All of Amtrak's preferred stock is owned by the U.S. federal government. The members of its board of directors are appointed by the President of the United States and are subject to confirmation by the United States Senate. Common stock was issued in 1971 to railroads that contributed capital and equipment; these shares convey almost no benefits but their current holders declined a 2002 buy-out offer by Amtrak.
Amtrak employs nearly 19,000 people. It operates passenger service on 21,000 miles (34,000 km) of track primarily owned by freight railroads connecting 500 destinations in 46 states and three Canadian provinces. In fiscal year 2008, Amtrak served 28.7 million passengers, representing six straight years of record ridership. Despite this recent growth, the United States still has one of the lowest inter-city rail usages in the developed world.
History
Amtrak's origins are traceable to the sustained decline of private passenger rail services in the United States from about 1920 to 1970. In 1971, in response to the decline, Congress and President Richard Nixon created Amtrak. The Nixon administration secretly agreed with some railroads that Amtrak would be shut down after two years. After Fortune magazine exposed the manufactured mismanagement in 1974, Louis W. Menk, chairman of the Burlington Northern Railroad remarked that the story was undermining the scheme to dismantle Amtrak. Though for its entire existence the company has been subjected to political cross-winds and insufficient capital resources, including owned railway, Amtrak's ridership has maintained consistent growth.
Pre-Amtrak
Privately operated passenger rail service
Train No. 101, the Hiawatha, led by a streamlined 4-4-2 class A steam locomotive, passes near Red Wing, Minnesota on August 4, 1937.
From the middle 19th century until approximately 1920, nearly all intercity travelers in the United States moved by rail. The rails and the trains were owned and operated by private, for-profit organizations. Approximately 65,000 railroad passenger cars operated in 1929.
For a long time after 1920, passenger rail's popularity diminished and there were a series of pullbacks and tentative recoveries. Rail passenger revenues declined dramatically between 1920 and 1934 because of the rise of the automobile, but in the mid-1930s, railroads reignited popular imagination with service improvements and new, diesel-powered streamliners, such as the gleaming silver Pioneer Zephyr and Flying Yankee. Even with the improvements, on a relative basis, traffic continued to decline, and by 1940 railroads held 67% of passenger-miles in the United States.World War II broke the malaise. During the war, troop movements and restrictions on automobile fuel generated a sixfold increase in passenger traffic from the low point of the Depression. After the war, railroads rejuvenated overworked and neglected fleets with fast and often luxurious streamliners—epitomized by the Super Chief and California Zephyr—which inspired the last major resurgence in passenger rail travel.
The postwar resurgence was short-lived. In 1946, there remained 45% fewer passenger trains than in 1929, and the decline quickened despite railroad optimism. Passengers disappeared and so did trains. Few trains generated profits; most produced losses. Broad-based passenger rail deficits appeared as early as 1948 and by the mid-1950s railroads claimed aggregate annual losses on passenger services of more than $700 million (almost $5 billion in 2005 dollars using CPI). By 1965, only 10,000 rail passenger cars were in operation, 85% fewer than in 1929. Passenger service was provided on only 75,000 miles (120,000 km) of track, a stark decline. The 1960s also saw the end of railway post office revenues, which had helped some of the remaining trains break even.
Causes of the decline of privately operated passenger rail service
Commemorative sign introduced in 1993. Though the system was established during Dwight D. Eisenhower's presidency, the five stars commemorate his rank as General of the Army during World War II.
