They were uncompetitive because they were still running on 1930's technology, and essentially have been since.
Most current track has long since been upgraded...and that's one reason why the whole U.S. rail industry collapsed in the 1970s, a lot of those tracks were decades old and deteriorating. I had seen some chart somewhere of how much a train car can carry compared to it early 20th century counterpart, the decline of the common boxcar is partly because the current boxcars can carry more stuff. Europe and others barely carry freight at all, their capacity sucks.
I doubt even upgrading rails would've helped as by the 1940s railroads were losing ground
fast, the spike in passenger rail came from military use, basically sending the country's best men to get mulched in an overseas war, or at the very least, sending them to do work at bases and major cities.
Except in areas that are poor or are being propped up by the government, long-distance railroads have fallen into a niche where it's either automobiles or planes are the better choice depending on distance and price, demanding that they be subsidized "just because" is a nonsensical argument.
It's a bit like ships. Shipping cargo is still done, but moving people across the ocean by boat (despite major improvements in ship technology) is impractical (7 days vs. 10 hour flight). The analogy goes further when long-distance trains are basically a "land cruise", you do it because you want the experience, not because it's faster or cheaper.
There's also some misconception that trains are better because no TSA, but even Jason can attest to long security lines, and looking up Amtrak it has
the same bullshit restrictions on luggage anyway as well as the requisite "fuck you, that's why" clause TSA has.