History of rail transport in the United States
Railroads played a large role in the development of the United States from the industrial revolution in the North-east 1810–50 to the settlement of the West 1850–1890. The American railroad mania began with the Baltimore and Ohio Railroad in 1828 and flourished until the Panic of 1873 bankrupted many companies and temporarily ended growth.
Although the South started early to build railways, it concentrated on short lines linking cotton regions to oceanic or river ports, and the absence of an interconnected network was a major handicap during the Civil War. The North and Midwest constructed networks that linked every city by 1860. In the heavily settled Midwestern Corn Belt, over 80 percent of farms were within 5 miles (8 km) of a railway, facilitating the shipment of grain, hogs and cattle to national and international markets. A large number of short lines were built, but thanks to a fast developing financial system based on Wall Street and oriented to railway bonds, the majority were consolidated into 20 trunk lines by 1890. State and local governments often subsidized lines, but rarely owned them.
The system was largely built by 1910, but then trucks arrived to eat away the freight traffic, and automobiles (and later airplanes) to devour the passenger traffic. The use of diesel electric locomotives (after 1940) made for much more efficient operations that needed fewer workers on the road and in repair shops.
A series of bankruptcies and consolidations left the rail system in the hands of a few large operations by the 1980s. Almost all long-distance passenger traffic was shifted to Amtrak in 1971, a government owned operation. Commuter rail service is provided near a few major cities such as New York and Chicago. Computerization and improved equipment steadily reduced employment, which peaked at 2.1 million in 1920, falling to 1.2 million in 1950 and 215,000 in 2010. Route mileage peaked at 254,251 miles (409,177 km) in 1916 and fell to 139,679 miles (224,792 km) in 2011.
Freight railroads continue to play an important role in the United States' economy, especially for moving imports and exports using containers, and for shipments of coal and, since 2010, of oil. According to the British news magazine The Economist, "They are universally recognised in the industry as the best in the world." Productivity rose 172% between 1981 and 2000, while rates rose 55% (after accounting for inflation). Rail's share of the American freight market rose to 43%, the highest for any rich country.
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