This post is complete baloney from start to finish. Federal regulation of the railroads was tied to three indisputable facts that have nothing to do with "destroying the railroads ultimately":
1. When railroads first extended beyond state borders, they became subject to legitimate Federal oversight under the U.S. Constitution as an industry involved in interstate commerce. This may seem outlandish today, but for the first few decades of the country's existence there was no such thing as a corporation that was formed under Federal law. Every corporation was a state corporation, and a railroad could only operate within the borders of the state where it was incorporated. Railroads literally had to trans-load their freight from one train to another at a state border and hand it off to another railroad company for the next stage of its trip. With the advent of multi-state corporations, the Federal government became the regulatory body for the railroad industry by default because state laws could not address legal disputes between shippers and railroad companies for business that was conducted across state lines.
2. The Federal regulation of the railroad industry reached a point that would be considered excessive in almost any other industry because a private company with an enormous fixed transportation infrastructure that serves other businesses effectively functions as a monopoly for many of its customers. The Federal regulation -- for better or for worse -- is an implicit recognition that this monopoly arrangement for the railroad industry is unavoidable in this type of industry. As a point of fact, this is the same rationale for the heavy government regulation of public utilities with fixed transmission assets and no real competition.
3. Despite the monopoly/regulation arrangement I described in #2, the railroad industry in the U.S. still presented major risks to the economic well-being of the country. In the early years of the Dow Jones Industrial Index, almost every company in the index was either a railroad or a major railroad customer. In the latter decades of the 19th century and the early part of the 20th century there were a number of cases of financial/economic disasters in the country that were caused by a disruption by a single railroad (a strike or other labor action, for example). Quite simply, it was recognized by people in positions of authority all over the country that the railroad industry had become too powerful, and represented a threat to the economic stability of the nation. The establishment of the first Federal highway system around the time of the first World War was specifically intended to provide a measure of competition to the railroad industry by promoting the growth of a trucking industry that was more flexible and had much lower barriers to entry than the railroads.
That makes no sense at all. Canal companies were not so subject to “oversight”, nor were interstate shipping companies (that used the canals and other waterways whether by barge or other vessel) or stagecoach companies.
Furthermore, with hundreds of interstate railroad companies, there were no monopolies. Monopolization only manifested when the federal government imposed it—the main examples being USRA, Amtrak and Conrail. The Pennsylvania Railroad had major competitors for passenger traffic between New York and Chicago (very big during railroads’ heyday), those being the Baltimore & Ohio, the New York Central and the Erie, and many more competitors for localized destinations.
The notion that railroad companies in the USA ever became “too powerful” is propaganda advanced by pro-government types. Why? Because it was a threat to the notion of government centralization. Funny how the “solution” was to overregulate the railroads and overtax them so that they could not be “competitive” with the federal- and state-funded road network, is it not? (Don’t ever say “generally agreed” when it is not.)