I keep seeing this and I'm not even quite sure that its true. But what caused the abnormal profits that the Northern Pacific had from its passenger operations in the 1960's during such a sharp, nationwide decline in ridership?
lattasnip9 I keep seeing this and I'm not even quite sure that its true. But what caused the abnormal profits that the Northern Pacific had from its passenger operations in the 1960's during such a sharp, nationwide decline in ridership?
Al - in - Stockton
It also served an area of the mountain west with limited choices in transportation. Even in the seventies some "Interstates" in Montana were basically gravel highways. Airline service was limited and expensive. Plus NP did it's best to keep quality and service high.
passengerfanFor passengers travelling long distances on the NCL that train provided excellent scenery from the Vista Domes. There were two for coach passengers and two for sleeping car passengers during the summer months.
Texas Zepher passengerfanFor passengers travelling long distances on the NCL that train provided excellent scenery from the Vista Domes. There were two for coach passengers and two for sleeping car passengers during the summer months.Was the NP the only railroad with a dome sleeper car?
Johnny
wjstixEven in the seventies some "Interstates" in Montana were basically gravel highways
I'm not sure where you get your information, but having grown up in Montana in the 60's and 70's, and having family in Helena, Bozeman, Billings and Havre that we regularly visited, the interstates (I-90 and I-15) were NEVER gravel roads, perhaps your confusing an interstate highway with a state highway (which were all paved in my memory) or maybe you experienced and oil & gravel repave job (chips).
You may be surprised to learn that we also had electricity, running water and airports as well. You must be from "back east".
(hope you are picking up on my sarcasm, cause I'm laying on pretty heavy)
GS
"The true sign of intelligence is not knowledge but imagination."-Albert Einstein
http://gearedsteam.blogspot.com/
Northern Pacific ran a classy operation.
But, could you be more specific, like with numbers? Do you mean "profit" or revenue? There's quite a difference. Like most roads, NP made no profit on its passenger operations, let alone "abnormal" profits. The NP pretty much paralleled Interstate Highway development during that period of time. It seems like that would have had to have hurt the operation. On the other hand, it inherited Milwaukee Road's passenger base when Milwaukee shut down the Olympian in 1961. On the other, other hand, NP was a pretty small passenger operation compared to GN, for instance. I would have thought GN kept its ridership better than anyone, due to the nearly complete lack of Interstate Highway development along its lines. I recall passenger numbers increasing on GN just prior to the Merger, and loss numbers were getting better as well. I vaguely recall NP's numbers declining.
Geared Steam wjstixEven in the seventies some "Interstates" in Montana were basically gravel highways I'm not sure where you get your information, but having grown up in Montana in the 60's and 70's, and having family in Helena, Bozeman, Billings and Havre that we regularly visited, the interstates (I-90 and I-15) were NEVER gravel roads, perhaps your confusing an interstate highway with a state highway (which were all paved in my memory) or maybe you experienced and oil & gravel repave job (chips). You may be surprised to learn that we also had electricity, running water and airports as well. You must be from "back east". (hope you are picking up on my sarcasm, cause I'm laying on pretty heavy) GS
My information came from a car trip from the Twin Cities to the west coast in July 1973. I was rather surprised to be on an Interstate that had a very long stretch of gravel. I guess it could have been a temporary thing due to some major repaving project or something.
Stix
It was a "chipping" job, they lay down a coat of oil, then come back and spread gravel on top of it. Instead of running a roller over it they would let the traffic drive over it to press the gravel into the oil and to form the "pavement". Usually wouldn't take long on an interstate to go from gravel to pavement, the downside is everyone's windshield would get hammered, and you had gravel berms on each side of the lane for awhile. Obviously this method was driven by costs, much cheaper to resurface alot of highway in a state with low population.
sorry, no numbers. I just keep hearing on these forums that something like eight out of the ten years in the sixties, NP had a profit on its passenger service.
DeggestyAlso, the observation cars for the California Zephyr and the CP each had 3 bedrooms and 1 drawing room.