The causes of the decline of passenger rail in the United States were complex. Until 1920, rail was the only practical form of intercity transport, but the industry was subject to government regulation and labor inflexibility. By 1930, the railroad companies had constructed, with private funding, a vast and relatively efficient transportation network, but when the federal government began to construct the National Highway System, the railroads found themselves faced with unprecedented competition for passengers and freight with automobiles, buses, trucks, and aircraft, all of which were heavily subsidized by the government road and airport building programs. In 1916, the amount of track in the United States peaked at 254,251 miles (409,177 km), compared to 140,695 miles (226,427 km) in 2007 (although it remained the largest rail network of any country in the world). Some routes had been built primarily to facilitate the sale of stock in the railroad companies; they were redundant from the beginning. These were the first to be abandoned as the railroads' financial positions deteriorated, and the rails were routinely removed to save money on taxes. Many rights of way were destroyed by being broken up and built over, but others remained the property of the railroad or were taken over by local or state authorities and turned into rail trails, which could be returned to rail service if necessary.
Government regulation and labor issues
1914 IWW demonstration in New York City
The first interruption in passenger rail's vibrancy coincided with government intervention. From approximately 1910 to 1921, the federal government introduced a populist rate-setting scheme, followed by nationalization of the rail industry for World War I. Ample railroad profits were erased, growth of the rail system was reversed, and railroads massively underinvested in passenger rail facilities during this time. Meanwhile, labor costs advanced, and with them passenger fares, which discouraged passenger traffic just as automobiles gained a foothold.
The primary regulatory authority affecting rail interest from the early 20th century was the Interstate Commerce Commission (ICC). The ICC played a leading role in rate-setting and intervened in other ways detrimental to passenger rail. Increases in train speeds which had been occurring since the 1930s were hampered after the Naperville train disaster of 1946 and other crashes in New York in 1950. In 1947 the ICC issued an order requiring US railroads, by the end of 1951, to install automatic train-stop or train-control or cab-signalling wherever any trains would travel at 80 mph (130 km/h) or faster. Such technology was not widely implemented outside the Northeast., effectively placing a speed limit in other areas, which is still in effect today, and why the 79 mph maximum passenger train speed is common in the United States. In 1958, the ICC was granted authority to allow or reject modifications and eliminations of passenger routes (train-offs). Many routes required beneficial pruning, but the ICC delayed action by an average of eight months and when it did authorize modifications, the ICC insisted that unsuccessful routes be merged with profitable ones. Thus, fast, popular rail service was transformed into slow, unpopular service.The ICC was even more critical of corporate mergers. Many combinations which railroads sought to complete were delayed for years and even decades, such as the merger of the New York Central Railroad and Pennsylvania Railroad, into what eventually became Penn Central, and the Delaware, Lackawanna and Western Railroad and Erie Railroad into the Erie Lackawanna Railway. By the time the ICC approved the mergers in the 1960s, disinvestments by the federal government, years of deteriorating equipment and station facilities and the flight of passengers to the air and car had taken their toll and the mergers were unsuccessful.
Taxation
At the same time, railroads carried a substantial tax burden. A World War II–era excise tax of 15% on passenger rail travel survived until 1962. Local governments, far from providing needed support to passenger rail, viewed rail infrastructure as a ready source for property tax revenues. In one extreme example, in 1959, the Great Northern Railway, which owned about a third of one percent (0.34%) of the land in Lincoln County, Montana, was assessed more than 91% of all school taxes in the county. To this day, railroads are generally taxed at a higher rate than other industries, and the rates vary greatly from state to state.
Railroads also were saddled with antiquated work rules and an inflexible relationship with trade unions. Work rules did not adapt to technological change. Average train speeds doubled from 1919 to 1959, but unions resisted efforts to modify their existing 100 to 150 mile work days. As a result, railroaders' work days were roughly cut in half, from 5–7½ hours in 1919 down to 2½–3¾ hours in 1959. Labor rules also perpetuated positions that had been obviated by technology; for example, requirements that diesel locomotive have a "fireman" aboard at all times, even in switching yards.[citation needed] Between 1947 and 1957, passenger railroad financial efficiency dropped by 42% per mile.
Today, the burden of nascent railroad worker pensions, including those of freight railroad workers, are financed by Amtrak, regardless of whether such workers were ever employed by Amtrak or worked in passenger railroad service. In effect, Amtrak subsidizes the pensions of thousands of railroad workers who would otherwise not receive any pension.
