thumb|upright=0.8|Political cartoon characterizing the startup of the USRA in 1918

The United States Railroad Administration (USRA) was the name of the nationalized railroad system of the United States between December 28, 1917, and March 1, 1920. It was the largest American experiment with nationalization, and was undertaken against a background of war emergency following American entry into World War I. During its brief existence, the USRA made major investments in the United States railroad system, and introduced standardized locomotive and railroad car classes, known as USRA standard. After the end of World War I, while some in the United States advocated for continuing nationalization, ultimately the railroads were returned to their previous owners in early 1920.

Background

Although the carriers had made massive investments in the first years of the 20th century, there remained inadequacies in terminals, trackage, and rolling stock. Inflation struck the American economy, and when in 1906 Congress empowered the Interstate Commerce Commission (ICC) to set maximum shipping rates, the rail firms had difficulty securing revenue sufficient to keep pace with rising costs. The ICC did allow some increases in rates, however. Ownership of the United States rail network was divided among 441 distinct corporations. Investors had overexpanded the nation's trackage, so by late 1915 fully one-sixth of the railroad trackage in the country belonged to roads in receivership (bankruptcy). The national railway investment of $17.5 billion, of which more than half was funded by debt, had an estimated worth of $16 billion.

European nations engaged in World War I ordered $3 billion of munitions from United States factories; and most of this production was routed through a few Atlantic port cities. Terminal facilities in these cities were not designed to handle the resulting volume of export tonnage, though German destruction of Allied cargo ships was ultimately a bigger problem. Thousands of loaded railroad cars were delayed awaiting transfer of their contents to ships; they were essentially used as warehouses. This resulted in a shortage of railroad cars to move normal freight traffic. The United States' declaration of war on April 6, 1917, increased rail congestion by requiring movement of soldiers from induction points through training facilities to embarkation points. When the Supreme Court ruled the law constitutional, the carriers had no choice but to comply.

The railroads attempted to coordinate their efforts to support the war by creating the Railroads' War Board, but private action ran into anti-trust and other regulatory barriers. Observers noted, for example, that sometimes competitive practices prevailed that were not in the best interests of efficient mobilization. Also, government departments sought priority for shipment made on their behalf, and congestion in freight yards, terminals, and port facilities became staggering.

Finally, in December 1917 the ICC recommended federal control of the railroad industry to ensure efficient operation. The takeover measures were to go beyond simply easing the congestion and expediting the flow of goods; they were to bring all parties—management, labor, investors, and shippers—together in a harmonious whole working on behalf of the national interest. President Wilson issued an order for nationalization on December 26, 1917. This action had been authorized by the Army Appropriations Act of 1916. Federal control extended over the steam and electric railroads with their owned or controlled systems of coastwise and inland water transportation, terminals, terminal companies, terminal associations, sleeping and parlor cars, private cars, private car lines, elevators, warehouses, and telephone and telegraph lines. Wilson appointed his son-in-law, Secretary of the Treasury William Gibbs McAdoo, as Director General of the newly formed USRA.

Congress passed the Esch-Cummins Act (Railroad Transportation Act) in February 1920, which substantially increased the ICC's powers over the railroads, and the USRA's authority ended on March 1, 1920. The ICC was given powers to approve or reject railroad mergers, to set rates, to approve or reject abandonments of service, and additional oversight responsibilities. The government also made financial guarantees to the railroads after control was handed back to them, to ensure their financial survival after the restoration of control.

Aftermath

The Esch-Cummins Act maintained and expanded a complete railroad regulatory system after the war. During the 1920s the railroads, with rates and routes set by the ICC, were facing increasing competition from other modes of transportation: trucking and airplanes. These competing modes were basically unregulated at the time, and received extensive financial assistance from the federal government. This competition contributed to the railroads' decline in the 1920s and beyond, and which was amplified in the 1930s during the Great Depression.

Notable personnel

  • Charles Keller, a U.S. Army Colonel, served as secretary of the USRA Committee on Inland Waterways in 1918. (He was later promoted to Brigadier General and served in World War II.)
  • Charles A. Prouty, previously Chairman of the ICC, was the USRA Director of Public Service and Accounting.
  • Edward Chambers, formerly Vice President of the Atchison, Topeka and Santa Fe Railway, was USRA Director of the Division of Traffic.

See also

  • History of rail transport in the United States
  • Federal Railroad Administration - Established in 1966
  • Amtrak - Quasi-public corporation established in 1971 for inter-city passenger rail service
  • Conrail - Government corporation operating a freight rail service (1976-1987)

References

Further reading

  • United States Railroad Administration, Report to the President (1918) online