Texas Zepher DeggestyAlso, the observation cars for the California Zephyr and the CP each had 3 bedrooms and 1 drawing room.Yeah I knew that one, but I consider it an observation car not a sleeper. One of those fuzzy lines.
And don't forget how several of those NP Dome sleepers operated winters in the Southwind and City of Miami and for one season even in the Panama Limited.
lattasnip9 sorry, no numbers. I just keep hearing on these forums that something like eight out of the ten years in the sixties, NP had a profit on its passenger service.
That's not something I recall. The NP didn't have real good operating ratios in general in the 1960s. I can't imagine that passenger service was earning better then freight. By 1967, NP was reporting: "A continuing effort is being made to reduce heavy losses incurred through the operation of passenger trains." –Northern Pacific Railway, Annual Report,1967, p. 6.
I must need my hearing checked . Naturally, I was skeptical when I got the information.
Bagehot lattasnip9 sorry, no numbers. I just keep hearing on these forums that something like eight out of the ten years in the sixties, NP had a profit on its passenger service. That's not something I recall. The NP didn't have real good operating ratios in general in the 1960s. I can't imagine that passenger service was earning better then freight. By 1967, NP was reporting: "A continuing effort is being made to reduce heavy losses incurred through the operation of passenger trains." –Northern Pacific Railway, Annual Report,1967, p. 6.
No the information is correct. I don't recall right now exactly how many years NP made a profit (albeit a small one) on passenger service from say 1958-68 but it was a majority of those years. William Kuebler Jr. talks about that in his book The Vista-Dome North Coast Limited: The Story of the Northern Pacific Railway's Famous Domeliner which is a quite thoroughly researched book. (Bill is / was president of the Northern Pacific Railway Historical Society.)
wjstix Bagehot lattasnip9 sorry, no numbers. I just keep hearing on these forums that something like eight out of the ten years in the sixties, NP had a profit on its passenger service. That's not something I recall. The NP didn't have real good operating ratios in general in the 1960s. I can't imagine that passenger service was earning better then freight. By 1967, NP was reporting: "A continuing effort is being made to reduce heavy losses incurred through the operation of passenger trains." –Northern Pacific Railway, Annual Report,1967, p. 6. No the information is correct. I don't recall right now exactly how many years NP made a profit (albeit a small one) on passenger service from say 1958-68 but it was a majority of those years. William Kuebler Jr. talks about that in his book The Vista-Dome North Coast Limited: The Story of the Northern Pacific Railway's Famous Domeliner which is a quite thoroughly researched book. (Bill is / was president of the Northern Pacific Railway Historical Society.)
Operating Ratio, Northern Pacific Railroad, Passenger Operations
1958: 200.1%
1959: 194.3%
1960: 193.0%
1961: 175.8%
1962: 180.2%'
1963: 180.8%
1964: 183.5%
1965: 194.3%
1966: 186.1%
1967: 198.7%
1968: 261.4%
These represent a substantial loss in every single year.
"With an average out-of-pocket cost in 1958 of $3.76 per train-mile, $1.25 per train-mile reached the bottom line as net profit, a very respectible figure. Annual passenger revenue on the NP increased during each of the four consecutive years of 1959-1962, with the North Coast Limited accounting for the bulk of this income. While other railroad's premier passenger trains were bleeding red ink during those years, the North Coast Limited was still making a profit. By 1968 however, it was barely breaking even."
- William R. Kuebler, Jr. The Vista-Dome North Coast Limited (pg.11)
wjstix "With an average out-of-pocket cost in 1958 of $3.76 per train-mile, $1.25 per train-mile reached the bottom line as net profit, a very respectible figure. Annual passenger revenue on the NP increased during each of the four consecutive years of 1959-1962, with the North Coast Limited accounting for the bulk of this income. While other railroad's premier passenger trains were bleeding red ink during those years, the North Coast Limited was still making a profit. By 1968 however, it was barely breaking even." - William R. Kuebler, Jr. The Vista-Dome North Coast Limited (pg.11)
passengerfanthe NP North Coast Limited had two accidents ... One was in Idaho and the other in Montana.... the one in Montana... involved the eastbound NCL being a runaway coming off Evaro Hill or going too fast for a curve and putting most of the head end and coach section on the ground with many on their sides.