Subsidized competition
The Empire Builder, taken in Havre, Montana in 1967, in the last color scheme pre-Amtrak
While passenger rail faced internal and governmental pressures, new challenges appeared that undermined the dominance of passenger rail: highways and commercial aviation. The passenger rail industry wilted as government backed these potent upstarts with billions of dollars in construction of highways and government-owned airports and the air traffic control system.
As cars became more attainable to most Americans, this newfound freedom and individualization of transit became the norm for most Americans because of the increased convenience. Government actively began to respond with funds from its treasury and later with fuel tax funds to build a non-profit network of roads not subject to property taxation that rivaled and then surpassed the for-profit network that the railroads had built in previous generations with corporate capital and government land grants. All told between 1921 and 1955 governmental entities, using taxpayer money and in response to taxpayer demand, financed more than $93 billion worth of pavement, construction, and maintenance.
In the 1950s, a second and more formidable threat appeared: affordable commercial aviation. Government at many levels supported aviation. Governmental entities built sprawling urban and suburban airports, funded construction of highways to provide access to the airports, and provided air traffic control services.
Loss of U.S. Mail contracts
Until 1966, most U.S. Postal Service mail was transported on passenger trains. By the 1960s, it was not uncommon for passenger trains to feature a dozen mail cars with only a few passenger cars. The mail contracts kept most passenger trains economically viable. In 1966, the U.S. Postal Service switched to trucks and airplanes, depriving many passenger trains of a major source of revenue.
Formation
Union Station, the headquarters of Amtrak in Washington, D.C.
Rail Passenger Service Act
In the late 1960s, the end of passenger rail in the United States seemed near. First had come the requests for termination of services; then came the bankruptcy filings. The legendary Pullman Company became insolvent in 1969, followed, in 1970, by the dominant railroad in the Northeastern United States, the Penn Central. It now seemed that passenger rail's financial problems might bring down the railroad industry as a whole, yet few in government wanted to be held responsible for the extinction of the passenger train.
In 1970, Congress passed and President Richard Nixon signed into law, the Rail Passenger Service Act. Proponents of the bill, led by the National Association of Railroad Passengers (NARP), sought government funding to assure the continuation of passenger trains. They conceived the National Railroad Passenger Corporation (NRPC), a hybrid public-private entity that would receive taxpayer funding and assume operation of intercity passenger trains. The original working brand name for NRPC was Railpax, but shortly before the company started operating it was changed to Amtrak. There were several key provisions:
Any railroad operating intercity passenger service could contract with the NRPC, thereby joining the national system.
Participating railroads bought into the NRPC using a formula based on their recent intercity passenger losses. The purchase price could be satisfied either by cash or rolling stock; in exchange, the railroads received NRPC common stock.
Any participating railroad was freed of the obligation to operate intercity passenger service after May 1, 1971, except for those services chosen by the Department of Transportation as part of a "basic system" of service and paid for by NRPC using its federal funds.
Railroads that chose not to join the NRPC system were required to continue operating their existing passenger service until 1975 and thenceforth had to pursue the customary Interstate Commerce Commission (ICC) approval process for any discontinuance or alteration to the service.
Nearly everyone involved expected the experiment to be short-lived. The Nixon administration and many Washington insiders viewed the NRPC as a politically expedient way for the President and Congress to give passenger trains the one "last hurrah" demanded by the public. They expected Amtrak to quietly disappear as public interest waned.[28] Proponents also hoped that government intervention would be brief, but their view was that Amtrak would soon support itself. Neither view has proved correct. Popular support has allowed Amtrak to continue in operation longer than critics imagined, while financial results have made a return to private operation unfeasible.
Non-participating railroads
Of the railroads that were still offering long-distance passenger service in 1971 only six declined to join Amtrak.
