<P> The late nineteenth century United States witnessed a boom in agriculture which lasted through the First World War, but transportation in rural areas was inadequate . Conventional steam railroads made limited stops, mostly in towns . These were supplemented by horse and buggies and steamboats, both of which were slow and the latter of which was restricted to navigable rivers . The increased capacity and profitability of the city street railroads offered the possibility of extending them into the countryside to reach new markets, even linking to other towns . The first interurban to emerge in the United States was the Newark and Granville Street Railway in Ohio, which opened in 1889 . It was not a major success, but others followed . The development of the automobile was then in its infancy, and to many investors interurbans appeared to be future of local transportation . </P> <P> From 1900 to 1916, a large network of interurban lines was constructed in the United States, particularly in the states of Indiana, Ohio, Pennsylvania, Illinois, Iowa, Utah, and California . In 1900, 2,107 miles (3,391 km) of interurban track existed, but by 1916, this had increased to 15,580 miles (25,070 km), a seven-fold expansion . During this expansion, in the regions where they operated, particularly in Ohio and Indiana, "...they almost destroyed the local passenger service of the steam railroad ." To show how exceptionally busy the interurbans radiating from Indianapolis were in 1926, the immense Indianapolis Traction Terminal (nine roof covered tracks and loading platforms) scheduled 500 trains in and out daily and moved 7 million passengers that year . At their peak the interurbans were the fifth - largest industry in the United States . </P> <P> The fortunes of the industry declined during World War I and particularly into the early 1920s . Many interurbans had been hastily constructed without realistic projections of income and expenses . They were initially financed by issuing stock and selling bonds . The sale of these financial instruments was often local with salesmen going door to door aggressively pushing this new and exciting "it can't fail" form of transportation . But many of those interurbans did fail, and often quickly . They had poor cash flow from the outset, higher expenses than expected, and struggled to raise essential further capital from a wary financial community . Interurbans were very vulnerable to acts of nature damaging track and bridges, particularly in the Midwestern United States where flooding was common . Receivership was a common fate when the interurban company couldn't pay its payroll and other debts, so state courts took over and allowed continued but temporary operation while suspending the company's obligation to pay its bond interest . With the interest payments suspended, the company had enough cash flow to meet its other cash obligations, but it was expected by the court that Receivership would eventually end and the company would resume its interest payments . Otherwise the company would be forced to quit, and many did . In addition, the interurban honeymoon period with the municipalities of 1895--1910 was over . The large and heavy interurbans, some weighing as much as 60 tons riding on track designed for lighter street cars, caused damage to city streets which led to disputes and lawsuits over who should bear repair costs . The rise of automobile traffic in the middle 1920s aggravated those trends . As the interurban companies struggled financially, they faced increasing competition from cars and trucks on newly paved streets and highways, and many municipalities sought to remove interurbans from city streets . Some companies exited the passenger business altogether to focus on freight, while others sought to buttress their finances by selling surplus electricity to local communities . Several which attempted to exit the rail business altogether ran afoul of state commissions which required that interurban trains remain running "for the public good," even at a loss, such as the Indiana Railroad's forced passenger operation from Indianapolis to Seymour in 1939 . </P> <P> Many financially weak interurbans did not survive the 1920s; others went bankrupt during the Great Depression . A few struggling lines tried combining to form much larger systems in an attempt to gain operating efficiency and a broader customer base . This occurred in Ohio in year 1930 with the long Cincinnati & Lake Erie Railroad (C&LE), and in Indiana with the very widespread Indiana Railroad . Both had limited success up to 1937--1938 primarily from growing revenues earned from freight . The 130 - mile (210 km) long Sacramento Northern Railway stopped carrying passengers in 1940 but continued hauling freight using heavy electric locomotives into the 1960s . </P>

The major source of profits for promoters of interurban electric railroads was