Texas Zepher passengerfaninvolved the eastbound NCL being a runaway coming off Evaro Hill or going too fast for a curve and putting most of the head end and coach section on the ground with many on their sides.If I recall that wreck, the first coach that went on the ground was a dome-coach and it scooped up dirt/mug through the door into the compartment. It buried a sleeping passenger and she suffocated. The NCL's only passenger fatality in its entire history.
passengerfaninvolved the eastbound NCL being a runaway coming off Evaro Hill or going too fast for a curve and putting most of the head end and coach section on the ground with many on their sides.
Bad wreck. One of the Missoula NP Dispatchers, "Van," drove me up the next day to look at it.
The post I am responding to says this: "I don't recall right now exactly how many years NP made a profit (albeit a small one) on passenger service from say 1958-68 but it was a majority of those years."
Without offering my personal opinion and the reasons for it, the published Operating Ratios show that this is factually wrong.
Now, a quote arises about the North Coast Limited.
The Northern Pacific's Passenger Operating Ratios were among the worst in the country. Probably due to lack of economies of scale -- it was also one of the smallest operations of the transcontinentals. About half the size of GN's, considerably smaller than Union Pacific's, and perhaps about one-fourth the size of any of the "Big Four" Midwestern roads. I seem to recall that even with substantially fewer passengers, NP maintained a car fleet just about the same size as GN and some of the others. It was a very inefficient operation, and a lot of credit has to go to the Company for maintaining it as well as they did. Robert McFarland took the passenger operation seriously; Lou Menk wanted to see it gone, as quickly as possible.
Given that, the North Coast Limited was a considerable part of that operation, and the very negative operating ratios of that operation simply belie any serious contention that the NCL was even close to profitable. The NP certainly never claimed that. Some clever accounting might have obscured the passenger losses with mail contracts. I don't recall, if I ever knew, how the mail contract was allocated between the NCL and the MS, but it is not credible to claim that the NP's main train made money while its overall passenger operations lost so much.
A little common sense goes a long ways here. The book is wrong.
passengerfan I know that 1962 was a big year for both the GN and NP due to the Seattle Worlds Fair. It was probably more so for the GN as the NP North Coast Limited had two accidents that damaged a lot of equipment.
I know that 1962 was a big year for both the GN and NP due to the Seattle Worlds Fair. It was probably more so for the GN as the NP North Coast Limited had two accidents that damaged a lot of equipment.
By far the biggest improvement in Operating Ratio was in 1961, coinciding with the Milwaukee Road's final withdrawal of Olympian service in the Pacific Northwest. That had been the train that competed directly with the Northern Pacific's passenger service over much of their routes. After its passenger tie-up with the Union Pacific, Milwaukee had been promoting its "Cities" service over the Union Pacific to the Pacific Northwest, Portland, Tacoma and Seattle, and had been trying to get out of offering the same service twice -- over its own lines on the Olympian, essentially competing against itself -- and had been actively and logically discouraging travel on the Olympian after 1957 trying to get in a position to terminate service. The NP clearly benefitted, 1958 -1961. That really shows up in the record.
The World's Fair in 1962 didn't do much for the NP, at least as far as the Operating Ratio was concerned. The World's Fair traffic hurt the Operating Ratio as it was short term traffic, required extra expenditures and staffing, and entailed other unique problems peculiar to the experience. And that can be seen in the Operating Ratio quite clearly. It was busy, I can attest to that, but in many ways that cancelled out the much better passenger mix gained from the Milwaukee phase-out, 1957-1961.
Bagehot A little common sense goes a long ways here. The book is wrong.