Rock Island E-8 No.652 with E-6 No.630 at Midland Railway, Baldwin City, KS
Chicago South Shore and South Bend Railroad passenger trains, which operated in the roughly 100-mile (160 km) industrial corridor between Chicago, Illinois and South Bend, Indiana continue to operate as part of the Northern Indiana Commuter Transportation District system.
The Georgia Railroad was required by its state charter to maintain roughly 200 miles (320 km) of minimal passenger service, which it did with mixed freight/passenger trains. This limited passenger service continued until the company was sold to the Seaboard System in 1983.
The Reading Company maintained passenger services on short (less than 100 mile) lines from Philadelphia to each of Newark Penn Station, NJ, Bethlehem, PA, and Pottsville, PA. The Reading Company merged into Conrail in 1976. Passenger service to Bethlehem and Pottsville was discontinued in 1981, while passenger service to New Jersey was cut back by roughly 50 miles (80 km) to terminate in West Trenton, NJ.
The Chicago, Rock Island and Pacific Railroad (the Rock Island) determined that the fee to join Amtrak was greater than the cost of the statutory five years of operations for its remaining intercity passenger service. The Rock Island continued operating two truncated passenger trains (the Peoria Rocket and the Quad Cities Rocket) on short routes out of Chicago until 1978.
Southern Railway relinquished some operations, but continued four routes, including its Southern Crescent. Continued losses convinced Southern Railway to relinquish remaining passenger operations to Amtrak in 1979. Amtrak continues a variation of the Southern Crescent service as the Crescent.
The Denver and Rio Grande Western Railroad (DRG) continued operating its portion of the original California Zephyr service, renamed the Rio Grande Zephyr, between Denver, Colorado and Ogden, Utah. In operation until 1983, the Rio Grande Zephyr was the last privately operated long-distance passenger service in the United States. Amtrak subsequently rerouted its modern version of the California Zephyr to follow DRG's scenic route between Denver and Salt Lake City.
Rainbow Era (the first decade)
Amtrak #928, a former PRR GG1, speeds through North Elizabeth, NJ, in December 1975
Day one
Amtrak began operations on May 1, 1971. The corporation was molded from the passenger rail operations of 20 out of 26 major railroads in operation at the time. The railroads contributed rolling stock, equipment, and capital. In return, they received approval to discontinue their passenger services, and at least some acquired common stock in Amtrak. Amtrak received no rail tracks or right-of-way at its inception. Railroads that shed passenger operations were expected to host Amtrak trains on their tracks, for a fee.
Consolidations
There was a period of adjustment. However, Amtrak was making numerous renovations and improvements. All Amtrak's routes were continuations of prior service, although Amtrak pruned about half the passenger rail network. Of the 364 trains operated previously, Amtrak only continued 182. On trains that continued, to the extent possible, schedules were retained with only minor changes from the Official Guide of the Railways. Former names largely were continued.
Pennsylvania Railroad Metroliner car, built by Budd, circa 1968
Several major corridors became freight-only, including New York Central Railroad's Water Level Route across New York and Ohio and Grand Trunk Western Railroad's Chicago to Detroit service, although passenger service soon returned to the Water Level Route with the introduction of the Lake Shore Limited. Reduced passenger train schedules created headaches. A 19-hour layover became necessary for eastbound travel on the James Whitcomb Riley between Chicago and Newport News.
Amtrak inherited problems with train stations, most notably deferred maintenance, and redundant facilities resulting from competing companies that served the same areas. On the day it started, Amtrak was given the responsibility of rerouting passenger trains from the seven train terminals in Chicago (LaSalle, Dearborn, Grand Central, Randolph, Chicago Northwestern Terminal, Central, and Union) into just one, Union Station. In New York City, Amtrak had to pay to maintain Penn Station and Grand Central Terminal because of the lack of track connections to bring trains from upstate New York into Penn Station, a problem not rectified until the building of the Empire Connection in 1991. In many cases Amtrak had to abandon service into the huge old Union Stations such as Cincinnati, Saint Paul, Buffalo, Kansas City, Houston, and Saint Louis, and route trains into smaller Amtrak-built facilities down the line, jokingly referred to over the years as "Amshacks" due to their basic design. Amtrak has pushed to start reusing some of the old stations, most recently Cincinnati Union Terminal, and Kansas City Union Station.
