the major source of profits for promoters of interurban electric railroads was
Interurban 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 1895â€“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. [16] 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.[17]