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Profound Change of the Rail Transportation Industry
During the Industrial Revolution

Dave Carlson - July 5, 2006


Advances in science and technology ushered in changes to established industries and created new ones. Technological advances during the Industrial Revolution profoundly changed the rail transportation industry. As America’s first big business, railroads endured growing pains during the early years. It was the first industry required to manage people, schedules, equipment, facilities, and other resources over multiple large geographic areas. It required extensive infusions of capital to start a railroad company. As it developed, the railroad industry wove its way into manufacturing, farming, government, and the way people were accustomed to living. The railroad industry developed a systematic management style. While it had its dark moments related to corruption and greed, the railroad industry made a significant positive Global impact.

Profound Change of the Rail Transportation Industry during the Industrial Revolution

The purpose of this paper is to explore the effects of the Industrial Revolution on the rail transportation industry. It will provide highlights on portions of the industry before, during, and after the Industrial Revolution using representative examples mostly from the United States and Great Britain to illustrate the issues. Finally, it will explore this question: Did the Industrial Revolution usher in a profound change to the rail transportation industry? Let’s find out.

A study of history presents many examples of cause-and-effect relationships between various forces. The discovery of fire made a significant impact on the cooking industry. The invention of the wheel dramatically changed the way people move things. Explosives revolutionized the mining (Hartman & Mutmansky, 2003) and construction (Zukas & Walters, 1998) industries. During the late 18th through early 19th century a profound transformation was underway in the world (Wikipedia, 2006b). “The Industrial Revolution heralded a new age for civilization. The cultural rebirth had created new social, economic, and political conditions ripe for advances in science and technology” (Wren, 2005, p. 39).

Advances in science and technology ushered in changes to established industries and created new ones that once were never conceived as possible. For example, advances in technology made during the Industrial Revolution helped make the rail transportation industry creation and subsequent growth possible. Consequently, “no technology transformed economies and human interaction across the globe in the nineteenth century than did the railway. It was the great dynamic innovation of the century, which in turn promoted many ancillary industries such as steel-making and telegraphy” (Australian Heritage Commission, 2003, ch. 4, ¶ 1). While an investigation of the steel-making and telegraphy industries could fill volumes, the scope of this paper is to investigate the rail transportation industry.

Rail Transportation Before the Industrial Revolution

Since “clinging to past precepts provides no incentive to seek new knowledge, to explore, nor to experiment, science and technology cannot advance without education, the freedom of inquiry, and the encouragement of risk taking” (Wren, 2005, p. 8). The birth of the railroad industry offered a life-of-hard-knocks education for many involved in the industry. Railroad managers learned early lessons by trial and error, as risk taking and experimentation was encouraged and required for most railroad innovations (Encyclopedia Britannica, 2006). “The world's first railway, the Liverpool Manchester Railway Company, opened in 1830 and on its first day its famous engine Stephenson's Rocket ran over and killed the member of Parliament for Liverpool -- a portent of the carnage to come” (Malleson, p. 93). It appears the early managers of railway companies had much to learn about public relations and how to convince people that travel by railway was safe. Of course, statements like one made by Thomas Carlyle in 1842 did not help their positive-spin campaign: “I was dreadfully frightened before the train started; in the nervous state I was in, it seemed to me certain that I should faint, from the impossibility of getting the horrid thing stopped” (Malleson, pp. 93-94).

We know little about early industrial organizations, and even less about organizations of the rail transportation industry. “History leaves a notoriously scanty scent. Records and memorabilia are lost or destroyed, notable ideas may never be committed to writing, and judgments must be made on perhaps a small part of what actually occurred” (Wren, 2005, p. 61). Previous experience offered little advantage to the early managers of railroad companies, as many of the procedures and technology they needed to manage railroads were new to their industry (Wren, 2005, p. 84). Consequently, it is reasonable to assume that the growth of railroad organizations was as painful and difficult as the growth of the technology that spawned those organizations and their related industries.

