Staggering Improvement


Looking over a CoBank report on the state of rail capacity in the West, I came across this astonishing graph:

The Staggers Act effectively deregulated the rail industry in this country, after almost a century of increasingly heavy-handed rules set out by the Interstate Commerce Commission (RIP).  It took a few years for volume to rise, but contrary to the arguments of the regulators, rates fell, revenue fell, and productivity shot up almost overnight.  As effects rippled through the economy, volume began to take off.

In recent years, as the cost of fuel has risen, and capacity constraints have become more evident, rates and revenue have started to rise, which accounts for the turnaround in railroad stocks.

What’s really striking is the stasis that the railroad industry was held in before 1980.  The ICC set their rates, limited their service, and forced freight lines to continue to run unprofitable and largely unused passenger service, competing with bus lines that were getting significant federal help through the interstate highway system.  How much of the overall economy’s stagnation and deterioration through the 60s and 70s was a result of this misguided paternalism can only be guessed at.

Harley Staggers, the author and chief sponsor of the Staggers Act, was no economic or political libertarian.  He was a 16-term Democratic representative from West Virginia who tried to subpoena the footage from a CBS documentary on Watergate and filed an FCC complaint over the F-word in a song on a radio station.  But he had enough sense to see that Appalachia’s coal industry needed a healthy railroad system to grow.  He’s lucky that this act from his final term in office is what people remember him by.

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