Since the steam locomotive was invented in England in 1797, rail travel and freight shipments have taken on increasing significance as more and more miles of track have been laid and as technology has improved the capacity of locomotives to deliver cargo in a timely and cost effective manner. In this essay, the changes taking place in the American railroad industry from its emergence as a monopoly in the nineteenth century to passage of the Staggers Rail Act in 1980 will be presented. It will be argued that the passage of the Staggers Act not only created a balanced regulatory system that continues to the present time, but also made America's freight railroads the most productive and affordable in the world (Association of American Railroads, 2009a).
The first railroad in North America, the Baltimore & Ohio,
was chartered by Baltimore merchants in 1827 but it was not until 1830 that the first regularly scheduled steam powered rail passenger service began operating in South Carolina (Internal Revenue Service [IRS], 2007a). Throughout the nineteenth century, dramatic expansion in terms of the number of miles of track in operation in the United States and the number of players in the railroad sector took place. By 1860, there were more than 30,000 miles of operational track and during the Civil War the railroads played a major role as both side in the conflict used trains to move troops and supplies. In 1862, President Abraham Lincoln signed the Pacific Railroad Act which authorized the construction of the Transcontinental Railroad that ultimately linked California with the rest of the nation (IRS, 2007a).
Consequently, between 1880 and about 1920, the Golden Age of railroading emerged and during this period, consolidation in the industry brought about the existence of a number of monopolies that were based on regional primacy (Leonard, 1964). The developing railroads rapidly became huge businesses, vital to the s...