Railroads used to be the primary means of long distance travel. However, the arrival of the '50s saw government-funded highway and airport projects. Inevitably, airplanes, buses and personal automobiles competed with trains. According to the Amtrak Historical Society, by 1958, rail accounted for only 4 percent of inter-city travel. The decline continued through the '60s, and it seemed that railroad travel would soon become obsolete.
Congress created Amtrak in 1970 after the Railroad Passenger Service Act was adopted. The act established a private company with the mission of operating a profitable passenger service, which could eventually expand to efficiently meet future inner-city transportation needs. Railroad companies transferred their goods and services to Amtrak in exchange for stock or a tax write-off. All except three companies chose to do so: The Denver & Rio Grande Western, the Rock Island and the Southern lines.
Amtrak is almost wholly owned by the U.S. Department of Transportation. In fact, its board of directors was initially made up of the Secretary of Transportation and 11 other members appointed by the president. The endeavor was intended to be a two-year federal undertaking to save and revitalize the nation's rail system.
Initially, Amtrak acted as a travel broker. Although it operated well over 100 trains, the stations, terminals, yards, locomotives, maintenance facilities and employees were all owned or employed by individual railroads.
The '80s brought a movement from supervision to ownership, but Amtrak continued to lose more money than it received from the government. Congress demanded, in 1997, that Amtrak become self-sufficient by 2002 or prepare for liquidation.
The terrorist attack on the Twin Towers in 2001 and the ensuing panic associated with air travel caused rail use to rise significantly. Federal funding was controversial from the beginning, and many see the formation of the Amtrak corporation as a mere bail-out, but proponents argue that Amtrak government support pales in comparison to federal funding of highway travel and aviation. Amtrak will receive $2.6 billion a year in federal funding through 2013.
