Under ownership of the government, the line was extended to its present endpoint of Toba Station. In the first quarter of the 20th century, before the outbreak of World War II, the Sangū Line came to be considered a major line due to its importance in providing transportation for pilgrims to Ise Grand Shrine. Express trains providing direct service to and from Tokyo, Osaka, and as far away as Uno Station in Okayama Prefecture were running at this time, and dual tracks were added to many parts of the line to allow for an increase in the frequency of trains. However, through the ownership of the government, these dual tracks were dug up near the end of the war and were used as emergency scrap metal for military operations.
After the war, the Sangū Line saw its first rival train line which was owned by Kintetsu who offered express service from Osaka and Nagoya. However, the Sangū Line maintained its competitive edge in the 1940s and 1950s because Kintetsu was, at the time, not yet able to offer direct service from Nagoya due to differences in track gauge, so passengers that were coming to Ise Grand Shrine via Nagoya were forced to change trains during the journey if they took Kintetsu, thus many people opted to take the government-owned Kokutetsu option instead since it was direct.
In the 1960s, there was a plan to rebuild the dual tracks that had been taken away by the government during the war but the plan encountered some problems. By 1960, Kintetsu had altered its Nagoya Line to utilize the same gauge as the rest of its lines and therefore direct Kintetsu service was now available. A few years later, Kintetsu acquired its Kyoto Line and thus it was now offering direct service from Kyoto as well as Osaka and Nagoya. Finally, Kintetsu built its Toba Line, which created competition along the only remaining section of the Sangū Line that had previously had no rival. All this combined led to reduced ridership which in turn led Kokutetsu to revoke the Sangū Line's status as a major line; the line became classified as a local line and the plan to rebuild the dual tracks was abandoned. Kokutetsu was even advised in 1968 to permanently close the Iseshi to Toba section of the line, however they opted instead to discontinue direct express service from various major cities in the following years. This issue of permanently closing the line arose again in the early 1980s, however after a close inspection of the daily number of riders on the line it narrowly avoided being re-classified as a third sector railway and survived the transition to JR in 1987.
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