Germany pioneered wagonways beginning in 1550 (Bellis, 2006). These ancient ancestors of modern railroads “consisted of wooden rails over which horse-drawn wagons or carts moved with greater ease than over dirt roads. Wagonways were the beginnings of modern railroads” (Bellis, 2006, ¶ 1). “In the late 1760s, the Coalbrookdale Company began to fix plates of cast iron to the wooden rails” (Wikipedia, 2006a, ¶ 3). In 1789 an English civil engineer, William Jessop, designed and installed edged rails to be used with flanged wheels. “In 1802, Jessop opened the Surrey Iron Railway in south London—arguably, the world's first public railway, albeit a horse-drawn one” (Lexico, 2006a, ¶ 3). In 1815, the New Jersey legislature issued the United States’ first railroad charter to Colonel John Stevens of Hoboken, New Jersey (Wren, 2005, p. 83). The improvements of steam power (Wren, 2005, p. 41) and steel production (Wren, 2005, p. 98) helped the rail transportation industry put the horses back into their stalls and move forward under its own power.

Rail Transportation During the Industrial Revolution

The start of the Industrial Revolution is not marked by any specific event. Eric Hobsbawm postulated that it appeared during the 1780s in Europe and took until about 1840 to start having a noticeable effect on the rest of the planet (Hobsbawm, 1992). “U.S. manufacturing before 1835 was characterized by small, family-run, water-powered organizations. In the 1840s and 1850s, however, U.S. entrepreneurs unleashed a host of products and implements that would revolutionize industry” (Wren, 2005, p. 82). Things were about to change.

“The business firm of the last half of the nineteenth century was an entirely different creation from the localized, family owned and managed, and labor intensive firms of the pre-Civil War period” (Wren 2005, p113). “The Industrial Revolution in America had an impact on Americans that crossed political, economic, and social boundaries. It brought changes in daily living both at home and work, redefined the government's role in the economy, and changed how Americans communicated and worked with each other” (Rooker, 2005, ¶ 1). “Although textiles represented the largest private enterprises of this period in the United States, a transportation and communication revolution was on the horizon” (Wren, 2005, p. 83). Table 1 illustrates the rapid expansion of the railroad industry in various countries. Notice that Great Britain, who began with the greatest length of open railways in 1840, yielded their lead to several other countries by the end of the 19th century.

Table 1
Spread of Railways to Ten Selected Countries


Great Britain2,39014,60325,06030,079

Table 1 Source: (Halsall, 1997, ¶ 6)
Note: Numbers indicate length of line open, in kilometers (1 KM = .62 mile).

The countries shown in Table 1 were not the only countries to benefit from railroad development. It is interesting to note that “Australians built more railways per capita than any other country” and “railways shaped Australia's settlement patterns and helped create one of the world's most urbanised [sic] nations“ (Evans, n.d., p.3).

There is evidence that "railroads were truly the United States’ first big business" (Chandler, 1965, p. 9). Perhaps this is because there was a fundamental difference between the purpose for rail transportation in Great Britain and North America (United States and Canada). It appears that “railways in Great Britain were built as compliments to already existing modes of transportation, whereas railroads in North America arose to fulfill specific needs and were usually the dominant mode of transportation” (Rademacher, 2004, p. 7).

The railroads, however, grew to such a size and complexity that means had to be developed of coping with massive financial requirements, developing integrated systems of trackage and station agents, spreading large fixed costs, and handling a labor force dispersed over a wide geographical area. These factors required managers to develop ways of managing the first U.S. industry of larger than local scope. (Wren, 2005, p. 84)

This big business was in desperate need of a way to manage its finances, systems, labor force, and the myriad of other factors which combined to make the rail transportation industry function. Daniel McCallum, a pioneer in railroad management, came at the right time for the industry. Born in Scotland in 1815, McCallum migrated to the United States in 1822. During the years 1848-1854 McCallum’s knack for management and engineering helped him gain more responsibility within the New York and Erie Railroad Company. He eventually rose to the position of General Superintendent of the Erie line (Wren, 2005, p. 85).

