This dissertation has been 62-762 microfilmed exactly as received DURR# Frederick R. E., 1921- ECONOMIC AND SOCIAL EFFECTS OF RAILWAY ABANDONMENTS WITH SPECIAL REFERENCE TO LAND USE AND TAXATION. The Ohio State University, Ph.D., 1961 Economics, finance University Microfilms, Inc., Ann Arbor, Michigan ECONOMIC AND SOCIAL EFFECTS OF RAILWAY ABANDONMENTS WITH SIECIAL REFERENCE TO LAND USE AND TAXATION DISSERTATION Presented In Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the Graduate School of The Ohio State University By Frederick R. E. Durr, A.B., M.A. * MW* The Ohio State University 1961 Approved by CONTENTS Page LIST OF TABLES....................................................................................................... iv LIST OF ILLUSTRATIONS..................................................................................... vi Chapter I. INTRODUCTION ................................................................................................................... 1 The Problem I I . THE EVOLUTION OF RAILROAD ABANDONMENT REGULATION . l6 The Public In te r e st Charters and Franchises Public Aid The Question of Profitability State Regulation Federal Regulation of Abandonments Summary H I. ANALYSIS OF THE CAUSES OF RAILROAD ABANDONMENTS . Competition Competition from Other Railroads Highway Competition Competition from Pipelines Competition from Waterways Air-Carrier Competition Competition - A Summary The Subsidy Question Readjustments in Railroad Operating Practices Decline in the Source of Traffic Legal Changes In Railroad Status and Miscellaneous Causes Summary IV. THE ECONOMIC AND SOCIAL IMPLICATIONS OF RAILROAD ABANDONMENTS........................................................................................ i;>7 The Hole of Regulatory Commissions in Abandonments. The D irect Labor E ffe c ts of Abandonments Employee Rights in Abandonment o f a Portion of Line Employee Rights in Abandonment o f an E ntire Line Other Employee EffectB i i iii Chapter Page The Social Effects of Railroad Abandonments The Effects of Railroad Abandonments on Land Use Ohio Taxation of Railroads Ohio Property Taxes as Applied to Railroads The Railroad Excise Tax in Ohio Summary V. AN ANALYSIS OF OHIO RAILROAD ABANDONMENTS I9U8 -I 9 6 0 . 171 Reasons for Ohio Railroad Abandonments Competition Competition from Other Railroads Competition from Highway Carriers Competition from Waterways Competition from Pipelines Decline in the Source of Traffic Changes in the Legal Status of RailroadB Readjustment of Railroad Operating Practices Summary The Direct Labor Effects of Ohio Abandonments Summary Opposition to Abandonments in Ohio Salvage Value of Abandoned Railroads Land Use and Taxation Effects of Ohio Railroad Abandonments Ohio Rail Abandonments and Land Use The Tax Effects of Ohio Rail Abandonments Summary VI. SUMMARY AND CONCLUSIONS................................................................ ?l6 The Decline of the Rail Industry The Regulation of Railroads The Causes o f Railroad Abandonments The Economic and Social Implications of Railroad Abandonments Railroad Abandonments in Ohio, 19^8-1960 Conclusions APPENDIX A PROTECTION FOR EMPLOYEES IDLED BY ABANDONMENT OF A PORTION OF RAILROAD L IN E ......................................... PJ7 APPENDIX B COMMISSION FINDINGS IN OHIO RAILROAD ABANDONMENT CASES 19^8-1960 .............................................. BIBLIOGRAPHY............................................................................................................. 3 11* AUTOBIOGRAPHY......................................................................................................... 320 LIST OF TABLES Table Page 1 Railroad Mileage Constructed and Abandoned, United States, Annually, 1950-1959 ...................................................... 7 2 Main Track Railway Mileage, United States, Decen­ n i a l l y , 1830-1960 ............................................................................ 18 3 Total Intercity Freight Traffic, Intercity Freight Traffic by Motor Carrier, and Motor Share of Total Intercity Traffic, United States, Annually, 1937-1959 .............................................................................................. 66 4 Petroleum and Petroleum Products Transport by Rail and Pipeline With an Index of Traffic by Both Modes of Transport, United States, Annually, 1948-1959* • * 83 5 Volume of Intercity Freight Traffic by Mode of Transportation, United States, Annually, 1948-1959* * 86 6 Percentage Distribution of Total Intercity Freight Traffic by Mode of Transportation, United States, Annually, 1948-1959 ........................................................................ 