The lowest economic point of the Great Depression came on a blistering hot day in July 1932. Six months after that historic Dow Jones Industrial Average low, 25% of the national workforce was unemployed—about 15 million people. When President Roosevelt took office at the beginning of 1933, the U.S. had been in a recession for four years and was in desperate need of an economic reboot.
Enter the New Deal, which President Roosevelt began implementing days after being sworn in. The thesis of the New Deal was simple: that investing in public works could jumpstart the economy. The projects instituted by the New Deal had legs; It brought electricity to rural parts of the country, strengthened labor unions, and enacted the WPA. Put simply, it helped some of that 25% get back to work while developing cornerstones of the American experience. The programs put in place by the New Deal helped build part of Los Angeles’ Griffith Observatory, which is now visited by 1.5 million people each year. It instituted the Federal Theatre Project, which contributed to launching the careers of prominent artists who still shape literature and the arts today. It founded the Social Security Administration, which one in five Americans benefit from on a monthly basis.
By 1940, the American GDP was up 44%—an increase of $45 billion. Whether or not this was a result of the New Deal is widely debated, but many scholars believe in the economic prowess of the New Deal, and the results of it are still felt today.
Cut to June 2020. On June 8, the National Bureau of Economic Research’s Business Cycle Dating Committee announced that the U.S. has been in an official recession since February. The unemployment rate is currently 11.1%, according to the Bureau of Labor Statistics and the Fed Chair announced in June that the GDP decline seen in the second quarter of 2020 is likely to be the most significant on record.
Given the current circumstances, the New Deal has unsurprisingly reentered cultural consciousness alongside the debate of how best to reinvigorate the economy and mitigate unemployment numbers.
Simultaneously, travel is seeing a deliberate and potentially lasting shift toward domestic travel and a push to find eco-friendly and non-air transportation alternatives. There has never been a more poignant time to discuss rail innovation.
We have, admittedly, been down this road before. But America’s commitment to rail travel could be classified as a will they, won’t they relationship at best. Keen interest in U.S. rail surged through the 19th century—when 20-mile-per-hour trains exemplified American progress. But the intrigue tapered off by the early 20th century. Between the revelation of the automobile and the subsequent investment in interstate highways, rail innovation didn’t stand much of a chance.
“Rail travel was in a fight against the automobile,” says USC professor of history and the American west Bill Deverell. “Rail would lose.”
Needless to say, today, only pockets of the country rely on train transportation—the Northeast corridor, for example, has a long-established preference for commuting by train. But for longer domestic trips, train travel is far from the go-to mode of transportation.
Baruch Feigenbaum, senior managing director of transportation policy at Reason Foundation cites American’s commitment to cars as one of the main reasons this country is without a high speed rail system. Further, the opportunity for reasonably priced flights in the U.S. discourages us from investing in high speed rail, which he says is “known as the Southwest effect [and] has depressed the market for high speed rail.”
An attempt at revitalizing rail was made under the New Deal—to little avail. The Great Depression forced already stagnant railroad company growth to drop off completely. “Many major railroads went bankrupt,” says Deverell. “By the early 1930s, the number of railroad workers in the U.S. was less than half what it had been after the First World War.”
As the Great Depression ended, and the U.S. interest in rail travel decreased, the conversation around high speed rail gained traction abroad.
“Countries with the most successful high speed rail systems started building them before World War II—before the interstate system,” says Feigenbaum.
In fact, as the New Deal was investing in public works, Japan was putting plans in place for their first bullet train, which can now speed up to 199 miles per hour and can carry passengers the 300 miles from Tokyo to Kyoto in just two hours. Japan Rail backs up Feigenbaum’s assertion, saying, “Planning for the bullet train system began even before World War II, with land being acquired as early as the late 1930s.”
Yet nearly a century later, the U.S. has little motivation to invest in rail opportunity. As Feigenbaum suggests, it’s the one-two punch of reduced interest in rail travel and abundant transportation options, from low-cost flights to car demand.
There’s also the financial deterrent to consider. When lobbyists, senators, and representatives push for high speed rail funding, the dollars and cents of the proposals are a hurdle, to say the least. According to Feigenbaum, a high speed rail line in the U.S. that runs 240 miles long would cost an estimated $20 to $30 billion.
The government has tried to take on smaller investments in high speed rail before. “I was working in congress at the time when the Obama administration announced a vision for high speed rail,” says Feigenbaum. “The administration awarded grants to something like 38 states. But they didn't award much money to any one state and high speed rail is extremely expensive to build.”
On one hand, there’s the predictably recurring question: Is high speed rail really the best use of limited government funding? On the other, there’s a long-standing precedent of the government investing in the U.S. rail systems. According to Professor Deverell, the federal government’s investment in railroad construction or operation dates back to federal sponsorship of the 1860s transcontinental railroad project.
“That’s the pinnacle of federal friendship to the rails, as it hastened the completion of the massive endeavor and was a striking example of what we now call public/private partnerships,” says Deverell. “It created a transit and capital network the likes of which the country had not before seen.”
There’s also global precedent that investing in high speed rail can significantly transform tourism and the economics of daily commuting.
In Japan, where the first bullet train was completed in 1964, commuters can live in lower cost-of-living areas but commute daily to Tokyo or Kyoto for better work opportunities. Tourism dollars are spread throughout the country, because visitors are motivated to visit multiple major cities when it’s so easy to travel between them. The Shinkansen network—also one of the safest rail systems in the world—has put money back into the pockets of commuters and expanded the reach of tourism dollars.
Abroad, high speed rail has increased tourism revenue. It has expanded cities such that average workers can earn more while renting for less. And it has helped usher in a wave of new domestic travel. These are all things the U.S. may very well need in the aftermath of COVID-19.
