Econ Ed Link: What Happened to Railroads?

Between the Civil War and World War II, railroads were one of the nation's most important businesses and an integral part of people's lives. In this instructional activity, students assume the role of detectives investigating why the rail companies experienced a crisis in the 1960s and what helped the freight transport portion of the business return to profitability later in the same century. Students analyze a set of clues that help them explore the impact of government policies and changes in consumer demand on rail service. They discover that government policies (e.g., regulations, subsidies, and taxes) can have both positive and negative consequences in the marketplace. An interactive activity helps students understand that rail service competes in two different markets-passenger service and hauling freight. Students also learn that railroads and government policies have had to adjust as the transportation industry changed in the second half of the twentieth century.