Railways are a centerpiece in most economic histories of the nineteenth and twentieth centuries. Railways were especially important in periphery economies where existing transport networks were poor and international trade comprised a large share of GDP. Despite their importance, much is still unknown about the operation and development of railways, especially outside of North America and Europe. Sylvester Damus fills a number of gaps by analyzing Argentine railways. Argentina serves as an excellent case study because most of its railways were British-owned and supplied up to their nationalization in 1948. Damus’ work largely focuses on the period from the 1900s to the 1960s. It complements Colin Lewis's history on Argentine railways before 1913 (British Railways in Argentina, 1857–1914: A Case Study of Foreign Investment. London: Athlone Press, 1983).

Through seven chapters, Damus draws three broad conclusions. First, railway TFP growth was relatively high from 1900 to 1960 and was bolstered by technological adoption and innovation. Second, the regulatory environment became increasingly unfavorable for railway companies and limited their profitability. Third, British capitalists failed to extract large rents from equipment supply and land speculation. Regarding the productivity estimates, Damus finds that the average annual rate of TFP growth was a healthy 1.98 percent from 1900 to 1960 (p. 4). As in any TFP estimation, there are concerns about assigning proper factor shares and making adjustments for the quality and composition of inputs and outputs. Nevertheless, Damus’ conclusion that the productivity growth of railways was superior to the Argentine economy as a whole seems undeniable. More questions arise concerning the interpretation. There is a chapter cataloging technological adoptions and changes in capacity utilization. The discussion points to the significance of economies of scale in accounting for productivity growth but Damus is unable to assign a contribution to changes in scale versus technology.

Concerning regulation, Damus argues that it was generally unfavorable for companies. The Mitre Law of 1907—which was designed to ensure profitability and maintain high levels of foreign investment—did not achieve its goals over the long run because it was not properly designed and enforced. The implementation period of the Mitre Law overlaps with the runup to nationalization in 1948. Damus says little about how the Mitre Law might have contributed to nationalization and its effects. Damus devotes a chapter to analyzing railway rates and argues that poor financial performance could have been averted if regulatory authorities had increased rates (p. 57). Railway companies frequently complained that rates were not properly adjusted to inflation resulting in rationing. Damus estimates a counterfactual railway revenue based on a constructed “free-market” price. Drawing on an estimate of the elasticity of demand, Damus is able to calculate the increase in revenue that would accrue if prices were increased to the point where wagon demand equaled wagon supply. The results would seem to belie the claims of railway companies, however here one can question the analysis. Damus estimates the elasticity of demand to be 0.6 by regressing the quantity of wagon demand on average freight charges and variables for the stock of wagons and waiting times (p. 54). Insufficient attention is paid to the endogeneity of average freight charges (i.e., the price variable). The robustness of the counterfactual revenue is not discussed.

From the 1850s to the 1880s Argentine railway companies received a 7 percent rate of return guarantee on their capital investment. In this regard, Argentina was not exceptional: guarantees were a common policy tool for stimulating private railway investment throughout the world. Damus points out, however, that investors rarely received a 7 percent guarantee because operating expenses were arbitrarily fixed at 45 or 50 percent of revenues. Thus a railway could experience a shock raising its operating expenses close to 100 percent of revenues, resulting in a return as low as 4.5 percent even after receiving guarantees (pp. 169–70). Damus also argues that guarantees were at times an impediment to railway expansion because there was uncertainty about whether the government would approve additions to capital at the guaranteed rates. Overall, readers are left with a nuanced view of the role of guarantees in stimulating railway investment.

Another interesting line of inquiry concerns the distribution of surplus. Dependency-type theories argue that British-owned railways transferred profits back to Britain by overpaying suppliers with whom they sat on interlocking boards of directors. Damus strikes a blow against this theory by documenting comparable prices paid to U.K. and U.S. locomotive and rail suppliers. The evidence thus goes against transfers to Britain vis-à-vis core countries but it does not discount the possibility of transfers more generally. Damus also investigates the overlap between railway boards and those for suppliers, and finds little evidence for interlocking directories. The findings suggest that British supplies may have dominated the Argentine railway market because of a competitive advantage.

Overall, Damus refutes a number of hypotheses and offers some alternative explanations related to the performance of Argentine railways. The use of quantitative evidence is refreshing and the arguments are generally convincing. It should serve as the basis for quantitative economic histories of Argentine railways in the twentieth century.