Did market forces kill the trains?

Many critics of markets point to automobile dependency in the United States as a downfall of freedom, and they state that more government control is needed.  It is often implied by them that our current situation is a result too much market interaction.  I contend that in a free market, trains would be more dominant and cars less prevalent.

Why trains?

First of all, why does it matter what form of transportation is used?  From an economist's point of view, the first thing to think about is cost.  For overland freight transport, trains are generally more efficient than trucking (http://en.wikipedia.org/wiki/
Energy_efficiency_in_transportation#Transportation_modes).

According to the Research and Technology Innovation Administration (RITA, part of the Bureau of Transportation Statistics), Amtrak is more energy efficient than either buses or automobiles, using 1,745 BTUs per passenger-mile, compared to 2,656 BTUs for buses and 3,501 BTUs for automobiles.  This data was collected in 2008.  This does seem to indicate that trains are more efficient for passenger travel as well as freight.

Private sector roads were common in America for quite some time, but the 1824 court case Gibbons v Ogden effectively led the way to the nationalization of roads.  Canals and turnpikes had always been under federal control.

James J. Hill proved that a privately funded, profitable rail line could be run without land grants with his Great Northern Railway.  This was in an era of many subsidized railroads, subsidized railroads, and government canals and turnpikes.  Without these obstacles, I bet numerous competing private railroads would exist.  Government policy tipped the scale in favor of inefficient cars and trucks, not market forces.

Intra-city Systems

Also, it used to be common for rail systems to exist in cities above 10,000.  These started as horsecars, later replaced with cable railways or trams powered by electricity.  These were privately owned and originally profitable.  However, in 1935 the Public Utility Holding Company Act made it illegal to sell both transport and electricity.  Labor laws, regulations, unexpected inflation, the great depression, and tax-funded government roads were all government forces that helped to destroy these industries.

Bailouts

While it is true that in 1970 that Penn Central Railroad was bailed out, bailouts have benefited the auto industry on numerous occasions.  In 1980, Chrysler received a federal bailout, and in 2008 General Motors and Chrysler received a bailout.  In that same time, Ford also received special financing from the Federal Reserve.

Concluding Remarks

If one sees an inherently inefficient system prevailing over a more efficient one, it is almost certainly due to government intervention.  The entire market process is about rewarding those who use resources efficiently.

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