From a book I just finished, Twilight of the Great Trains, by Fred Frailey, I decided that I need to learn more about something. In the fall of 1967, the post office pulled all, or nearly all, of its mail business off the railroads. This was an enormous loss of freight revenue for all the railroads. Most of it was on passenger trains, but a fair amount of bulk type mail was shipped on fast freights as well. Suddenly, nearly every passenger train lost a huge chunk of revenue, and went in the red. The built up losses to the railroads was in the multi-millions. Did no one see this at the time, as being a catasrophe in the works? It appears to me, that this played a huge part in the problems the railroads had in the 70’s.
The LBJ administration said it was because the RR’s hadn’t come up with any new ideas on how to handle the mail and the steady reduction in the number of passenger trains was slowing its delivery. However, there were reports that the airline lobbists played a major role in the decision by LBJ and his administration–but I never heard any follow up to that issue. (At that time, the US Postal Service was a direct branch of the US government and one of the biggest political plums for Congress and the President; campaign laws in regards to political contributions were very weak–and often ignored.) The news media at the time was the big 3 TV networks but they did no real investigative reporting that I’m aware of. Can’t say if individual newspapers did any real follow-up. It just wasn’t big news at the time since the coluntry was in the middle of the Vietnam war and the war critics were taking off (and had their found their first really big support in Walter Cronkite.) Some of the railroads didn’t care anyway since they now would be able to drop or reduce money-loosing passenger service. But you are correct in the importance of loosing the mail contracts. When combined with the growth of the Federal Highway system and the unwillingness of the RR Unions to make any of the needed major changes in the work rules to help keep rail passenger service, the eventual loss of rail passenger service was a foregone conclusion.
Murph – to think LBJ entrusted something as important as first class U.S. Mail to the nation’s airlines – which in 2005 (the last time stats were announced) lost 10,000 bags EVERY DAY. Some 240,000 of those bags were NEVER returned to their owners.
(?) What I’ve read, in several different books, is that the railroads had to take literally, years to get a passenger line dropped, even if it was losing a lot of money. The mail hauling made a lot of money, and passenger hauling lost a lot of money, while riding on the same train. Therefore, a lot of railroads altered their scedules, to better accomodate the mail service.
See above. Even after 1967, the government made it darn near impossible to drop a passenger train, even though it took off the main revenue source for the train-mail.
As probable as mail delivery set the demise of Rail travel, I’m pretty sure the bean counters had come up with eliminating rail travel long before 1967, they wanted to get out of it so bad you could feel it, but those free land grants they got for providing rail service looked pretty good, and they were not about to jeopordize them until they figured out a way to get out of the contract(which they did).
I wouldn’t think the Federal land grants would figure in. Until 1946 the Federal Government received reduced rates on freight and personnel transported by the railroads.
When the Govenment ended the reduced rate requirement, the savings to the Government had paid for the value of the land granted a few times over. Nothing is Free.
First, I re-read “Twilight of the Great Tains” regularly. I rode those trains (Chief, El Cap, Denver Z) and they truely were “Great”.
Railroads such as the Santa Fe didn’t want out of the passenger business. They wanted to stay with it, but they couldn’t As Frailey points out in “Twilight”, after the mail diversion the Santa Fe would have had its entire net income devoured by passenger losses within a few years. Sometimes financial reality, as defined by “bean counters”, forces us to act in ways we don’t really want to.
IMHO, the diversion of mail to air was incredibly stupid. The Federal Government took the mail revenue from the railroads, then had to turn around a few years latter and take over the passenger losses. So it (as in we taxpayers) has to pay double. First to move the mail, then to subsidize the passenger trains.
And it’s pretty obvious that flying a letter from Chicago to Kansas City isn’t going to get it from origin to destination any faster. It might get it from the Chicago air termianl to the KC air terminal faster, but the actual origin to destination time? No. You can put it on a train and get the same result.
One must remember, before the airlines were deregulated, they were very different (and better) organizations. Back then it was still an event to fly, and the airlines still treated it as such. To lose a bag back then was a BIG deal, and did not happen very often. Alas, Southwest and employee/corporate greed has turned the airline industry to the flying bus service that we have today.