The Coast Starlight at San Luis Obispo, CA.
On the other hand, merged operations presented efficiencies such as the combination of three West Coast trains into the Coast Starlight, running from Los Angeles to Seattle. The Northeast Corridor received an Inland Route via Springfield, Massachusetts, thanks to support from New York, Connecticut and Massachusetts. The North Coast Hiawatha was implemented as a second Pacific Northwest route. The Milwaukee to St. Louis Abraham Lincoln and Prairie State routes also commenced. The first all-new Amtrak route, not counting the Coast Starlight, was the Montrealer/Washingtonian. That route was inaugurated September 29, 1972, along Boston and Maine Railroad and Canadian National Railway track that had last seen passenger service in 1966. Amtrak was also instrumental in restoring service in the Empire Corridor of upstate New York, between Albany and Niagara Falls, with its Empire Service, a service that was discontinued in the sixties by the New York Central and Penn Central.
Northeast Corridor ownership
Amtrak soon had the opportunity to acquire railway. Following the bankruptcy of several northeastern railroads in the early 1970s, including Penn Central which owned and operated the Northeast Corridor, Congress passed the Railroad Revitalization and Regulatory Reform Act of 1976. A large part was directed to the creation of a Conrail, but in addition the law enabled transfer to Amtrak the portions of the Northeast Corridor not already owned by state authorities. (The portion in Massachusetts is owned by the Commonwealth and managed by Amtrak. The route from New Haven to New Rochelle is owned by the Metropolitan Transportation Authority and the Connecticut Department of Transportation as the New Haven Line.) That track became Amtrak's jewel and helped Amtrak generate significant revenues. While the Northeast Corridor ridership and revenues were higher than any other segment of the system, the cost of operating and maintaining the corridor proved to be overwhelming. As a result, Amtrak's federal subsidy increased dramatically. In subsequent years, short route segments not needed for freight operations were transferred to Amtrak. Nevertheless, in general, Amtrak remained dependent on freight railroads for access to most of its routes outside of the northeast.
The verdict
A Great Northern EMD F7 Locomotive.
In its first decade, Amtrak fell far short of financial independence, which continues today, but it did find modest success rebuilding trade. Outside factors discouraged competing transport, such as fuel shortages which increased costs of automobile and airline travel, and strikes which disrupted airline operations. Investments in Amtrak's track, equipment and information also made Amtrak more relevant to America's transportation needs. Amtrak's ridership increased from 16.6 million in 1972 to 21 million in 1981.
Rainbow Era: defined
Amtrak's early years are often called the Rainbow Era, which refers to the ad hoc arrangement of the rolling stock and locomotives from a pool of equipment, acquired by Amtrak, at its formation, that consisted of a large mix of paint schemes from their former owners. This rolling stock, which for the most part still bore the pre-Amtrak colors and logos, formed the multi-colored consists of early Amtrak trains. By mid-1971, Amtrak began purchasing some of the equipment it had leased, including 286 second-hand locomotives, of the EMD E and F types, 30 GG1 electric locomotives, and 1290 passenger cars, and continued leasing even more motive power. By 1975 the official Amtrak color scheme was painted on most Amtrak equipment and newly purchased locomotives and rolling stock began appearing.
The 1980s and 1990s
A Michigan-bound Amtrak led by a F40PH in still older Phase III paint livery passes through Porter, Indiana, after departing from Chicago in 1993
The high-speed Acela Express at New Haven Union Station.
