New York Central Railroad - Decline

Decline

The New York Central, as with most other U.S. railroads, began a precipitous decline once the Second World War ended. Problems resurfaced that had plagued the railroad industry before the war, such as over-regulation by the Interstate Commerce Commission (ICC), which severely regulated the rates charged by the railroad, along with continuing competition from automobiles. These problems were coupled with even more formidable forms of competition, such as the rapid development of reliable propeller and jet airplane service in the 1950s which began to deprive the NYC of its long-distance passenger trade. The signing of the Interstate Highway Act of 1956 helped create a network of more convenient and efficient roadways for motor vehicle travel throughout the country, enticing many more people to travel by car, as well as haul freight by truck rather than by rail. Additionally, the 1959 opening of the Saint Lawrence Seaway adversely affected the NYC freight business. Container shipments could now be directly shipped to ports along the Great Lakes, eliminating the railroads' once-lucrative freight hauls between the east and the Midwest.

At the same time, the NYC also carried a substantial tax burden. Federal, state, and local governments, far from providing needed support to passenger rail, viewed rail infrastructure as a ready source for property tax revenues: taxes that were not similarly imposed upon interstate highways. To make matters even worse, most railroads, including the NYC, were also saddled with a World War II–era excise tax of 15% on passenger rail travel, which remained until 1962: 17 years after the end of the war. These factors contributed to the overall weakening of all railroads throughout the United States, leading the New York Central into a slow decline.