Of all major U.S. industries, none is more vulnerable to the bite of spiraling prices or the blight of softening business than the 114 Class 1 railroads, which carry roughly half of the nation's products and raw materials. Last week the railroads were caught in a dangerous vise, whose jaws were both inflation and deflation, whose effects make a case study for economists. From the headquarters of roads from Boston to San Francisco came gloomy news of a sharp setback in earnings: a 40% decline for the Pennsylvania, the nation's largest railroad, a 60% nose dive for the New York Central,...
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