History of rail transportation in the United States

Railroads played a large role in the development of the United States from the Industrial Revolution in the Northeast (1820s–1850s) to the settlement of the West (1850s–1890s). The American railroad mania began with the founding of the first passenger and freight line in the country, the Baltimore and Ohio Railroad, in 1827 and the "Laying of the First Stone" ceremonies. Its long construction westward over the Appalachian Mountains began in the next year. It flourished with continuous railway building projects for the next 45 years until the financial Panic of 1873, followed by a major economic depression that bankrupted many companies and temporarily stymied growth.

Railroads increased the speed of transport and dramatically lowered its cost. In the West where navigable rivers were few, the low cost allowed shipping of primary sector products hundreds of miles at a profit. Converting the Great American Desert of the Louisiana Purchase into the American breadbasket took decades rather than centuries.

Though the antebellum South started early to build railways, the absence of an interconnected network was a major handicap of Confederate railroads in the American Civil War (1861–1865). Lines already linked every city in the North and Midwest before the war. 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. Many shortline railroads were built, but the majority were consolidated into 20 trunk lines by 1890. State and local governments often subsidized lines but rarely owned them. The economic importance and complexity of this new national system, and failures in management, inspired the first federal regulatory agency, the Interstate Commerce Commission in the 1880s.

The system was largely built by 1910. However, federal and state policies to subsidize, fund, and prioritize new competitors against railroads resulted in decline. The large system of highways built and owned by public authorities, operating at a loss and rather than a profit, allowed trucks to eat away freight traffic. Automobiles (and later airplanes, which were also subsided via airports, air traffic control, etc.) devoured the passenger traffic. After 1940, the replacement of steam with diesel electric locomotives 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 shifted to Amtrak in 1971, a government-owned operation. Commuter rail service is provided near a few major cities, including New York City, Chicago, Boston, Philadelphia, Baltimore, and Washington, D.C. 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 bulk shipments of coal and (since 2010) oil. 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, primarily due to external factors such as geography and higher use of goods like coal. In recent years, railroads have gradually been losing intermodal traffic to trucking.