Ridership stagnated at roughly 20 million passengers per year amid uncertain government aid from 1981 to about 2000.
In the 1990s, Amtrak's stated goal remained operational self-sufficiency. By this time, however, Amtrak had a large overhang of debt from years of underfunding, and in the mid-1990s, Amtrak suffered through a serious cash crunch. To resolve the crisis, Congress issued funding but instituted a glide-path to financial self-sufficiency, excluding railroad retirement tax act payments. Passengers became "guests" and there were expansions into express freight work, but the financial plans failed. Amtrak's inroads in express freight delivery created additional friction with competing freight operators, including the trucking industry. Delivery was delayed of much anticipated high-speed trainsets for the improved Acela Express service, which promised to be a strong source of income and favorable publicity along the Northeast Corridor between Boston and Washington, D.C.
The 21st century
Ridership increased in the first decade of the 21st century after implementation of capital improvements in the Northeast Corridor and rises in automobile fuel costs. Amtrak set its sixth straight year of record ridership, with 28.7 million passengers for the 12 months ended September 30, 2008. According to Amtrak, an average of more than 70,000 passengers ride on up to 300 Amtrak trains per day.
Through the late 1990s and very early 21st century, Amtrak could not add sufficient express freight revenue or cut sufficient other services to break even. By 2002, it was clear that Amtrak could not achieve self-sufficiency, but Congress continued to authorize funding and released Amtrak from the requirement.
Amtrak's leader at the time, David L. Gunn, was polite but direct in response to congressional criticism. In a departure from his predecessors' promises to make Amtrak self-sufficient in the short term, Gunn argued that no form of passenger transportation in the United States is self-sufficient as the economy is currently structured. Highways, airports, and air traffic control all require large government expenditures to build and operate, coming from the Highway Trust Fund and Aviation Trust Fund paid for by user fees, highway fuel and road taxes, and, in the case of the General Fund, by people who own cars and do not.
Before a congressional hearing, Gunn answered a demand by leading Amtrak critic Arizona Senator John McCain to eliminate all operating subsidies by asking the Senator if he would also demand the same of the commuter airlines, upon which the citizens of Arizona are dependent. McCain, usually not at a loss for words when debating Amtrak funding, did not reply.
Under Gunn, almost all the controversial express freight business was eliminated. The practice of tolerating deferred maintenance was reversed to eliminate a safety issue.
Alexander Kummant, Amtrak's chief from 2006–2008, was committed to operating a national rail network, and he did not envision separating the Northeast Corridor (the rail line from Washington, DC, to Boston that is primarily, though not completely, owned by Amtrak) under separate ownership. He said that shedding the system's long distance routes would amount to selling national assets that are on par with national parks, and that Amtrak's abandonment of these routes would be irreversible. Amtrak is seeking annual congressional funding of $1 billion for ten years. Kummant has stated that the investment is moderate in light of federal investment in other modes of transportation. In 2011, Amtrak announced its intention to build a small segment of a high speed rail corridor in New Jersey called the Gateway Project, estimated to cost $13.5 billion.
Amtrak numbers 156 and 66 in throwback paint at Galesburg.
In 2011 and 2012, Amtrak will celebrate its 40th anniversary with festivities across the country, starting the year-long celebration with National Train Day in May. A commemorative book entitled Amtrak: An American Story was published, and a documentary was created. Four commemorative locomotives and an exhibit train are also made. The exhibit train will be an entirely rebuilt train powered by EMD F40PH and GE Genesis locomotives and will include three made-over baggage cars and a food service car. 4 GE P42DC's are also going to be painted into past paint schemes. P42DC No.156 will be in Phase 1 colors, No.66 will be in Phase 2 colors, No.145 has been painted into Phase 3 colors, and No.184 will be in Phase 4 colors.
Passenger Wi-Fi services were launched on Acela Express in 2010; WiFi is being expanded to other Amtrak services in 2011.
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