Business realities and changing times.

Phil, your post is thought-provoking. Railroads were indeed businesses first, and even small roads were highly bureaucratic and institutional in their operation. They were slow to adapt to changing times, but the successful railroads of today realized decades ago that volume traffic was the key to their collective survival and ultimately success.
Much is made of the romance of shortlines and narrow gauge, but accounts of those who rode them was that service ranged from indifferent to terrible, and in the kindest of words, very uncomfortable. These lines served extractive industries like lumber and mining, and a combination of declining revenue, declining service and maintenance, better roads and dependable autos meant that the public and shippers had better and more efficient alternatives. In the late 19th Century a trip from Denver to Slverton was cut from 20 days to three. It was a breakthough in transportation. So were all-weather roads and automobiles which shortened the trip to a day. It is obvious that changing times could bring something that succeeds auto travel.
For a fascinating insight in the economic impact shortlines had on the West, I highly recommend picking up a copy of Nevada Historical Society Quarterly Volume 40, No.3 (Fall 1997).It features an article titled, "Mining and Railroads in West Central Nevada", by John F.Due. The article is an inside look into how these roads managed to survive long after their initial sources of revenue faded away, often running for decades in the red. This is revealed in a set of revenue tables at the end of the 30-page article. Among other things Professor Due discusses whether these railroads survived far longer than they should have. A great read for anyone who loves shortlines, narrow gauge and histories of the Old West.