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Railway Express Agency

By | June 5, 2006

Yesterday's Federal Express

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One enduring symbol of railroading’s past is the red-and-white diamond herald of the Railway Express Agency. Today one finds reminders of REA only at museums or old depots, but it once was a major element of the American scene – the FedEx of its day.

Formation of the REA

Express service is the prompt and safe movement of parcels, money, and goods at rates higher than standard freight rates.

It is generally considered to have been started by William Harriden, who in 1839 began regular trips between New York and Boston carrying such items. Other early names in the express business are those of William G. Fargo, a New York Central freight clerk at Auburn, N.Y., and Henry Wells, a leather worker at Batavia, N.Y., who organized Wells Fargo & Co. in 1853; Henry B. Plant, who formed Southern Express; Alvin Adams; and John Butterfield.

The express business flourished in the latter half of the 19th century, and by 1900 there were four principal express companies: Adams, Southern, American, and Wells Fargo. In 1913 the Post Office introduced parcel post, the first major competition for the express companies. Express business continued to climb until 1920, then remained stable for a decade.

During World War I, the United States Railway Administration took over the nation’s railroads. Under the USRA, the four companies were consolidated as American Railway Express, Inc., except for the portion of Southern Express that operated over the Southern Railway and the Mobile & Ohio (and that came into the organization in 1938).

In March 1929, the assets and operations of American Railway Express were transferred to Railway Express Agency. REA was owned by 86 railroads in proportion to the express traffic on their lines – no one railroad or group of railroads had control of the agency.

How it worked

REA’s arrangement with the railroads was that they provided terminal space and cars and moved the cars at their expense; REA paid its own expenses and divided the profit among the railroads in proportion to the traffic. Express service in Canada and Mexico was operated directly by the railroad companies.

Express revenues remained at profitable levels into the 1950’s, albeit partly because of rate increases – express volume dropped substantially after World War II. The railroads began to view express service as expensive business.

REA negotiated a new contract in 1959 which allowed it to use any mode of transportation, and it acquired truck rights to allow continued service after passenger trains were discontinued. It tried piggyback and containers, but without much success.

In 1969, after several years of deficits, REA was sold to five of its officers and renamed REA Express. By then only 10% of its business moved by rail and its entire business constituted less than 10% of all intercity parcel traffic.

REA sued the railroads and the United Parcel Service for various reasons and became involved in suits and countersuits with the clerks’ union, and the Civil Aeronautics Board terminated REA’s exclusive agreement with the airlines for air express. REA Express terminated operations in November 1975 and began liquidation – which was complicated by trials of its officers for fraud and embezzlement.

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