I first met Bill Kuebler about 15 years ago when he presided over the NPRHA convention here in St.Paul. He has spent a lifetime following the NP - many observations in his book about riding the NCL came from his personal experiences in the 1960's - and spent years researching this book. I can't imagine him doing the research to allow him to go into the intricate detail he did about the train and the NP, and then just out of the blue slap something in there about NP passenger operations making a profit without first making sure of his facts.
Given that, and with all due respect, I have to take his statement over someone who spent a few minutes looking at a few isolated numbers and came to an opposite conclusion.
wjstix Bagehot A little common sense goes a long ways here. The book is wrong. Given that, and with all due respect, I have to take his statement over someone who spent a few minutes looking at a few isolated numbers and came to an opposite conclusion.
I'm not looking for an insult contest. The numbers are those reported by the Northern Pacific Railroad, a company with which I am "well acquainted."
And you had stated that the "passenger service" made money. It didn't.
The NCL, given the size of NP's passenger operation, couldn't have made money given what the company itself referred to as its "heavy" losses and what it reported over the ten year period which showed absolutely very heavy losses over the entire time period.
Did he cite that Company report anywhere?
The"few isolated numbers" are the final operating results of the period you referred to. There's no other way to judge the economic performance of the service. And they are reported by the Company itself, not a railfan book. Without getting into credibility discussions about people who spend a lot of time and energy on their books, the Company's own reported numbers carry some weight here.
Well first I apologize if you took what I wrote as an insult. I simply said that I trust Bill K. did exhaustive research on his book and wouldn't just blithely make a statement that he wasn't sure of.
Second, if you re-read the quote, it says the NP's passenger service made a profit during that period "with the North Coast Limited accounting for the bulk of this income", not just that the NCL made money.
wjstix Second, if you re-read the quote, it says the NP's passenger service made a profit during that period "with the North Coast Limited accounting for the bulk of this income", not just that the NCL made money.
Yes, I was referring to NP's passenger service.
The numbers you provided from the book show a 75% Operating Ratio for a long-haul passenger service competing with Interstate Highways over much of its route. That's better than most good freight roads in that era. The number is not credible. It just isn't.
These are the numbers reported by the NP itself for the Operating Ratio of its passenger operations:
These are big money-losing numbers. Operating Ratio = Operating Expense/Operating Revenue. The costs of operation were substantially greater than the revenues received. Substantially. It was among the worst in the country. Hence NP's own reference in its own Annual Report to "heavy losses" because that is exactly what they were. NP was reporting: "A continuing effort is being made to reduce heavy losses incurred through the operation of passenger trains." –Northern Pacific Railway, Annual Report,1967, p. 6. It was a "continuing" effort because they were "continuing" losses. Absolutely nowhere does the Northern Pacific Railroad claim it made money on its passenger services during the time frame you identified.
Not only are these the NP's own reported numbers, they are consistent with 1) the experience of other roads with long haul passenger services, and 2) the size of the NP's operation.
I was on and around that road during that entire period and I never once heard anyone speak of a "profitable" passenger operation there.
I recall reading about that wreck in Idaho, and I believe that it was at a trestle over Granite Lake. They approached a 20 mph curve at about 80 mph, and the engines just rose up and tipped over, taking the following cars over with them. The engines kept sliding on their sides, ran over the embankment alongside of the trestle, knocked down trees as they went down the embankment, slid out onto the ice of Granite Lake, and busted through. Some of the locomotive trucks were never recovered from the lake.
Is it possible that this argument, err....discussion might be an apples vs. oranges issue at this point. If my memory serves (and it sometimes doesn't) I seem to remember that during the negotiations for train-off petitions in the 50's and 60's the argument often was clouded by whether the figures on whether a train was losing money was based on 'out of pocket', ie; cost of equiopment and crew, etc.' vrs. 'fully allocated' costs' where the out of pocket costs were used and added to the costs of track maintainance, dispatcher etc, and then spread equally among all trains using the line. In the former case, some trains actually made a profit late in the period prior to Amtrak, while with the fully allocated accounting, almost no passenger train could. I acknowledge that my explanation might be a gross simplification to make the point that this was a complex issue. Depending on which side of the issue you were on, you might use one formula or the other.
