress his outline for a patent law. His petition led to the Patent Law of 1790, the foundation of the present U.S. patent system.

In 1802 Stevens built a screw-driven steamboat, the first example of a powered screw applied to ship propulsion. His steamboat also incorporated a multi-tubular boiler; he received a patent for that in 1803. The following year, Stevens completed an improved twin-screw steamboat that was successful in navigating the Hudson River.

He then designed a low-pressure engine to be used in a paddle-wheel ship. Although Robert Fulton successfully launched his own paddle wheeler in 1807 before Stevens could finish his, he persisted and launched his 100-foot vessel in 1809. Since Fulton had a monopoly grant to navigational rights on the Hudson River, Stevens sent his ship to Philadelphia by sea, the first time a steamship ever navigated ocean waters. It was there, in 1811, that he inaugurated the world’s first steam-ferry service.

Also in 1811 he published “Documents Tending to Prove the Superior Advantages of Rail-Ways and Steam-Carriages over Canal Navigation.” Stevens outlined a great deal about railway transportation that later came to fruition. The New Jersey legislature granted Stevens the first U.S. railroad charter in 1815. To demonstrate the practicality of railroads, he built the first American steam locomotive in 1825, although it was never put into commercial service. The 1815 charter was used in 1830 when the Camden and Amboy Railroad and Transportation Company was formed.

 

 

The Industrial Revolution and steam-powered railroads

In 1825, English inventor George Stephenson, now known as “The Father of Railways,” successfully used steam to power his invention – the world’s first successful commercial locomotive. Americans who saw the new steam locomotives in the United Kingdom were amazed that railroads decreased the cost of shipping by carriage by 60 to 70%. This was due, of course, to the fact that railroad cars could carry much more weight than a horse-drawn cart.

The first locomotives used in the United States were purchased from the company Stephenson founded – the Stephenson Works. Even the rails that the first U.S. railroads traveled on were largely imported from England until the Civil War.

Railroads helped spur development during the Industrial Revolution in both the United Kingdom and the United States. The Industrial Revolution in the U.S. occurred primarily in the northeastern region of the U.S. from about 1810 to 1850. Railroads were built throughout the region beginning around 1830.

The early railroads

In the first years of the 19th century, a number of major canals had been built to move cargo and agricultural harvests from point to point. Examples of canals used at that time are the New York Canal and the Erie Canal.

In 1827, Baltimore was the third-largest city in the country, but no canal had been built to connect it with other points. The American frontier was much closer to the Eastern seaboard at that time, and Baltimore was 200 miles closer to the frontier than New York City. Building a railroad would make Baltimore more competitive with the canals in terms of transporting people and freight westward.

Therefore in 1827, to link the port of Baltimore to the Ohio River, Maryland chartered the Baltimore and Ohio Railroad (B&O), the first section of which opened in 1830. The B&O became the first railroad chartered as a common carrier in the United States.

While a number of private railroads had been established prior to the B&O, its distinction is that it was the first common carrier to be established and was chartered from its inception to haul freight and passengers on timetabled trains over a distance with steam power. It was also the first to open for public service. As part of the definition, common carriers must charge fair and the same rates to classes of customers.

The B&O started using steam-powered locomotion in 1829 with Peter Cooper’s “Tom Thumb” locomotive. This was the first American-built locomotive to run in the U.S. The B&O continued to be built westward toward the Appalachian Mountains and the American frontier. The B&O route reached the Ohio River in 1852, the first eastern railroad to do so.

A number of private (not commercial carrier) railroads began operations at about the same time that the B&O was being constructed. Among them were:

The Granite Railway in Massachusetts was incorporated in 1826 as a common freight carrier; construction began on April 1, and operations began on October 7. The railroad was built  primarily to haul granite for the construction of the Bunker Hill Monument, commemorating the famous Revolutionary War battle.

The Granite Railway later became a branch of the Old Colony and Newport Railway, which itself was absorbed by the New York, New Haven and Hartford Railroad. Many refer to the Granite Railway as the nation’s first commercial railroad because it was the first to evolve into a common carrier without an intervening closure.

That same year the Mohawk and Hudson Railroad was incorporated as the first railroad chartered in New York State.

More importantly, it was the first U.S. railroad designed to operate a steam locomotive instead of as a horse-drawn or gravity railroads. Its operations began on August 9, 1831. The railroad was built to carry passengers and freight around a bend in the Erie Canal; it reduced an all-day trip on the canal to less than one hour by rail. Its first steam locomotive was named for the builder of the Erie Canal, DeWitt Clinton.

The animal-powered Leiper Railroad began operations in 1810. The railroad was used until 1829, when it was temporarily replaced by the Leiper Canal; it reopened to replace the canal in 1852 (now using steam-powered locomotives). The railroad became a branch of the Baltimore and Philadelphia Railroad (part of the B&O Railroad) in 1887. The railroad’s significance is that it was the first railroad built to be permanent, as well as the first to evolve into part of the system of a common carrier after an intervening closure.

