Why?

 That the NC&StL ferry operation continued as long as it did is a subject of great interest.  The reasons were based in the presence of revenue generating industries at Gadsden.  Freight car origination fees were generated for the NC&StL by this railroad branch, largely produced at Gadsden.  Although this city had railroad service from several other railroads, the financial hopes of the NC&StL were based on the need to originate freight loads from shippers on their trackage, then transport this freight as far as possible on the NC&StL before  transferring the freight load to another railroad.  Given that there were other railroads in Gadsden, ones that did not have expensive car ferry operations, one would think that the freight traffic would naturally flow to the more efficient railroads.  Yet this was not the case.  At that time, the railroads were governed by the Interstate Commerce Commission.

In part, attempts by the railroads to cut costs were slowed considerably by the conservative presence of the Interstate Commerce Commission, which regulated almost all railroads in the United States. The ICC had been formed after political pressure was exerted by railroad customers who had themselves been mistreated by the railroad companies. Virtually every aspect of the railroads' business was regulated by the ICC; rates, service, closures, construction, all were controlled by the ICC. Once our vast network of railroads had been built, the track  structure of the US stayed largely in place because of the ICC.

The nature of the ICC was covered well in an article in the Wall Street Journal, August 14, 2001. In a review of John Steel Gordon's book "The Business of America", reviewer John Lilly states:

More typical is Mr. Gordon's evident enthusiasm for free and fair markets. In   "R.I.P, ICC", he presents an unflattering obituary of the Interstate Commerce Commission, which ended its days in 1995, having "outlived the problem it was created to manage by several decades."

That problem was 19th-century railroad freight rates, which could be intensely competitive on major "trunk" lines but virtually without competition on "branch" lines, where high rates made up for low money-losing ones elsewhere. To put an end to such "price gouging", the federal government set up the ICC. Soon, though, the railroads learned how to manipulate the agency, and politicians too, so that the ICC  became a kind of broker for the railroad cartel, stripping away risk and ensuring "regulated" profits. In the 1930's, Mr. Gordon notes, trucking challenged the railroads' freight business, but the ICC simply moved over to regulate trucking.

So, the ICC served to both insure regulated rate of return to the railroads and also removed elements of risk for the railroads. At the same time, peculiar inefficiencies crept into the transportation system. Because freight moving between two points had an established tariff, choice of a particular railroad was not necessary. If two railroads operated between the same two cities, the tariff for that route was the same regardless of the operating company which hauled the freight. The  tariff for that route was based upon the costs of transportation between those two points. An inefficient railroad had little incentive to become more efficient, since their rate of return on investment was already locked into the tariff.

As a result, odd little railroad operations such as the NC&StL car ferry operation continued long after they should have been closed. All freight rates between the points served by the NC&StL via this car ferry were the freight rates which all railroads charged shippers, even though the other railroad operations were likely to be quite more efficient.  This situation continued for many years.  The NC&StL later merged with the Louisville & Nashville in 1957 and the car ferry operations ended shortly after that.

[Home] [Guide to Z-Scale] [Model Railroads] [Proto Railroads] [G&GE RR] [HY&T RR] [NC&StL Ferry] [Texas City Terminal] [Map Tech] [Collecting] [Miscellany] [Links]