An interesting and excellent account of these arguments was written by Fred Frailey in 'The Twilight of the Great Trains'. In various accounts of different railroads, he writes of these arguments and how the perceptions of which trains were making money were in fact not what you might imagine. In short, prior to the end of the mail contracts, the secondary trains often recovered their costs, while the flagship streamliners did not.
zephyr22 In the former case, some trains actually made a profit late in the period prior to Amtrak, while with the fully allocated accounting, almost no passenger train could. I acknowledge that my explanation might be a gross simplification to make the point that this was a complex issue. Depending on which side of the issue you were on, you might use one formula or the other.
In the former case, some trains actually made a profit late in the period prior to Amtrak, while with the fully allocated accounting, almost no passenger train could. I acknowledge that my explanation might be a gross simplification to make the point that this was a complex issue. Depending on which side of the issue you were on, you might use one formula or the other.
Railroads could not pick and choose their accounting methods for reporting purposes. The accounting method was set by law.
The ICC accounting method reported direct costs plus certain allocated costs. A railroad could, for instance, include a percentage of cost for MOW, etc. because engineering studies clearly showed that, in those days, there was a "straight mileage pro-rate" for such costs. A railroad could not, for instance, include a percentage cost of overhead, because there was no incremental cost, or savings, from the addition or loss of a given train movement. The formula was a very reasonable accounting of actual operating costs.
The railroads however "argued" that by fully allocated cost accounting, the long-distance losses were horrific -- but they were horrific as it was for roads like the NP using the ICC method.
The "fully" allocated cost argument regarding passenger services was developed purely for public relations purposes. It had nothing to do with actual railroading.
If anyone tried to make the argument that a certain freight traffic didn't cover its "fully allocated" cost, they would be tossed out of the room because railroads don't/can't work that way.
Nobody ever laid off one-twentieth of a dispatcher, or 5% of a supervisor because one train on his shift went away, but that's the absurdity of the fully-allocated passenger train cost accounting "argument" which tried to argue that such costs were part of its "cost" of operating a given passenger train.
Now, this would lead me to a discussion about Lou Menk, but, that would only distract from the notion that the railfan book is simply wrong on this point and anyone with a practical experience or notion of the small size of the operation at the NP, the large amount of equipment needed -- startlingly high compared to larger operations -- the high cost of that equipment, long haul passenger costs in general, and declining ridership trends would instantly see that the Company's published numbers reflect a realistic assessment of losses, since unlike books published by outsiders for general audiences, Company reports had to meet stringent reporting standards set by the ICC, the SEC and the IRS and the penalties for mistakes or misrepresentations offered nothing, absolutely nothing, to compensate for a "feel good" about a particular train or service.
The purpose of all those reporting requirements is to avoid misleading investors. Nobody is going to go to fiddle with the accounting and risk jail just because they want to make a passenger train look better, or worse, than is reasonable according to Generally Accepted Accounting Principles as applied to passenger train service at the time.
People made investment decisions based on these reports and the Company had no incentive whatsoever to mislead its owners, which is what this thread suggests they would have been doing by not reporting what a non-railroader published in a book for a general audience rather than relying on their own numbers and approved accounting principles.
--Bagehot
Calling Kuebler's book a 'railfan book' is kinda like calling Winston Churchill's "History of the English Speaking Peoples" a pretty good book for an amateur.
What he says is the North Coast Limited made money up until about 1968, at which point it was still breaking even. He also says the NP's passenger revenue's increased each year 1959-62 at a time when many railroads were losing money on all their trains, with the NCL contributing the bulk of that revenue. I guess NP passenger trains overall may have been losing money, and I just misunderstood the passage referring to the NCL making a profit.
BTW as a Revenue Examiner for my state, I always remember Mark Twain's quote that in ascending order of evil there are "lies, *** lies, and then there are statistics!!"
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