In this paper I examine the role that political-economic forces played in prompting managerial and technological change within the railroad industry in the early twentieth century. The Progressive Era witnessed a flurry of federal regulations aimed at making railroad operations safer for the traveling public and railroad employees. In 1906, Congress introduced the Hours of Service Act (HOSA), which capped the number of hours that operational employees could work in a 24-hour period. Railroad officials complained that the bill would undermine the sophisticated telegraphic train dispatching systems implemented by the industry in the late nineteenth century. The passage of the HOSA in 1907 created a difficult situation for railroad managers. Hemmed in by federal regulators and organized labor, officials decided to implement a radical technological innovation that they had resisted for more than three decades, the telephone. The events surrounding the HOSA's passage and implementation highlight the complex relationship between the state and American business during the Progressive Era. The HOSA was supposed to benefit railroad employees, but the outcome of the regulatory battle among the government, organized labor, and railroad management ultimately transformed the rail industry to the detriment of organized labor.