During his tenure as general superintendent, McCallum established several principles of management:

  1. A proper division of responsibilities;
  2. Sufficient authority conferred to enable such responsibilities to be fully carried out;
  3. The means of knowing whether such responsibilities are faithfully executed;
  4. Great promptness in the report of all derelictions of duty, so that evils may be corrected quickly;
  5. Such information to be obtained through a system of daily reports and checks that will not embarrass principal officers nor lessen their influence with their subordinates; and
  6. The adoption of a system, as a whole, that will not only enable the general superintendent to detect errors immediately, but will also point out the delinquent. (Wren, 2005, pp. 85-86)

McCallum did not stop at just developing a list of management principles. He applied his experience to effectively integrate those principles into the daily management of the New York and Erie Railroad Company.

McCallum also developed information management to probably the highest state of the art for the times. He used the telegraph to make operations safer as well as to facilitate administration by requiring hourly reports to show the position of every train in the system, daily reports on passengers and cargo, and monthly reports to give management statistical accounts for planning, rate making, and control. He designed a clever cross-check control system by requiring both freight and passenger conductors to report on train movements, loadings, damaged freight, and so on; by comparing the reports, he could readily spot discrepancies and dishonesty. (Wren, 2005, p. 87)

McCallum later used this knowledge and the experience he gained on the Erie line to organize effective troop and cargo transport during the Civil War (Pickenpaugh, 2000).

“The development of reliable, efficient rail service was crucial to the growth of specific industries and the overall economy” (Montagna, 1981, Transportation ¶ 7). Agriculture was a specific industry that greatly benefited from rail service. Farmers were no longer limited to their local communities to find a market for their crops. They now could increase their yield, since they had access to a growing market. Two agricultural commodities significantly affected by increased transportation capability were strawberries and potatoes. These perishable produce items needed to be rapidly transported to large markets. The ability to transport strawberries and potatoes likely aided Portage la Prairie, Manitoba earn the titles of “world strawberry capital” and “North American potato processing capital” (Answers.com, 2006, ¶ 8).

“The railroad would provide a revolution in transportation, and, as we shall see, an emphasis on managing in a systematic fashion” (Wren, 2005, p. 83). “Organizational growth, geographical separation of activities, and the separation of ownership and management were the driving forces for systematizing railroad management” (Wren, 2005, p. 88). As the railroads moved beyond local geographic control, they “would sweep away local trade barriers, open new lands for settlement, extend markets and reshape distribution strategies, and provide an inexpensive, rapid, year-round means for travel and commerce” (Wren, 2005, p. 84).

“The innovation of railways was irresistible, and no European people could afford to ignore them. It soon became simply unthinkable to miss the train” (Mitchell, 2000, p. 68). The dream had become a reality in both Europe and North America. People and things could be transported to each other. If something could not be moved to the people (e.g., the City of Saint Louis), then trains could move people to the appropriate location. Manufactured goods also could be moved just as effortlessly by rail to population centers for consumption.

“Organizational growth, geographical separation of activities, and the separation of ownership and management were the driving forces for systematizing railroad management” (Wren, 2005, p. 88). The railroad did not create a utopian society where people and things moved themselves effortlessly from one location to another. Actually, the growing pains of rapid organizational and geographical expansion almost consumed the industry (McPherson, 1922). Unfortunately, corruption and greed were prevalent as the rail transportation industry intertwined with every aspect of society (see Figure 1).

Railroad Cartoon - Southern Pacific Company President Collis P. Huntington
Figure 1. A typical cartoon by Seinnerton in the San Francisco Examiner, 1896, depicted Southern Pacific Company president Collis P. Huntington as an octopus, squeezing the life out of California interests. Courtesy California State Library, Sacramento. (Oris, 2005, p. 47)

McPherson (1922) stated that “there are phases of the railroad problem that come and go so rapidly that it is difficult even for the press to keep abreast of them” (p. 108). He goes on to say that “the ultimate purpose of the railroad is to serve, protect, and promote the industry and commerce of the United States, and thus to conduce to the material welfare of the people of the United States” (McPherson, 1922, p. 108). Based on this assumption of the industry, it is apparent why he was so concerned about railroad problems.

