BACK TO THE FUTURE

July 10, 2008

In 1956, at the age of 55, my bachelor Uncle Frank retired from his job as a bookbinder at Kalmbach Publishing Company in Milwaukee. He bought a new Buick and took it in a triangle across the country, first to Seattle to visit his sister Emma, then down to L.A. to his other sister Ida, then up the hypotenuse of Route 66 back home. He liked the experience so much that he did it every year thereafter for almost three decades. In fact, he made a life of it, leaving Milwaukee in September, spending the fall in the cool Northwest and the winter in warm Southern California, and returning to the Midwest in the spring for summer sausage and Summerfest. And he bought a new Buick every two years.
Uncle Frank’s retirement was built around the automobile, and not just driving one.
In 1937, the midst of the Great Depression, he and his younger brother Ted pooled their savings and bought both a new Dodge and several shares of Chrysler stock.
They saw the future.
Though Frank worked for a company specializing in railroad magazines — Trains and Model Railroader are still the anchors of Kalmbach’s now-eclectic list of publications — that form of transport was never a part of his investment strategy. He larded his growing portfolio with the Big Three automakers, and after less than 20 years of prolific stock splits and shrewd and timely trading, felt comfortable enough to leave the noise and glue of the bindery and live off his liberal dividends.
Last week, General Motors’ common stock closed below $10 a share, the lowest it’s been since 1954, when Uncle Frank was gobbling it up in anticipation. Two years later, Congress passed the Federal-Aid Highway Act, underwriting the largest public works project in U.S. history, the Military and Interstate Highway System. Originally planned during World War II to expedite the movement of army convoys, the Interstate system was early recognized by auto manufacturers and trucking companies as their gift from heaven. As government-funded multi-lane highways with city-skirting loops linked the nation, and as railroads — unsubsidized and encumbered by pro-auto federal regulations limiting speed and rights-of-way — were pushed to the side-track of public policy, the rubber tire replaced the steel wheel as the cheapest and fastest mode of freight transport. Similarly, auto and air travel, now made comfortable and convenient, relegated passenger trains to the nostalgic.
The same applied to urban transport. As John Stilgoe reveals in his 2007 book, Train Time: Railroads and the Imminent Reshaping of the U.S. Landscape, in the early twentieth century Chicago had a complex system of underground tunnels through which electrified trains brought merchandise from the rail yards to the basements of downtown businesses, and left with mail-order packages to be sorted and shipped via the Railway Express Agency, the forerunner of UPS and FedEx. By the late 1950’s, as more and heavier trucks clogged and polluted the streets above, the tunnels were abandoned.
In rich, sometimes numbing detail, Stilgoe recounts other remarkable but now largely forgotten achievements of rail technology and logistics in the decades preceding the ascendency of the highway: the rapidity of mail and package delivery to the remotest parts of the country; the comfort, accessibility, and speed of vigorous and competitive passenger service; the efficiency of short-line railroads over trucking in moving raw materials to long-haul shipping points. He also paints a grim portrait of the future of our auto-based infrastructure: the deterioration of the Interstates, the ever-mounting congestion of metropolitan highways, and the related compromise of the quality of life for those living in the exurbs and daily facing dead-stop commutes.
Even before fuel costs started their shoot to the sky, Stilgoe saw the rebirth of railroads as "imminent," buttressing his argument with timely examples and predictions. Commuter-train rights-of-way, long abandoned and used as hiking trails, are now being converted to their original purpose; high-speed rail lines are starting to supplant the truck and airplane to move the bourgeoning volume of internet mail-orders; underground rail corridors will displace the truck for delivery of goods and removal of garbage in major cities; and far-flung commuter towns, when linked by rapid passenger and freight rail to their urban hubs, will take on a life of their own as companies find them convenient and attractive places to relocate.
As the price of fuel increases, rail transport presents itself as by far the better and more competitive alternative to highway and air, to customers and investors alike. The railroad industry estimates that trains currently move a ton of freight an average of 423 miles on a gallon of fuel, and hybrid locomotives are coming on line that will improve performance all the more.
Returning to rail may eventually generate some government support — McCain and Obama, where are you? — but it’s private investment that will bring in the vast amounts of money necessary for new track and technology. While the Big Three sputter down, prices of railroad stocks are moving up.
It’s back to the future. If Uncle Frank were around today, he’d be a railroad man.