About Amtrak

Amtrak is a hybrid public-private railway company. In order to understand the historical significance of Amtrak, it is important to understand the factors that led to the decline of private railroad industries in the early and mid-20th century. Government regulations crippled the private railway industries. Yet, paradoxically, the federal government saved the railways by creating and subsidizing Amtrak in 1970. Many questions surrounding Amtrak remain relevant today, including government's role in subsidizing the transportation industries.

Identification

Amtrak is a government-funded company providing railway service across the United States. The name "Amtrak" is a combination of the words "American" and "track." Amtrak owns and operates 182 tracks, including the Northeast Corridor, the Philadelphia-to-Harrisburg line, the Empire Corridor, the New Haven-Springfield Line, the Chicago-Detroit Line, the Post Road Branch, and others across the lower 48 states. Amtrak operates about 2,000 railroad cars, including sleeper cars, coach, business, crew, dinette cars, dining cars and baggage cars. Even-numbered trains usually travel north and east while odd-numbered trains travel south and west. When Amtrak first opened in 1971, the company had 25 employees. Today, Amtrak has over 25,000 employees.

Geography

Although Amtrak is no longer legally required to operate a national route system, service is available in 46 states (all except Alaska, Hawaii, South Dakota and Wyoming). The Northeast Corridor, running between Boston and Washington D.C., is powered by overhead wires. Other tracks operate by diesel locomotives. The busiest stations are New York's Penn Station, Washington DC's Union Station, Philadelphia's 30th Street Station, Boston's South Station, Chicago's Union Station and Los Angeles' Union Station. The busiest stations have trains operating up to several times per hour. Other areas in the Midwest, West and South have much more infrequent service, operating fewer than three trains per day. Amtrak also offers commuter services, funded by states rather than the federal government.

History

The early and mid-20th century saw the decline of the passenger railway industry. From the mid-19th century to the 1920s, most Americans traveled between cities by rail. At the time, the rails and trains were privately owned and operated. In 1929, approximately 65,000 railroad passenger cars were in operation. From the 1920s to the 1960s, the railway industry's popularity declined, though there was a brief period of recovery after World War II. By 1965, there were as few as 10,000 railway cars in operation. Quality and availability of railway service also suffered due to falling profits, underinvestment and bureaucratic regulations. During the 1910s and World War I, rate-setting schemes and delayed actions from the federal government and the Interstate Commerce Commission (ICC) caused the once fast and popular rail services to become slow and inefficient.

Significance

Several factors contributed to the decline of private railway industries from the 1920s to the 1960s. Beginning in the 1930s, the federal government began to heavily subsidize other modes of transportation, including auto and commercial aviation. Heavy competition undercut the dominance of the railways industry. Railroads were also subject to hefty property taxes. The federal government implemented a World War II-era tax that remained until 1962. State governments as well saw railways as an easy source of tax revenue.
Labor issues also crippled the railway industry. The industry was saddled with antiquated work rules, increased labor costs and inflexible trade unions. Work policies were unable to adapt to improvements in technology. Although train speeds had doubled from the 1910s to the 1950s, workers were unwilling to increase the number of miles they worked each day, which caused a sharp decline in railroad financial efficiency.

Effects

In 1969, the Pullman Company went bankrupt and was followed shortly by Penn Central in 1970. As a response, President Richard Nixon and Congress passed the Rail Passenger Service Act in 1970. In order to ensure the continuation of railway trains, the government created Railpax (later renamed Amtrak), a hybrid public-private entity receiving taxpayer funding. The Nixon administration saw this as a politically expedient move, a way to appease the public and give the railway industries a last hurrah. He believed that public interest would fade and that Amtrak would die out after a few years. Supporters of Amtrak, however, hoped that government intervention would be intermittent and that Amtrak would soon be able to operate independently. Neither occurred. Amtrak developed enough popular interest to sustain itself, but not enough to privatize.

Time Frame

On May 1, 1971, at 12:05 a.m., the first Amtrak train departed New York's Penn Station for Philadelphia's 30th Street. The early years of Amtrak were a period of transition and adjustment. Although the Amtrak routes were continuations of pre-existing railway services, the number of routes was cut in half. Before Amtrak, there were 364 routes. Amtrak only continued 182 of them. Some of the problems Amtrak inherited included deferred maintenance and redundant facilities. Yet merging the railway systems also promoted efficiency in intercity travel. Amtrak's acquisition of the Northeast Corridor in the 1970s also resulted in significant increases in revenue. Although Amtrak was not able to make the transition into becoming a private entity, the company did benefit from fuel shortages, which hurt the auto industries, and airline strikes, which hurt commercial aviation, in the 1970s.

Considerations

From the 1980s to now, Amtrak saw a steady stream of passengers, around 20 million per year. In the 1990s, Amtrak sought unsuccessfully to become independent of government funding. This sparked the ongoing debate about whether the federal government should continue subsidizing Amtrak. Sen. John McCain argued in favor of eliminating subsidies, but Amtrak president David L. Gunn countered that the government was also subsidizing commercial aviation. In 1971, Amtrak received $40 million in federal funding, plus $100 million in loans. By 1981, that figure had increased to $1.5 billion. In the 1980s, President Ronald Reagan had reduced funding to $601 million, but during the 1990s those figures had increased. Opponents of federal subsidies argued that the bailouts served the interests of unions and corporations rather than traveling citizens. Proponents, however, countered that since the government funds the auto and aviation industries, there shouldn't be a double standard. The debate between intervention and privatization remains relevant today. President Obama's stimulus package includes $1.1 billion for Amtrak, $2 billion for auto companies, and $3 billion for airlines.

Resources

• Trains Magazine: All About Amtrak
• Reuters: Stimulus Plan Would Help Autos, Airlines, Amtrak