Saturday, July 31, 2010

All Aboard!

I love trains.  Everything about them, from the turn of the century nostalgia to the fuel efficiency just warms me up.  They're great.  So of course, I was pretty excited that a key feature of this trip was the train ride.  We were gearing up for a ride down the California coast and across the Arizona desert back home to Tucson.  We were like Wyatt Earp in spandex shorts.

Like the rest of Salinas, the train station was fully from another era.  I got, like, a 1930's dustbowl-meets-Gotham City vibe.


We had some time to kill before the train showed up.  For all of its strengths, punctuality is not Amtrak's strong suite.  But it's not really their fault.  In the U.S., freight trains get priority over passenger ones, so we say plenty of mile-long caravans of cargo containers pass by before our train showed up.


But the waiting just made us more excited with we saw the silver and blue locomotive rolling in.


Amtrak has a very interesting history.  As you would expect, train travel peaked around World War I, and quickly declined in the interwar period, as the car became America's preferred method of travel.  Rail travel picked up during World War II, as the military used it for troop transport, and gasoline restrictions encouraged Americans to keep their cars in the garage.

But the surge was short lived, and the death knell of passenger trains came in the 1960s, as the Postal Service switched its cross-country shipments from rails to jets.  It didn't help that the publicly-funded highway system artificially decreased the cost of automobile travel, and the privately-funded rail lines just couldn't compete.

By the late 1960's, the decline of passenger rail travel threatened to bring down the entire railroad industry, and of course no one in the Federal government wanted to see that.  Enter the Rail Passenger Service Act.  It allowed all of the rail companies to unload their passenger responsibilities onto another entity (what would become Amtrak).  Amtrak isn't run by the government.  It is an independent, private corporation that has many shareholders.  A large percentage of the shares are owned by the rail lines that used to run the passenger trains, but the largest shareholder is the U.S. Government.  But government ownership is different than government run.  Just like you and I can own shares in Disney, we don't participate in the day to day operation of the company and we don't pick which movies it produces.  But if we aren't happy with the direction of the company, we can vote to replace the people who do run the day to day operation.  Amtrak is no different.  Congress and the President (and the other shareholders) don't pick the routes or set the prices, but they do appoint the board of directors who are responsible for the overall direction of the company.

Interestingly, there are a lot of parallels (and one important difference) between what was essentially a government-backed bailout of the passenger rail system, and the recent government-backed bailout of the automobile industry.  In each case, the government didn't take over day to day operations, but it did invest a lot of money and receive shares in return.  The government then appointed directors who reshaped the operation into something that would become self sustaining.  However, the important difference is that after the auto industry was rebuilt, the U.S. government sold its shares in the company for a considerable profit.  Conversely, the passenger rail system has never quite turned into a fully self-sustaining operation that could be sold on the private market.  Popular support keep it operational (and keeps the government involved as a shareholder), but the realities of automobile and aviation competition keeps Amtrak from becoming something that could viably be sold on the open market.

Another interesting parallel.  The automobile industry bailout was crafted by democratic president (Obama) and was successful.  The railway bailout was crafted by a Republican president (Nixon) and was not successful.  Success being defined as the shares being purchased and later resold at a profit, with the industry remaining viable afterwards.  I'm wading into dangerous territory here, but I just wanted to point out that one party is supposed to be good with business, but the other party actually pulled it off.

But in all fairness, President Nixon actually designed Amtrak to fail.  The powerful railway companies were no longer interested in passenger rail service, but didn't want to be seen as the bad guys who dropped a popular (albeit unprofitable) operation.  Similarly, President Nixon didn't want to be seen as the president who dropped the ball on saving an American institution.  So he and his advisors devised a third party (Amtrak) that would take over passenger rail service, and eventually fade into oblivion as the money ran out.  But over 40 years later, Amtrak is still kicking (or rather limping along).  There is just enough popular support to maintain government involvement, and just enough profit to make that feasible.

But I was going to talk about a train ride.  I should probably start that over in a new post.