Can’t source any of this - it’s just my collective knowledge, but
As I recall, many of the railroads were eagerly seeking to drop routes in the 50’s. One reason the tourist railroad I run on uses Canadian railroad cars is because CN actually bought cars in the 50’s and beyond, while the US railroads were simply wringing every cent they could out of what they had, in an effort to reduce losses.
Interesting topic…would you recommend the book? I really enjoy Frailey’s work and passenger trains in that era are an interest to me, so it should be a match.
In a previous discussion on an unrelated topic (Great Northern if I recall correctly), I repeated asked “what changed in 1968?” The financial numbers for carriers took a drop in 1968 from which they didnt really recover.
The mail contract was never brought up (actually nothing was other than the ability of the Milwaukee Road to eat into profits of the Northern Tier carriers), but looking at a number of carriers, it was obvious “something happened.”
I think you have pointed out the answer to my question.
This is a IIRC thing, but my memory is that most first class mail was going by air already. The govt. post office was under a lot of pressure to reduce its losses, and was in that era to become the US Postal Service. Technology was changing, and hub and spoke “automated” regional sorting centers were to be the solution to the problem.
I also recall that train-offs were a burdensome process. And railroads were dying or dead in the public eye. No longer needed. (And in my foolishness I would think “If only”).
And a 1/10th of 1% increase in inflation caused furor!
Correct me if I’m wrong. Maybe someone can shed clear light.
Railroads were announcing how anxious they were to get rid of passenger trains. The government took them at their word and like any major shipper, moved to alternatives.
If you believe that the loss of the mail contracts explains the general negative impact on the railroads, then one would have to acknowledge that the economic results were suggestive as to the validity, or lack thereof, of the railroads’ contentions that passenger service had been a losing proposition – but for the mail contracts.
Be careful what you wish for … regarding the poor financial results post-1967, did the railroads do this to themselves by their standard public relations campaigns about how government regulation of railroads – in that instance passenger service – was harming the industry? And when taken up on it, they then lost a profit center?
The bottom line results, as suggested by MP173, indicates that this may have been a self-inflicted wound by an industry whose ideologues always trumped reality.
Ah, the Fall of '67! Standing on the platform at Glenwood station just north of Manhattan, watching history flash by … the final run of the westbound 20th Century Limited. Aware of the dominance of the 707 and 727 between New York and Chicago; Chicago and LA; and any city pair more than 400 miles apart. Aware of I-80 and I-70 and I-95 and I-You-Name-It and the owner-operators coming into their own. Aware of single-digit rail market share figures for comodities such as automobiles and sulphuric acid and You-Name-It. But naively confident that as a newly-minted MBA joining the vaunted NYC marketing team under Perlman and Hoffman and Sullivan and Ostrow and Moore and DeBoer and Liba and … the future was unlimited. PennCentral was two months away, with opportunity for service innovation and cost reduction. The Transportation Act of 1958 was finally, after arduous regulatory and court battles, yielding the benefits of competition between modes and the railroads had a fighting chance.
Ah, the Fall of '67! The last “Century” … and the first serious economic recession since '61. And the first serious stirring of inflation in years is underway. But naively unaware, as a newly-minted MBA, of the ingrained habits of railroad presidents when confronted with adverse economic conditions and combative labor relations: capitulate to union demands and whine to the ICC that “rate relief” was critical, while ignoring the impact on competitive position in the market place. Naively unaware of the catastophic “Saunders sell-out” on labor conditions for the PennCentral that assured no labor cost savings from the merger. Naively unaware of the senior-level infighting that would paralyze management from Day One of the merger and doom the Central marketing initiatives
That might be one way of looking at it: Uncle Sam betrayed the railroads. The other way, in my view, is that railroads had been carrying mail for so long that they came to view it as an established government entitlement – almost a right – and took offence when nimbler and faster competitors took away the business. What was once a profitable sideline to the passenger train business had become the business itself. As it was the railroads were given a generous reprieve. The distribution model changed, the railroads didn’t, and USPS found it could provide its customers better service by going elsewhere.
I’m not disagreeing with what you say, as it does make sense. The same thing happened on over the road freight, it just happened over a long period of time. The mail coming off the trains appears to have been all of a sudden. Nearly all of it seems to have happened in fall/winter 1967/68. Was there a long build up to this, and the post office one day said “the heck with it”?