This blight was not unique to the United States, however. Almost a century earlier, Great Britain had its own Collis P. Huntington in the form of George Hundson, who “envisioned a network of rails for the whole of England, Scotland, and Wales. In 1844, Hudson began promoting assorted ventures to raise capital for new lines and to acquire existing ones” (Wren, 2005, p. 91).

An early, if not the earliest, example of top management malfeasance exists in the deeds of George Hudson. He paid dividends out of capital, both existing and borrowed; altered accounts of railway traffic and revenue to indicate more profitability than existed; published false statements to investors; and, in one instance, bought iron rails from one of his lines for £9 each and sold them to another of his interests for £11, pocketing a £6,000 profit. (Wren, 2005, p. 91)

George Hudson quietly slipped away before being brought to justice, but not before pocketing ill-gotten gains of about £598,785 (Lambert, 1964).

“Emblematic of British engineering skill and financial might in the nineteenth century, the railway seemed to be symbolic of national decline in the twentieth, the scaling down of the nationalized network in the 1960s mirroring the concurrent retreat from empire” (Taylor, 2005, p. 111). Even though the railroad industry may not be as mighty as it once was, railroads made a significant positive impact on the world. “With improved transportation and communication, it became possible to produce and market in volume; thus production could be done in large batches or in continuous processing, and firms could seek volume distribution in a mass market” (Wren, 2005, p. 96).

Rail transport is one of the most energy efficient means of mechanised [sic] land transport known. The rails provide very smooth and hard surfaces on which the wheels of the train may roll with a minimum of friction. As an example, a typical rail car can hold up to 125 tons of freight with this and the weight of the car on two four wheel support trucks. Fully loaded, the contact between each wheel and the rail is the space of about one U.S. ten cent piece. This is more comfortable than most other forms of land transport and saves energy. Trains also have a small frontal area in relation to the load they are carrying, which cuts down on air resistance and thus energy usage. In all, under the right circumstances, a train needs 50-70% less energy to transport a given tonnage of freight (or given number of passengers), than does road transport. (Lexico, 2006b, ¶ 1)

Given the significant efficiency of rail transportation, it is understandable why some organizations rely heavily on its ability to move large amounts of cargo and passengers. “The passenger railroad industry provided national travel for people even before the invention of the automobile and construction of the national highway system, and the advent of commercial air flight” (A. Philip Randolph Porter Museum, n.d., ¶ 1).

This increase in efficiency greatly facilitated the increase in interstate commerce, but that increase in commerce also created a unique problem. What time is it? became a significant question without a definite answer. “It could be noon in Chicago, 12:30 P.M. in Pittsburgh, and 11:45 A.M. in St. Louis, a most confusing situation for the shipper or traveler” (Wren, 2005, p. 113). “In the early years of the railroads, the schedules were confusing because each stop was based on a different local time. The standardization of time was essential to efficient operation of railroads” (Rosenberg, 2006, ¶ 2). Another “necessity, the mother of invention” (Plato, n.d.) situation was the development of time zones to help synchronize train schedules. On November 18, 1883, railroads adopted the new time zones, proposed in 1878 by Canadian Sir Sanford Fleming (Rosenberg, 2006). More than thirty years later, on March 19, 1918, the U.S. Congress finally adopted time zones along with daylight savings time (BrainyHistory, 2006). In this author’s opinion, based on the acceptance of standard time zones and the improvement in clock technology, train schedules are the most reliable of all transportation methods. Managers in the train industry still might have problems managing people, money, and parts, but they have mastered time management.


The Industrial Revolution brought about significant changes that affected almost every industry in existence today. One of the most profound changes was the development of the rail transportation industry. “Better transport made raw materials cheaper, and made the supply more reliable. Better transport also enlarged the markets and made the finished goods cheaper. Better transport allowed new ideas and inventions to spread quickly” (Farah, 2006, p. 1).

As it developed, the rail transportation industry fathered various Herculean efforts to overcome enormous challenges that were never faced before. Changed by the Industrial Revolution, the rail transportation industry survived a few bouts with corruption and greed and has made a significant positive impact on the world.


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