87 7 Domestic Traffic in Petroleum and Petroleum Products by Mode of Transportation, United States, Selected Y e a r s ................................................................................................. 92 8 Percentage Distribution of Domestic Traffic in Petroleum and Petroleum Products by Mode of Transportation, United States, Selected Years .... 93 9 Transportation by Rail and Water, Selected Commodities, Selected Years, United States .................. 94 10 Commodities Most Frequently Shipped by Air Freight, Ranked According to Volume From Lowest to Highest, United States, 1 9 5 5 .................................................................. 97 11 Volume of Intercity Passenger Traffic by Mode of Transportation, United States, Annually, 1948-1959* . 99 12 Percentage Distribution of Total Intercity Passenger Traffic by Mode of Transportation, United States, Annually, 1948-1959 ........................................................................ 100 iv V Table Page 13 Physical Production of Selected Commodities, U nited S ta te s , A nnually, 19**9-1959 .... ....................... 119 ll+ Index of Physical Production of Selected Commodities, United States, Annually, 191*9-1959- • ■ 120 15 Hall Car Loadings of Revenue Freight, Selected Commodities, United States, Annually, 191*9-1959- . • 121 16 Index of Rail Car Loadings of Revenue Freight, Selected Commodities, United States, Annually, 1 9 4 9 - 1 9 5 9................................................................................. 122 17 Main Line Rail Mileage, Acreage in Main Line Railroads, and Portion of Total Acreage in Railroad Use in Ohio, by County, 1959 .................................... lUO 10 Amount of Property and ExciBe Taxes Paid to Ohio Counties by Steam Railroads by Type of Tax, i 960 . 162 19 Total Real and Public U tility Property Taxes, Railroad Property Taxes and Railroad Property Taxes as a Per Cent of Total Property Taxes, Ohio Counties, i 960 ............................................................... 165 20 Reasons Offered for Abandonment of Rail Facilities in Ohio, 191*8-1960 ............................................................................. 173 21 Miles of Main Line Track Abandoned, Salvage Value of Abandoned F acilities, and Salvage Value per Mile of Abandonment, Ohio, Selected Cases, 191*8-1960 202 22 Land Use and Property Tax Changes Resulting from Ohio Rail Abandonments, I9U8-I 960 ................................ 20? LIST OF ILLUSTRATIONS Figure Page 1 Percentage Distribution of Total Intercity Freight Traffic by Mode of Traneportation, United Statee, Annually, 19^8-1959 ............................................ 88 2 Percentage Distribution of Total Intercity Passenger Traffic by Mode of Transportation, United States, Annually, 19^8-1959 ........................................... 101 E x h ib it 1 Calculation of Net Salvage Value of a Railroad L ine ................................................................................... 20k v l CHAPTER I INTRODUCTION Ever since their introduction in the United States in 1830, the railroads have been a major factor In the transportation of persons and goods. For one hundred and thirty years the railroads have provided the connecting links betveen the raw material suppliers and the manufac- turing and processing centers, betveen the producing areas and the markets, betveen the outl r;s Istrlcts and the urban areas, and among the cities, towns, and villages of the nation. The overland rails were the first to provide the adequate east-west transport service that was unattainable with the earlier water transport methods. The railroad offered a flexibility of route that was not possible by waterways, except to a limited degree through the construction and utilization of canals. The demise of the canals was attributed, however, to the flexi­ bility and economy of the rails.* Just as the flexibility of the rails was an influencing factor in causing the decline in Importance of the canals, so was the saving realized by rail shipments a factor in the declining importance of the roadways. In 1053» after the railroads had moved into the middle west, * Edmund J . Jam es, "The A g ita tio n f o r the F e d e ra l R e g u la tio n of Railroads," Publications of the American Economic Association II (I887-I888) , p. 5 9 0 . “ 1 2 the freight rates on com were 15 .U cents per ton-mlle by wagon over the p roads, and one and one-half cents per ton-nlle by rail. It Is difficult to envision any coamunlty or area, or Indeed any Individual, that has not felt the Impact of the presence or of the absence of the railroads. The rail net frequently has been cited as a major factor in the rapid expansion and dynamic nature of the American economy. ^ Much of the romance of railroading Is history. It has been almost a century since