worsened in 1915 . Total railroad mileage increased by less than 1 %; freight tonmiles declined by 4 % for the second year in a row . Hidden in those figures was a 100 % increase in the value of the country ’ s exports . Most of those products were sent first by railroads to East Coast ports , and then by freighters to the European Allies . Railroads only achieved their 31 % increase in net income from the previous year ’ s depressed level by reducing their spending on maintenance and limiting their purchases of replacement locomotives and freight cars . Most remained unable to access the capital markets ; many were forced into involuntary bankruptcy . By the last quarter of 1915 , 82 different railroads were operating a total of 42,000 miles of track ( 16 % of the country ’ s total ) while in the hands of bankruptcy receivers .
Throughout 1916 , the railroad companies ’ aging rolling stock and inadequately maintained tracks , switches and sidings made it difficult for them to handle the increase in freight ton-miles related to the even larger amounts of food and munitions being sent to Europe . Moving that material across the ocean overwhelmed the capabilities of an ocean-going freighter industry with greatly reduced capacity due to the war . Vessels that had traditionally only participated in trade along the Great Lakes and intercoastal waterways took up some of the slack . But doing so forced more interstate freight traffic to move to the railroads , putting even more pressure on that part of the transportation infrastructure . In yet another sign of the railroad industry ’ s inability to operate efficiently , the shortage of ocean-going transportation resulted in freight cars sitting idle and unloaded at various ports .
As had happened in earlier periods of unusually high freight traffic , the industry began to experience a severe shortage of empty railroad cars . By the end of 1916 , that shortage exceeded 114,000 cars , thus preventing railroaders from providing the level of service needed to maintain an orderly and efficient transportation system . For the full year , freight ton-miles increased by 32 %. However , the combination of unapproved rate increases and mandated rate decreases resulted in a revenue increase of only 17 %. Operating income rose by only 23 %, as a new law established the eighthour-day for the freight train workforce and forced the companies to pay higher wage rates across the board .
“ Clear the Track !” cartoon published in the Tacoma Times on January 12 , 1918 , during the establishment of the United States Railroad Administration ( USRA ), led by William G . McAdoo . The USRA nationalized the US railroad system during World War I .
During the winter of 1916 – 1917 , the railroads ’ efforts to move more goods were compounded by the lower-thannormal temperatures and higher-thannormal snowfalls that plagued much of the country . In February , there were more than 145,000 loaded freight cars stuck in various eastern terminals ; the nationwide car shortage also reached 145,000 . The industry ’ s task became even more challenging in April when the United States formally entered the war . Trains had to continue moving material to East Coast ports , while also playing a prominent role in the mobilization of manpower and resources around the country as the
United States began building a multimillion-man Army .
Railroad industry executives were certainly aware of their challenges . In April 1917 , they asked the ICC to increase freight rates by an average of 15 % to provide sufficient financial resources to sustain their efforts . And , in a very unusual move , they formed the Railroads ’ War Board ( RWB ), an organization that would attempt to coordinate every company ’ s operations and optimize the efficiency of the nationwide rail system . Railroad managers spent the next several months implementing several actions to improve that system ’ s effectiveness . They transferred equipment
www . MoAF . org | Spring 2024 | FINANCIAL HISTORY 35