Most of America’s railroads were placed under federal government control in December 1917 because of World War I, in a move called “possibly the largest American experiment with nationalization.” The new U.S. Railroad Administration was headed by Treasury Secretary William McAdoo.
Under existing law, control of the railways were set to return back to private hands within 21 months of the end of the war. Yet shortly after war ended, McAdoo, who was set to retire from the Cabinet to co-found a law firm, stunned many by advocating Congress extend the government’s control of the railways for an additional five years — even though it was peacetime.
Why? Because massive investments were needed that he thought were unlikely to occur under private control.
The… difficulty in the present situation, as Mr. McAdoo views it, is financial, and affects annual permanent improvements that are, in his opinion, imperative for the maintenance of a national transportation system commensurate with the country’s growing needs. Up to the signing of the armistice about $600,000,000 had been spent in improvements during the year 1918. The authority for these expenditures was the “necessity of war” as recognized in the law. When hostilities ended this necessity could no longer be urged. Without this co-operation of the corporations owning the railroads it would be difficult under the existing law, Mr. McAdoo said, to develop and adopt a comprehensive plan for the improvement of the railroad system as a whole; and even with the consent of the corporations twenty-one months would be too short a time in which to make and apply such a plan.
McAdoo did not get his wish. The U.S. Railroad Administration ended in March 1920, with all railroads once again returning to private ownership.
McAdoo Talks of the Railways: Retiring Director General Foresees Private Ownership as Result of Five-Year Extension of Federal Control of the Nation’s Transportation System
Published: Sunday, January 5, 1919