How much cheaper do you think locomotive-hauled cars would have been compared to doodlebugs? Would the operating costs of loco-hauled overwhelm the lower cost of initial purchase?
As far as freight verses passengers: It appears passenger rail will always cost money, but is justified by the increased economic activity that results in more tax revenue to the governments that sponsor it.
Freight makes money on every car, paying back some or all of the investment. The increased economic activity, and better profits due to rail freight also serve to justify it to the local tax-receiving governments.