On August 8, 1829, in northeastern Pennsylvania, the Delaware and Hudson Canal Company’s gravity railroad began operations using the first locomotive to run on rails in the U.S. It was built to haul coal (as were many of the earliest private railroads). Chartered in 1823, the company called itself “America’s oldest continually operated transportation company.”

Chartered late in 1827, the South Carolina Canal and Rail Road Company laid an experimental track in February 1829 to haul cotton bales in downtown Charleston. The company was founded to haul freight and agricultural products to and from the port of Charleston to the Savannah River. Its steam locomotive was the first to be built for sale in the U.S. It was built at the West Point Foundry in New York City, and was named The Best Friend of Charleston. By 1833, the railroad had been extended to Hamburg, South Carolina. At 137 miles, it was the longest railroad in the world at that time. It was also the first railroad to regularly use steam locomotives. The railroad was absorbed later by the Southern Railway, which is now part of Norfolk Southern.

The Tuscumbia Railway was chartered in January 1830. It built a 2.1-mile rail line from Tuscumbia, Alabama to docks on the Tennessee River west of Sheffield. The historical importance of this shortline railroad was that it was the first railroad chartered and constructed west of the Appalachian Mountains. The railroad was renamed the Tuscumbia, Courtland and Decatur Railroad in 1832, and was extended over 40 miles to connect the two Alabama cities of Tuscumbia and Decatur.

In 1839, the Albion Railway was built to serve coal mines around Stellarton, Nova Scotia. This was the first Canadian railway to use iron rails and run year-round.

As railroads slowly proved their worth, there were many advocates who pushed for more lines to be built. There were also opponents, particularly as those first railroads proved their value. Among the opponents were turnpike operators, the stagecoach companies that plied the turnpikes and other roads, wagon makers and wagon drivers, companies that owned the various canals then in operation and tavern owners and innkeepers whose businesses lined the turnpikes and canals. Each of these groups had various reasons for opposing the rise of railroads, but the reasons centered on a real or perceived loss of revenue.

Despite the opposition by these groups and others, the financial benefits to railroad investors and the broader economic benefits to local, state and regional interests eventually prevailed.

The spread of railroads – 1840-1880

By 1835, dozens of local railroads had been built. Each of these lines went no more than a few miles, but rail’s potential was being realized. In 1840, there were 2,800 miles of railroad track in operation in the United States. By 1850, rail lines had more than tripled to about 9,000 miles of track. In 1860, the number of miles of track had more than tripled again, to more than 30,000 miles.

While railroads also were being built in the southern United States, they were primarily short lines linking cotton-growing regions to ocean or river ports. The lack of an interconnected network of railroads in the South was a major handicap to the Confederacy during the Civil War. By contrast, rail networks connected the major cities in the North and Midwest by 1860.

As noted above, even as the network of railroads spread further across the populated eastern one-third of the United States there were many proponents for a transcontinental railroad. The California Gold Rush in the late 1840s and California’s subsequent statehood spurred those calls.

Moreover, in the years before the Civil War and during the war, there was pressure on the territories to align with one side or another. President Lincoln understood a transcontinental railroad would help those territories cement ties with the Union. He authorized its building in 1862 and it was completed on May 10, 1869. Railroads were a major contributor to the settlement of the American frontier, which started with the B&O Railroad and continued as the frontier was continuously pushed westward over the decades.

Because of the Civil War, construction of new railroads (other than the transcontinental route) diminished. However, railroad usage increased significantly. As an example, the Battle of Bull Run was won in large part because a group of reinforcements were shuttled in by railcar. Both sides used their railroads to move troops and materiel closer to the conflict. By the conclusion of the war, the need for an even more diverse extension of railways was extremely apparent.

The transcontinental railroad construction garnered attention from the media and the public; its 1869 completion symbolized the nation’s reunification after the Civil War. Following the war, railroads in the South were repaired and extended.

Nonetheless, most rail construction took place in the industrial Northeast and the agricultural Midwest. New railroads, the improvement of existing lines and better interconnectivity between railroads were undertaken to reduce shipping times and costs.

This interaction of various companies initiated the trend of conglomeration, which would continue through the rest of the 19th century. In 1850, the New York Central Railroad Company was formed when a dozen small railroads located between the Hudson River and Buffalo merged. Other railroads began to extend their rail lines. The U.S. government issued land grants to Illinois between 1851 and 1857 to build the Illinois Central Railroad.

A precedent was set by this action. The federal land grant program was in effect between 1855 and 1871; its primary purpose was to help further populate the country’s western territories. However, railroads were perhaps the major beneficiaries of the land grant system; the Union Pacific Railroad and the Central Pacific Railroad (as well as other railroads that were begun in the West during the period) were given millions of acres that they could sell or pledge to bondholders. More than 129 million acres were given to the railroads through land grants before the program ended. This vast acreage was supplemented by another 51 million acres granted to the railroads by the various states. In addition, railroads received various government subsidies.

