The Railway Control Act Summary

  • Last updated on November 10, 2022

During the United States’ participation in World War I, the smooth and efficient operation of railroads was crucial to the war effort. The industrial economy depended on it, and the government needed it to move millions of men to military training camps, bases, and embarkation points. American railroads were plagued with issues in 1917, with many railroad companies in bankruptcy. Labor disputes had been smoothed over the year before with a bill that mandated an eight-hour work day, but operating costs were on the rise, profits were sagging, and many workers had left the railroads to work in other industries. Freight cars and locomotives were in poor repair and out of date. In December 1917, President Woodrow Wilson announced that the railway system would be nationalized in order to keep up with wartime demands. In March 1918, the nationalization of American railroads during wartime became law with the passage of the US Railway Control Act.

Summary Overview

During the United States’ participation in World War I, the smooth and efficient operation of railroads was crucial to the war effort. The industrial economy depended on it, and the government needed it to move millions of men to military training camps, bases, and embarkation points. American railroads were plagued with issues in 1917, with many railroad companies in bankruptcy. Labor disputes had been smoothed over the year before with a bill that mandated an eight-hour work day, but operating costs were on the rise, profits were sagging, and many workers had left the railroads to work in other industries. Freight cars and locomotives were in poor repair and out of date. In December 1917, President Woodrow Wilson announced that the railway system would be nationalized in order to keep up with wartime demands. In March 1918, the nationalization of American railroads during wartime became law with the passage of the US Railway Control Act.

Defining Moment

The United States entered the war in Europe in April 1917 and immediately began mobilizing the men and equipment needed for what would become the largest army in the nation’s history to successfully fight overseas. Railroad transportation was the primary domestic transport for the men and matériel that needed to make their way onto ships bound for the front lines. Furthermore, many of the parts for these same ships and the men who were to build them arrived by rail.

Railroads had been crucial to the US economy since the 1870s, when private rail lines were connected to provide nationwide coverage. By 1917, there were nearly two hundred private railroad corporations and 200,000 miles of track crisscrossing the country; but the ascendancy of railroads had been challenged by shipping and road-building interests that hampered profitability, increased taxes, and discouraged investment in railroads.

Although capital improvement lagged, traffic on the lines continued to grow. Wages and fares were kept low, and many skilled workers left the railroad industry in frustration. By 1917, the situation was critical, and although railroads were operating near capacity, the equipment was aging and often unsafe. Railroad companies were unable to turn a profit, and nearly one-fifth were in bankruptcy. Competition between companies meant that freight and passenger cars were being run inefficiently, routes were duplicated, and terminals were congested because railroad cars were in short supply.

The Army Appropriations Act was passed in 1916 and granted, among other things, the president the authority to take control of the railway system during wartime. When the United States entered World War I in April 1917, five railroad executives joined together a few days later to form the Railroads’ War Board in order to coordinate improvements to the system and hopefully thwart any government regulation of the industry. Their efforts, however, failed to streamline the system, and government freight did not always get the priority it was promised. Congestion in terminals and ports became unmanageable, and nonmilitary passenger and sleeper trains were continued despite the need to prioritize troop transport and war supplies. By the end of 1917, rail congestion was so bad that coal needed for winter heating and fuel for ships was stalled hundreds of miles from the coast. This, combined with rumors of an impending strike and a shortage of locomotives, convinced President Wilson to nationalize the railroads. On December 26, he announced the founding of the United States Railroad Administration (USRA). Overall, management teams familiar with individual railroad lines were kept on, but a USRA director general was given ultimate authority over operations. The USRA moved quickly to eliminate many underused or duplicate rail lines and to efficiently route cargo regardless of track ownership. New locomotives and cars were purchased and facilities improved. Despite lobbying from railroad worker unions to continue nationalization, US railroads returned to private ownership after the war, and the USRA’s authority ended on March 1, 1920.

