NEWS

How the decline of the freight rail industry highlighted the importance of community resilience: Murdo, South Dakota

Located one-hour’s drive south of Pierre, through the South Dakota plains along US-83, the town of Murdo’s 482 residents are mostly employed in agriculture, construction, and natural resource extraction. This is very different from the town’s heyday in 1970, when it was home to 865 residents and was a key cog along the Milwaukee Road. This line, like many others all across the US, was closed during one of the most turbulent periods in the history of the American railroad industry. The close dependence on this line by the Murdo community meant that its closure deeply affected the community’s economy.

Today, Murdo stands as an example of resilience, when examining small American towns affected by the downsizing of the railroads.

Rail station Murdo
A railway station in Murdo, SD is now a museum. (Wikimedia/John Lloyd)

According to the American Association of Railroads, at its peak the rail industry in the U.S. operated 254,000 miles of track and employed 1.8 million people. The decline of the rail industry, like many other industries in the U.S., started with the onset of the Great Depression, and by the eve of the Second World War, 30% of the industry was in receivership. The Second World War provided a brief respite for the beleaguered industry, spurred by the need to ship war-related goods. However, after the war, competition from trucking and barges spurred by federal subsidies for the construction of the interstate highway system and the expansion of inland waterways, further fueled the decline of the industry. Compounded by strict regulations regarding rates, routes, and train configurations, this decline proceeded well into the 1970’s.

Faced with mounting losses due to lost revenue, deteriorating infrastructure, and billions of dollars in deferred maintenance, many railroads were forced to discontinue Short Line Service in order to stay afloat. These lines, classified by the Federal Railroad Administration as having less than $20 million (in 1991 dollars) in annual operating revenue, were the primary lifeline of many small, rural communities. Often serving only a handful of customers or communities, these lines operated independently, such as in the case of the Virginian & Truckee Railroad, or as branches of larger companies such as the Buffalo, Rochester & Pittsburgh branch of the Chessie system. However, because of the low revenue generation capacity of these lines, which was often concentrated to one time of the year such as during a crop period, many independent operators closed, and large corporations, unable to divest these lines due to strict regulation, ceased Short Line operations.

The bankruptcy of the Penn Central Transportation Company, then the largest company in the U.S. ever to file for bankruptcy, forced the federal government to take action to halt the decline of the railroad. This prompted the passage of the Staggers Act in 1980, which deregulated the rail industry, eliminating government controlled shipping rates, allowing for railroad shipper contracts, and enabling larger railroads to market unprofitable lines to small enterprises. In the aftermath of the Staggers Act, the railroads’ share of the transportation market rose from 37.5% in 1979 to a stable 40%, return on railroad investment has averaged 8% since 1980, and the railroads have been able to spend over $511 billion on infrastructure improvements since. Additionally, the number of Short Line and Regional Rail operators grew from 220 in 1980 to 567 in 2014, together controlling around 43,000 miles of track.

But for Murdo, and other towns like it all over the rural United States, the Staggers Act came as too little, too late. The closure of the Milwaukee Road in 1980 sounded the death knell for Murdo as a rail town, as did the closure of many similar lines for other small communities. Almost 40 years later the railroad has not, and perhaps never will, return to Murdo. Yet life continues for its almost 500 residents and evidence that this was once a thriving railroad town scarcely exists. It is this point that makes Murdo different from the many towns which simply disappeared with the railroad. In the face of the existential crisis caused by the departure of the railroad, the residents of Murdo found a way to keep going, rather than simply pack up and leave. But how did they manage to survive in the face of these difficult circumstances where others could not?

A few miles outside Murdo is the 1880 Town, a popular 84-acre attraction started in 1972 by Clarence and Richard Hullinger. Initially constructed as a movie set featuring historical items owned by the Hullingers’, the town has since incorporated tributes to Murdo’s past relationship with the railroads including the Santa Fe Train Diner, a 1950’s themed diner housed in the cars of a retired Atchison, Topeka and Santa Fe Railway passenger train.

The attraction was featured by the New York Times in a 1974 piece about traveling along I-90, and according to South Dakota Magazine, today it attracts more visitors per capita than any other town in the state. This is a testament to the resilience of Murdo and towns like it that continue, and speaks to something which cannot be measured in any metric for community resilience. It speaks to the intangible elements that bind us to our communities, large or small, and push us to find a way to adapt to threats to our existence, as the residents of Murdo did.

Sources and Further Reading

Through the Decades – United States Census Bureau

Rapid City to Mitchell – Abandoned Rails

A Short History of U.S. Freight Railroads – Association of American Railroads

49 CFR 1201 – U.S. Government Publishing Office

Regional Rail Reorganization Act of 1973: Was Congress on the Right Track? – St. John’s Law Review

Impact of the Staggers Rail Act of 1980 – Federal Railroad Administration

FRA Summary of Class II and Class III Railroad Capital Needs and Funding Sources – Federal Railroad Administration

How deregulation saved the freight rail industry – The Washington Post

History of Short Line Railroads – American Short Line and Regional Railroad Association

Regional and Short Line Railroads in the United States – Transportation Quarterly

Milwaukee Road (West) – Center for Railroad Photography and Art

History of 1880 Town – 1880 Town

On the Road: South Dakota – The USA: Landscapes and Urban Spaces

This Train In South Dakota Is Actually A Restaurant And You Need To Visit – Only In Your State