Well it's actually partly a perception issue, and a complex truth.

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If we look inside books like "Bonanza Railroads" (Kneiss, 1941) or "The West The Railroads Made" (Schwantes/Ronda, 2008) you'll notice a few things that seem worth paying attention to. Westward expansion with Lincoln's Pacific Railroad act set forth an unusually generous land grant scheme to grab land across the US in a linear fashion from midwest cities to viable coastal port cities like San Francisco, Portland, Seattle, Los Angeles, San Diego, all of which (except SF) were very modest towns at the time, but a deepwater port is a deepwater port, opening the untold trade wealth that "The Orient" would open up as soon as a reliable link was opened. Couple that with the legend of the pioneer spirit, mostly propaganda of the era to sell tickets west to start a new life in the west.

New frontier, meet new technology.

Actually recognizably useful railroads in the US were coming into prominence in the 1850s, then refined by the Civil War 61-65. Consider Lincoln's 1851 Act from a technological perspective, it was a daring thing to embrace such a bleeding edge new technology which was only 30 years old at the time. The gorgeously filigreed, brass plated, ornately varnished 4-4-0 steam locomotives of the time were THE CUTTING EDGE technology, that's why they were so lovingly adorned. A surviving example is the narrow gauge "Eureka" https://www.railpictures.net/images/d1/5/5/9/8559.1250559156.jpg Coupled behind the locomotive and tender were gorgeous passenger cars and robust freight cars, all made from hardwood and iron hardware, rolling on cast iron wheels and finely turned brass bearings. Riding a train would be as fast and most humans would travel for almost a centory, 1840-1940 when air travel finally dipped into the realm of vague affordability. (Automobiles as a whole were slower than express passenger trains due to road conditions that didn't improve until after WWII)

So, the excitement surrounding the new, gorgeously adorned locomotives chuffing across the west would (and still does) capture the imagination of writers, photographers, film directors. A lot of media has been created around this era.

The railroad was the ONLY reliable, fast way to move any freight or passenger traffic over 2 tons (4,000lb) from 1840-1930. Wagons on rough, deeply rutted roads were the only option until just after WWI, when road trucks like the Mach AC "Bulldog" and Packard trucks began pulling short haul freight between cities.

Peak railroad use in North America occurred in spring of 1919, just after WWI. In that era, you could ride a luxury passenger train between EVERY major city in North America in Pullman sleeper luxury. You could then transfer to a local passenger to get you to even the tiniest town along a line, and even there you might even be able to catch a streetcar to get you to your destination. It seems quite unbelievable in our modern era of service cuts and spotty service that you could hold a flag out in front of a passenger train at a tiny shack in the woods and hop on, destination NYC, LA, SF, Chicago, etc.

Thousands of towns west of the Mississippi were built by, and centered around, the railroad depot. It's where your daily mail would originate from, it's where anything you ordered from a catalog (from entire Sears catalog houses packed into boxcars to Christmas cookies). Street grids aligned not to North/South, but the track alignment through town, and everything was walkable to the depot to take a train.

Road vehicles began making inroads with the development of asphalt, concrete and macadam road technology in the teens. (macadam is older, but also more laborious to make). The old saw about the Model T cars and Model TT trucks making large dents in passenger train and local freight IS true, and by the end of the 1920's local passenger train service began to dry up. As more highways got paved through the WPA programs of the 1930's and truck technology improved. (compare a 1914 Packard truck with a 1935 Autocar to see how marked the change is.) for the first time in history, road vehicles eclipsed trains in speed by the mid 1930's with some showy races occurring in Europe and the US.

Decline was pretty steady, also exacerbated by a huge dip in traffic due to the Depression. WWII brought railroads a huge break with 6 years of ultra heavy traffic, keeping marginal operations alive a few more years and vastly strengthening the physical plant of the railroad network. At the same time, it pushed it beyond its limits as well, and if WWII did anything, it got millions of soliders behind large "deuce and a half" and 5 ton military trucks for the first time, and a generation of future highway truck drivers was born.

The Eisenhower highway plan of 1955, inspired by the German Autobahns further cut into railroad's profits. Realize that almost ALL of the railroads in the US were privately owned and funded ventures, and the US Gov't is embarking on a multi-billion dollar project to directly compete with the railroads by making highways trucks could match and exceed freight trains in speed and flexibility, not to mention trouncing passenger service by allowing you to drive your new 1955 Chevy Nomad with the wife and kids at 60 mph without any scheduled stops to your next vacation destination.

Railroads tried to stem the tide, ordering beautiful stainless steel "lightweight" passenger cars with fluted sides, glass domes and luxurious interiors, and for a brief moment, it worked. People loved the beautiful clean modern equipment pulled by shiny and colorful new diesels from EMD or ALCo. It was certainly a lovely renaissance that'd last for about a decade, even if most of the trains made a lion's share of their profit by hauling bulk mail for the postal service up in baggage cars behind the engines.

Everybody likes to point to the arrival of the Boeing 707 as the "death of the passenger train" but you have to realize how incredibly expensive it was to fly in a jet for almost 10 years after its 1958 debut. IF you flew at all, it'd be in a piston engined airliner like a DC-6 or Convair 240, and even then it wasn't anywhere nearly as cheap (with inflation) as your $99 southwest fare.

However, the 1960's had a remarkably deadly effect on railroads. You had powerful semi-trucks with 40' trailers hauling freight anywhere, anytime on brand new interstates directly competing with railroads faced with lowered profits from every direction, increasing costs and deteriorating track conditions. Most people had switched completely to driving to get where they needed to go, occasionally flying really long distances when they needed to. Railroads began to cut costs, killing thousands of passenger trains, each of which had to be reviewed by the Interstate Commerce Commission to determine whether or not they could even be abandoned. (Both the railroads and airlines were heavily regulated until the 1980s).

Although local passenger trains began disappearing as early as the 1920's, the dissolution of a cohesive, useful passenger network really happened in the 1960s. Railroads like the Southern Pacific, took legendary, beautiful 14 car passenger trains, and cut them down to 2-5 car trains with just coach seats, no sleepers, and if you were "lucky" an automat vending machine car for snacks, actively discouraging riders, so they could free up the tracks for freight. Railroads like the CB&Q cooked the books, faking losses on their legers to cut service across the midwest. The Northestern US was crumbling catastrophically, with huge abandonments, loss of service and cutbacks thanks to trucks and autos.

(PART 2 BELOW)

Sources:

"Bonanza Railroads" (Kneiss, 1941)

"The West The Railroads Made" (Schwantes/Ronda, 2008)

"The Men Who Loved Trains" (Loving, 2006)