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Reviewed by:
  • American Railroads—Decline and Renaissance in the Twentieth Centuryby Robert E. Gallamore and John R. Meyer
  • John C. Spychalski, DLP, Professor Emeritus of Supply Chain Management
Robert E. Gallamore and John R. Meyer. American Railroads—Decline and Renaissance in the Twentieth Century. Cambridge, MA: Harvard University Press, 2014. Pp. xiii, 506 pp, ISBN 978-0-674-72564-5 (Hardback) US $55.00

The stated objective of this thirteen-chapter book, as first conceived by coauthor John R. Meyer, is presentation of a “full sweep” account of the US railroad industry’s evolution in the twentieth century (Preface, viii). Work on the book spanned 15 years up to the date of publication. Meyer contributed to the drafting and/or review of 10 chapters. In 2006, deteriorating health caused Meyer to enlist Robert Gallamore as co-author. Sadly, Meyer died in 2009, leaving Gallamore with responsibility for the drafting of three chapters (1, 12, and 13) and final revision of the entire draft. Both co-authors brought eminent credentials to the writing effort. Harvard University-based Meyer had a distinguished academic career as an economist focused heavily on policy issues in rail and other modes of transport. Additionally, he served for a time as a board member and vice-chairman of Union Pacific. Gallamore served Northwestern University as director of its Transportation Center and as professor of managerial economics and decision sciences between 2001 and 2006. Before entering the academic sphere, he served in numerous varied executive and staff analytical positions with several entities, including Union Pacific, Transportation Technology Center (provider of railway equipment research and testing services), the Federal Railroad Administration within the US Department of Transportation, and the United States Railway Association.

As portrayed in the book, the railroad industry dominated intercity freight and passenger transport in the United States within the first two [End Page 535]decades of the twentieth century. Onward from 1920 through the 1970s, its dominance declined steadily in the face of increasingly severe competition from the entry and steady rise of road, inland waterway, pipeline, and air transport. By the first half of the 1970s, this downward trajectory reached crisis level with the fall into bankruptcy of most railroads operating within the Northeast and a portion of the Midwest. Actions to abate the crisis between the mid-1970s and the start of the 1980s succeeded in fostering an economic rebirth for the freight railroad industry that has continued into the present century.

A prime although not exclusive focus of the book is the relationship between government policy actions and the condition and performance of the railroad industry between the beginning and end of the century. Within this array of actions, the authors place greatest negative criticism on federal economic regulation of the industry, as it existed between 1887 and repeal of most elements in 1980. They hold that economic regulation of freight rail transport was ill-founded and economically indefensible from its inception. Their most intense criticism is centered on how such regulation constrained railway pricing and service offering policies and practices in ways that greatly handicapped railroads’ ability to compete effectively against other modes of transport, thus weakening the viability of rail firms and preventing freight shippers and consignees from obtaining the benefits of using rail service. They provide a foundation for this criticism with a tutorial on the inherent economic characteristics of railway firms and an exposition of why such characteristics make unconstrained (by government regulation) demand-based differential pricing essential for enabling freight railroads to remain financially viable without external subsidy.

Government policy toward intramodal rail competition and consolidation of firms within the freight railroad industry is viewed by the authors as having been unenlightened prior to the later decades of the century, due to inadequate understanding of the inherent economic characteristics of rail service operation and market conditions and/or ill-founded pleas of opposition from parties with vested interest in the status quo. They judge that the consolidations that occurred largely after the mid-1970s have now yielded a national freight railroad system with components that strike an adequate balance between (1) protection of shippers’ interests through preservation of intramodal competition where sustainable, and (2) achievement of...

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