The story of Atlas Shrugged takes place in the United States at an unspecified future time. Dagny Taggart, vice president in charge of operations for Taggart Transcontinental Railroad, seeks to rebuild the crumbling track of the Rio Norte Line that serves Ellis Wyatt’s oil fields and the booming industrial areas of Colorado. The country is in a downward economic spiral with businesses closing and men out of work. Other countries in the world have become socialist Peoples’ States and are destitute. Colorado, based on Wyatt’s innovative method of extracting oil from shale, is the last great industrial center on earth. Dagny intends to provide Colorado the train service it requires, but her brother James Taggart, president of Taggart Transcontinental, tries to block her from getting new rails from Rearden Steel, the last reliable steel manufacturer. James wants to do business with the inefficient Associated Steel, which is run by his friend Orren Boyle. Dagny wants the new rail to be made of Rearden Metal, a new alloy that Hank Rearden developed after ten years of experiment. Because the metal has never been tried and has been denounced by metallurgists, James won’t accept responsibility for using it. Dagny, who studied engineering in college, has seen the results of Rearden’s tests. She accepts the responsibility and orders the rails made of Rearden Metal.
Worsening the economic depression in the U.S. is the unexplained phenomenon of talented men retiring and disappearing. For example, Owen Kellogg, a bright young Taggart employee for whom Dagny had great hopes, tells her that he is leaving the railroad. McNamara, a contractor who was supposed to rebuild the Rio Norte Line, retires unexpectedly. As more great men disappear, the American people become increasingly pessimistic. Dagny dislikes the new phrase that has crept into the language and signifies people’s sense of futility and despair. Nobody knows the origin or exact meaning of the question “Who is John Galt?,” but people use the unanswerable question to express their sense of hopelessness. Dagny rejects the widespread pessimism and finds a new contractor for the Rio Norte Line.
The crisis for Taggart Transcontinental worsens when the railroad’s San Sebastian Line proves to be worthless and is nationalized by the Mexican government. The line, which cost millions of dollars, was supposed to provide freight service for the San Sebastian Mines, a new venture by Francisco d’Anconia, the wealthiest copper industrialist in the world. Francisco was Dagny’s childhood friend and her former lover, but she now regards him as a worthless playboy. In this latest venture, d’Anconia has steered investors completely wrong, causing huge financial losses and a general sense of unrest.
James Taggart, in an attempt to recover the railroad’s losses on the San Sebastian Line, uses his political friendships to influence the vote of the National Alliance of Railroads. The Alliance passes what’s known as the “Anti-dog-eat-dog rule,” prohibiting “cutthroat” competition. The rule puts the superb Phoenix-Durango Railroad, Taggart Transcontinental’s competitor for the Colorado freight traffic, out of business. With the Phoenix-Durango line gone, Dagny must rebuild the Rio Norte Line quickly.
Dagny asks Francisco, who is in New York, what his purpose was in building the worthless Mexican mines. He tells her that it was to damage d’Anconia Copper and Taggart Transcontinental, as well as to cause secondary destructive consequences. Dagny is dumbfounded, unable to reconcile such a destructive purpose from the brilliant, productive industrialist Francisco was just ten years earlier. Not long after this conversation, Francisco appears at a celebration for Hank Rearden’s wedding anniversary. Rearden’s wife Lillian, his mother, and his brother are nonproductive freeloaders who believe that the strong are morally obliged to support the weak. Rearden no longer loves and cannot respect them, but he pities their weakness and carries them on his back. Francisco meets Rearden for the first time and warns him that the freeloaders have a weapon that they are using against him. Rearden questions why Francisco has come to the party, but Francisco says that he merely wished to become acquainted with Rearden. He won’t explain his presence any further.
Although public opinion and an incompetent contractor are working against them, Dagny and Rearden build the Rio Norte Line. Rearden designs an innovative bridge for the line that takes advantage of the properties that his new metal possesses. The State Science Institute, a government research organization, tries to bribe and threaten Rearden to keep his metal off the market, but he won’t give in. The Institute then issues a statement devoid of factual evidence that alleges possible weaknesses in the structure of Rearden Metal. Taggart stock crashes, the contractor quits, and the railroad union forbids its employees to work on the Rio Norte Line. When Dr. Robert Stadler, a brilliant theoretical scientist in whose name the State Science Institute was founded, refuses to publicly defend Rearden Metal even though he knows its value, Dagny makes a decision. She tells her brother that she will take a leave of absence, form her own company, and build the Rio Norte Line on her own. She signs a contract saying that when the line is successfully completed, she’ll turn it back over to Taggart Transcontinental. Dagny chooses to name it the John Galt Line in defiance of the general pessimism that surrounds her.
