The Impact of the Railroad on the Modern World

The railroad was the most transformative transportation technology of the Industrial Revolution. By making it possible to move goods, people, and information quickly and cheaply over long distances, the railroad helped to create a single integrated economy in many countries, and it tied the world’s economies together in a global trading system.

The Integration of Markets

The railroad dramatically reduced the cost of transport and made it possible to integrate regional markets into national and global markets. Before the railroad, the cost of moving goods over land was prohibitive, and most goods traveled short distances by road or by water. The railroad reduced the cost of land transport by an order of magnitude, and it made it possible to ship goods over long distances that would not have been possible before.

The integration of markets had several important effects. It made possible the specialization of production, with each region producing the goods that it was best suited to produce. It created a mass market for manufactured goods, since the new markets were much larger than the local markets that had existed before. And it allowed the new industrial firms to operate on a national or even global scale, since they could draw on raw materials from distant sources and sell their products in distant markets.

The article on the railroad history describes the development of the British railway system in more detail.

The Railroad and the Industrial Economy

The railroad was one of the largest customers of the new industrial economy. The construction of the railway network required enormous quantities of iron for rails, bridges, and locomotives, and large quantities of coal to power the locomotives. The result was a major stimulus to the iron, coal, and engineering industries, and the railway boom of the 1830s and 1840s was one of the most important drivers of the British economy.

The article on the Bessemer process describes the development of cheap steel, which made possible the great expansion of the railway in the second half of the nineteenth century.

The railroad was also important for the development of the modern corporation. The great railway companies, including the Pennsylvania Railroad, the New York Central, and the London and North Western Railway, were among the first modern industrial corporations, with their complex structures of ownership, management, and finance. The article on Andrew Carnegie describes the development of the modern corporation in more detail.

The Railroad and Daily Life

The railroad had a profound effect on the daily lives of people in the industrial age. The railway journey itself was a new experience for most people, and the new railway companies created a mass market for travel that had not existed before. The railways made it possible for people to travel to other cities for business or pleasure, and they created the first mass tourism industry, with the seaside resorts of Britain, like Blackpool and Scarborough, growing rapidly in the second half of the nineteenth century.

The railways also changed the way people thought about time. The railway timetable became the standard by which the country organized its time, and the introduction of standard time zones in the late nineteenth century was a direct response to the needs of the railway companies. The standardization of time was one of the most important cultural changes brought about by the Industrial Revolution. The article on the railroad history describes these changes in more detail.

The railways also had important effects on the development of the new industrial cities. The growth of the cities was closely tied to the railway network, and the railway stations became important social and commercial centers. The great Victorian railway stations, with their Gothic Revival and Italianate architecture, are still among the most impressive buildings in British cities.

The Railroad and the Environment

The railroad had important effects on the environment. The construction of the railway network required large quantities of iron and coal, and the locomotives themselves burned large quantities of coal. The result was a major increase in the demand for raw materials, and a significant contribution to the air pollution that was already a major problem in the industrial cities.

The article on the causes of the Industrial Revolution describes the role of coal in the Industrial Revolution.

The railroad also had important effects on the landscape. The construction of the railway network required the building of cuttings, embankments, bridges, and tunnels, and the railway corridors became a distinctive feature of the British landscape. The railway allowed previously remote areas to be developed for tourism and recreation, and the railway corridor itself became a new kind of public space.

The Global Spread of the Railroad

The railroad was developed in Britain in the 1820s and 1830s, but it spread rapidly around the world. The first railways in continental Europe were built in the 1830s, and the first American railroads were built in the 1820s and 1830s. By 1870, most of the developed world had a significant railway system, and the global railway network continued to grow throughout the late nineteenth and early twentieth centuries.

The spread of the railway was particularly important in the United States, where the vast distances and the lack of navigable rivers made the railway especially valuable. The completion of the transcontinental railroad in 1869 was a watershed moment in American history, tying the country together from coast to coast and creating a national market for goods.

The article on the American Industrial Revolution describes the development of the American railroad in more detail.

The Long-Term Legacy of the Railroad

The long-term legacy of the railroad is still being felt today. The railroad was the first major technology to be developed by the new industrial economy, and it was the first to be applied on a global scale. The development of the railroad was a key chapter in the history of the Industrial Revolution, and it laid the foundation for the modern transportation system.

The railroad also established a model of large-scale, capital-intensive infrastructure that has been imitated in many other fields, including the telegraph, the electrical grid, the highway system, and the internet. The principles developed in the railroad era, including the use of standardized equipment, the integration of operations, and the development of complex systems of management, are still central to the modern industrial economy.

The Continuing Question

The railroad is the textbook case of a “natural monopoly” industry, and the unresolved question is whether the natural-monopoly view is right. The traditional answer, going back to the U.S. Interstate Commerce Commission of 1887 and given its modern form in the work of Alfred Chandler and the New Institutional Economics, is that the railway was a natural monopoly: the high fixed cost of track, the requirement for a single integrated timetable, and the impossibility of running two parallel track systems through the same corridor meant that the industry had to be either regulated or nationalized. The British compromise was the 1844 Railways Act, which allowed the state to buy out any railway whose dividends exceeded 10 percent for three consecutive years, but that act was never invoked. The 1921 Railways Act grouped the railways into four regional companies, and the 1948 Transport Act nationalized them as British Railways. The interesting current question, raised by the comparative history of deregulation in the European Union and the post-1979 airline and trucking deregulation in the United States, is whether the natural-monopoly argument was ever correct or whether it was an ideological justification for cartelization. The U.S. Staggers Rail Act of 1980, which deregulated American freight railways and produced a major efficiency gain, is the most-cited counter-example. The question is still open in the current debates over rail privatization in Britain and over the use of the railway right-of-way for fibre-optic cables and high-speed broadband.

Selected Sources

Jack Simmons, The Victorian Railway (1991).
T. S. Ashton, The Industrial Revolution, 1760-1830 (1948).
Derek H. Aldcroft, From Forecast to Finance: Studies in British Commercial Forecasting and Policy, 1840-1920 (1968).
Fernand Braudel, The Wheels of Commerce (1979).