The Indiana Railroad (IR) was the last of the typical Midwestern United States interurban lines. It was formed in 1930–31 by combining the operations of the five major interurban systems in central Indiana into one entity. The predecessor companies came under the control of Midland Utilities, owned by Samuel Insull. His plan was to modernize the profitable routes and abandon the unprofitable ones. With the onset of the Great Depression, the Insull empire collapsed and the Indiana Railroad was left with a decaying infrastructure and little hope of overcoming the growing competition of the automobile for passenger business and the truck for freight business. The IR faced bankruptcy in 1933, and Bowman Elder was designated as the receiver to run the company. Payments on bonded debt were suspended. Elder was able to keep the system virtually intact for four years, and IR operated about of interurban lines throughout Indiana during this period. During the late 1930s, the routes were abandoned one by one until a 1941 wreck with fatalities south of Indianapolis put an abrupt end to the Indiana Railroad's last passenger operations.
Predecessor interurban companies
The late 1890s was a time of horse-drawn carriages and wagons pulled along unpaved streets and roads, so the arrival of the town streetcar was appreciated. Some of these trolley lines eventually expanded into the countryside and, by 1911, had grown into hundreds of miles of interurban lines networked across Indiana. "When before we had moved by horse and carriage, we now rode on plush seats to places , , even distant."
Union Traction Company
The Indiana Railroad was created on July 2, 1930, when Midland Utilities purchased the Union Traction Company of Indiana (UTC) and transferred ownership to the IR. Union Traction (UTC) was the largest interurban system in Indiana with of interurban trackage and of streetcar lines in Anderson, Elwood, Marion and Muncie. UTC had been created in 1897 to operate an initial line between Anderson and Alexandria, and came under the control of the Schoepf-McGowan Syndicate in 1902. UTC purchased or leased several neighboring interurban lines in short order: the Elwood and Alexandria was bought in 1903, the Indiana Northern in 1905, and the Indiana Muncie Hartford and Fort Wayne was leased in 1906. In 1906, UTC also purchased all of the Dayton and Muncie's trackage in Indiana.
UTC absorbed the Indianapolis, New Castle, and Toledo in 1912 and extended its trackage from New Castle to Muncie, but it did not reach Toledo. Although it attempted a passenger revival with the purchase of new equipment, UTC went into decline in the 1920s along with the other Indiana interurban systems. In 1925, it entered receivership whereby it continued operating by delaying paying interest on its bonded debt. It survived this bankruptcy whole and passed intact into IR control in 1930.
Interstate Public Service
At the same time that UTC was acquired, three other systems already owned by Midland Utilities were put under the control of IR. The largest was the Interstate Public Service Company (IPS), which was reorganized as an independent company known as Public Service Company of Indiana, but was operated under the auspices of IR. The IPS operated the line from Indianapolis to Louisville that had been built between 1896 and 1907 under a variety of small independent lines. Through service between Indianapolis and Louisville was inaugurated over these separate lines in 1908, but it was not until 1912 that ownership of the different segments was consolidated and IPS was created.
During the 1920s, IPS modernized its fleet of cars extensively. It operated frequent passenger services between Indianapolis and Louisville and operated suburban services around Louisville. By 1930, it was one of the strongest of the Indiana interurban lines. IPS operated three-car overnight sleeper trains each way between Indianapolis and Louisville during the years before the Great Depression. The all-steel interurban sleeper cars, with traction controls and motors removed, were purchased and used into the 1960s by British Columbia Railway.
Indiana Service Corporation
The Indiana Service Corporation (ISC) became part of IR at the same time as the IPS. ISC was the successor to the Fort Wayne and Wabash Valley Traction Company (FW&WV), a system that had been assembled from smaller predecessors around 1902.
In 1910, FW&WV had a very bad wreck near Kingsland, Indiana. Two wood bodied cars impacted head on, with one "telescoping" into the other, resulting in 41 fatalities. This is considered the worst accident in the history of interurban transit and forced the FW&WV into bankruptcy.