Additional railroads were built that broadened the reach of railroads and increased transcontinental routes. The time to travel from coast to coast (San Francisco to Omaha and east to Chicago and then on to the major cities of the East) dropped from six months to about two weeks. In the territories and new states of the West, cities grew as rail centers, with repair shops and a technically competent workforce.

In the increasingly populated Midwest, more than 80% of farms were within five miles of a rail line in the years following the Civil War. This helped the movement of agricultural products, including grain, hogs and cattle to markets across the country, as well as international markets. Much of this agricultural freight was carried on short lines that connected to the larger railroads. In the years following the Civil War, railroads that were unprofitable or not generating enough revenue were purchased and incorporated into a larger system. The railroad term for this was “rationalized.” By 1890 the majority of the smaller railroads were consolidated into 20 trunk lines.

With its extensive river system, the United States had supported numerous horse- or mule-drawn barges on canals and paddle-wheel steamboats on rivers that competed with railroads from about 1815 until the 1870s. The canals and steamboats were largely supplanted because of the significant increases in efficiency and speed of the railroads. The railroads were faster, and year-round conveyances as well. They also went to locations a canal was impractical or too expensive to build or a natural river never went. By comparison to railroads, long distance transportation of goods by wagon to a canal or river was slow and expensive. A railroad line to a city could make it an inland “port” that often prospered and changed many towns into cities.

So railroads displaced most of the canals and turnpikes as the primary method to move freight; by the 1870s the railroads also had significantly displaced steamboats. Compared to the water modes of transportation, the railroads lowered costs in two ways. As noted above, many canals and rivers were not navigable in the winter due to freezing, but railroads ran year-round in good or bad weather. Railroads also were safer – the chance of a train wreck was lower than the possibility of a boat capsizing or sinking. Railroads also provided more cost-effective transportation; they allowed shippers to store smaller inventories, reducing storage costs and lowering insurance costs because the risk of losing goods in transit was also lower.

Other changes occurred as well. Standardization increased during the 1860-1890 period. The various railroad gauges were standardized in May 1886. A standard gauge of 4 feet, 8.5 inches was set as the norm for most railroads in the United States.

In addition, labor unions formed to protect the rights of the workers. The railroads grew progressively larger and more powerful. Railroad trusts formed, and numerous aspects of the economy were controlled by the railroads. Calls for regulation of the railroad industry grew.

Government oversight

Many railroads were built or expanded in the 45 years after the construction of the B&O Railroad began in 1828. Railroads literally changed the landscape of the United States. They helped shift the population westward and opened vast areas to commerce and growth. However, railroad building projects stopped abruptly when the financial Panic of 1873 occurred. The Panic was followed by a major economic depression. Many historians blame the Panic and depression at least in part on the railroad trust that controlled railroad competition and the rates charged to rail freight customers.

One of the consequences of the Great Panic and the subsequent failure of numerous railroads was an increase in calls for greater government regulation of the railroads. This led Congress to pass the Interstate Commerce Act of 1887, which authorized the Interstate Commerce Commission (ICC). While the purposes of the ICC were noble, over time the Commission strangled the industry. To learn more about the ICC, please see this article. To learn more about the ICC regulation of the railroads, please see this article.

Significant changes to the U.S. rail system in the past 100 years

The railroad system in the United States was largely completed by 1910 (although there has certainly been some expansion and many lines have been upgraded and improved). Trucks slowly began to take freight traffic from the railroads beginning in World War I, and automobiles (and later airplanes) began to divert passenger traffic.

After 1940, diesel electric locomotives largely replaced steam-powered locomotives. This led to more efficient operations that needed fewer employees on the railroads and in repair shops. Other improvements in equipment and then computerization steadily reduced railroad employment, which peaked at 2.1 million in 1920. By 1950 railroad employment had decreased to 1.2 million in 1950; by 2010 railroads employed only 215,000 workers.

In addition to a significant decrease in employment, rail mileage also dropped over time. At its peak in 1916, there were 254,251 miles of active rail lines in the United States. That mileage had dropped to 139,679 miles in 2011.

Except for a brief increase during World War II, passenger travel by railroads declined steadily after 1920. Almost all long-distance passenger service was shifted to Amtrak in 1971. Amtrak is a government-owned corporation. While it does provide long-distance passenger service, most of its passengers are commuters, primarily in the densely populated corridor between Boston and the District of Columbia.

Similarly, the number of freight railroads shrank dramatically due to a series of bankruptcies and consolidations. There are now seven Class I freight railroads in the U.S. However, freight railroads continue to play an important role in the U.S. economy. According to The Economist, “They [U.S. freight railroads] are universally recognized in the industry as the best in the world.”