Author Biography

The Sixty-fifth United States Congress met in Washington, DC, from March 4, 1917 to March 4, 1919. The House of Representatives had a Republican majority, and the Democrats were the majority in the Senate. The Sixty-fifth Congress was active during the fourth and fifth years of Woodrow Wilson’s presidency and oversaw legislation that granted the declaration of war against Germany, the Selective Service Act that instituted conscription, measures that facilitated mobilization, and many other aspects of the war effort. The Sixty-fifth Congress was seated at the beginning of the war and was still in session when the armistice was declared on November 11, 1918.

Document Analysis

The terms of the US Railway Control Act (USRA) are laid out in this document. The railroads would remain in private hands, but the federal government would assume the control and operation of them. The government would pay an annual compensation that was the average of the previous three years’ income. Any additional income would become the property of the government. The president was given the authority through the USRA to determine just compensation if the average income was deemed atypical or if special circumstances arose. The railroads were to be returned to private ownership within twenty-one months after the end of the war and would be returned in good physical condition.

Section six of the act appropriated $500,000,000 to be made available to pay rent and make improvements to the railway. The USRA was interested in being as self-sufficient as possible, however, and most of the improvements and rent that were paid during the war came from increased passenger and shipping revenue.

Several sections of the US Railway Control Act deal with the Interstate Commerce Commission (ICC). The ICC was originally established in 1887 by the Interstate Commerce Act in order to regulate railroads, ensure fair rates, and guarantee that railways did not discriminate against certain places or give others an unfair advantage. By the outbreak of war, the ICC could also set maximum rates and had authority over telephone and telegraph companies. Because of their existing regulatory role, the USRA worked with the ICC to implement changes to the railroads, and language in the act describes how the two bodies are to interact.

While the USRA is the primary governing agency for railroads for the duration of the war, the president has the right to “avail himself of the advice, assistance, and cooperation of the Interstate Commerce Commission.” The president, through the USRA, was allowed to set “rates, fares, charges, classifications, regulations, and practices” for the railroads, and they were to take effect immediately. Though the ICC could subject such changes to a hearing, they were cautioned to remember that they were operating in extraordinary times when fares and charges were set for the national good and “not in competition.”

The USRA was always intended to be a temporary act, and the document is very clear about this. It is “expressly declared to be emergency legislation enacted to meet conditions growing out of war,” and the railroads will return to private hands no later than a year and nine months after the end of the war. The railroads were returned entirely and the USRA ceased to function on March 1, 1920.

Essential Themes

The primary theme of this legislation is the wartime nationalization of one of the largest US industries in the early twentieth century. During times of war and other extraordinary times, it has not been uncommon for the United States to nationalize industries, such as when the federal government took over the operation of railroads and coal mines during World War II or, following the September 11, 2001, terrorist attacks, when the federal government nationalized the airport security industry. Nationalization has also occurred when the federal government purchased ownership stakes in banks to prevent financial collapse. Industries that are considered vital to the economy are often subject to a form of nationalization, through large-scale loans and increased government involvement.

Bibliography and Additional Reading
  • Dempsey, Paul Stephen. “The Rise and Fall of the Interstate Commerce Commission: The Tortuous Path from Regulation to Deregulation of America’s Infrastructure.” Marquette Law Review 95.4 (2012): 1151–89. Academic Search Premier. Web. 24 Mar. 2014.
  • Huddleson, Eugene L. Uncle Sam’s Locomotives: The U.S.RA and the Nation’s Railroads. Bloomington: Indiana UP, 2002. Print.
  • Lee, Blewett. “Constitutional Objections to the Railway Control Act.” Yale Law Journal 28.2 (1918): 158–65. JSTOR. Web. 1 Mar. 2014.
  • McCartin, Joseph A. Labor’s Great War: The Struggle for Industrial Democracy and the Origins of Modern American Labor Relations, 1912–1921. Chapel Hill: U of North Carolina P, 1997. Print.
  • Soloman, Brian. North American Railroad Family Trees: An Infographic History of the Industry’s Mergers and Evolution. Minneapolis: Voyageur, 2013. Print.
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