How did the Great Depression affect the rail industry, specifically Class 1s did some go under? Or did it not really affect them?
Steve
If everything seems under control, you're not going fast enough!
https://history.howstuffworks.com/american-history/great-depression-railroads.htm
I tried to sell my two cents worth, but no one would give me a plug nickel for it.
I don't have a leg to stand on.
During the great depression, the Chesapeake and Ohio did very well. They were selling coal.
Amtrak America, 1971-Present.
I'm not sure how well the C&O did. More likely they weathered it better than many. Some avoided bankruptcy, but many class ones went bankrupt. Most, if not all that did, stayed in operation and ultimately reorganized their corporate structure. The time under court protection varies, with most released in the 1940s, some not being released until the 1950s.
There was a saying during the depression that every train (a standard crew being 5, with some exceptions) had two engineers and three conductors. What that means is that because of the downturn in business, men who had been engineers were set back to firemen. Men who had been conductors were set back to being brakemen. I read an account, the recollections of a brakeman working for the Chicago Great Western out of their hub terminal in Oelwein, Iowa during the depression, in a local paper once. He talked about how he could maintain credit at a local store because his prospects for work were better than most. He said he would be called to work 2 or 3 times a month.
The same with other departments. The following link tells of John Norwood hiring on the Rio Grande as a telegrapher during the depression.
http://www.telegraphlore.com/telegraph_tales/drgw_web/part2/jbnpage1.htm
Some railroads, and some parts of the country may have held on better during the Depression, but you can bet they all felt it.
Jeff
"One difference between pessimists and optimists is that while pessimists are more often right, optimists have far more fun."
More passenger traffic in boxcars. A movie with two of my favorite stars of the past, Emperor of the North http://www.imdb.com/title/tt0070030/
Henry
COB Potomac & Northern
Shenandoah Valley
Money from coal? If it got there - and mostly it did. But there are numerous tales of how some staying wram through the Depression only by "picking up coal that fell off of trains" when it sat there in an open top car easily available.
jeffhergertThere was a saying during the depression that every train (a standard crew being 5, with some exceptions) had two engineers and three conductors. What that means is that because of the downturn in business, men who had been engineers were set back to firemen. Men who had been conductors were set back to being brakemen.
Yeah, that's for sure. My mom's dad was a passenger conductor on the PRR and was laid off as the Depression went on. He became a fireman instead and ended up as assistant fire chief of a medium sized Midwest city. But times were indeed hard for awhile. It took a war to revive the ecoony enough to finally put most of its effects behind us.
Bear has a good point on the global reach of the Great Depression. Many places saw even more contraction than those in the US and, in its own way, it contributed to creating the political conditions for the rise of fascism in Germany, Japan's economic dislocation that led to its mistake in attacking Pearl Harbor, etc. Railroads played an integral part in all these events.
Mike Lehman
Urbana, IL
That is ironic, I just watched that movie yesterday!
angelob6660During the great depression, the Chesapeake and Ohio did very well. They were selling coal.
"Did fairly well" is like saying every house on my street burned to the ground but mine still has one wall standing. I made out pretty well.
Coal production was already falling in 1928 from 657 million tons to only 536 million in 1930 to a low of 441 million in 1934. Prices fell to where it cost more to mine a ton than you could sell it for, same with beef, wheat,and just about every commodity.
The C&O was one of the Van Sweringen brothers "holdings" along with Nickel Plate, Erie, Missouri and Texas Pacific, Rio Grande, Pere Marquette, Wheeling & Lake Erie and a whole bunch of "smaller" companies.
Looking at an Organization Chart from 1932 looks like a spider web. OP and MJ Van Sweringen used assets of one railroad to secure loans to buy another and so-on... Chesapeake and Ohio was ownde by the Allegheny Corporation which in turn was held by the Chesapeake Corporation and the notes for this corporation were held by Guaranty Trust bank.
Imagine having a second, third, fourth, fifth and so-on, mortgage on your house. Then all of a sudden, your house is only worth about 25% of the money you borrowed against it (sound familiar?).
The story has been repeated over and over, even as late as 2008. It's all about "speculation" which is nothing more than a guess.
I have read the book Invisible Giants by Herbert Harwood, Jr. twice and I still don't completely understand how the whole "house-of-cards" was assembled other than to realize that every bond, loan, share of stock and promisory note was leveraged way beyond it's value and breaking point.
Chesapeake and Ohio was a bit healthier than some other railroads but this "good blood" was siphoned off to pay down debt that was amassed by the collapse of other holdings. Many of these railroads were themselves investors in some of the coal mines in the east.
It wasn't until the Reconstruction Finance Corporation and the ICC got into the "Bailout" (reorganization) did the smoke start to clear and some of the losses stemmed.
If you really look at the Penn-Central merger, much of that failure can be traced back to depression era infrastructure woes compounded by the hard-driven wear on the railroad's physical plant.
After the War it was evident that goods and people could be quickly and comfortably moved by air and highway making for yet another financial blow to the railroad's survival.
This is just a small peek at what major setbacks were brought on by the Great Depression.
Thank You, Ed
The Great Depression had it's ups and downs, though of course at it's best it was still bad. It started with a recession after the stock market crash of 1929, with unemployment around 9-10%. The world banking crisis (largely precipitated by Germany reneging on it's war reparation loans) caused unemployment to rise to 25% by 1932-33. It got back to about 9-10% by 1936, then rose to I think around 14% in 1937. By the time the US entered WW2 in 1941, unemployment had been falling for a year or two, largely due to war related production (arms, ammunition, etc.).
Some large railroads went into bankruptcy / receivership during the 1930s, but didn't go out of business. Eventually they became solvent again.
Very few new engines, cars etc. were purchased...I think one year there were no (or only a very few) engines built for US railroads. That being said, railroads also tried to stem the loss of passenger traffic to autos by instituting new steam or diesel powered streamliners...Milwaukee Road Hiawatha, C&NW 400, NYC streamlined 20th Century Limited, ATSF Super Chief, Burlington Zephyr, etc.
BTW railroads generally handled the cut backs in number of trains by idling their oldest equipment. Newer engines and cars that were still being paid for (on a long term trust agreement - kinda like buying a home on a mortgage) were used first, so they were earning money to pay for themselves.
Reading, for one, started a bunch of car rebuilding project in an effort to at least keep the shop workers partially employed.
--Randy
Modeling the Reading Railroad in the 1950's
Visit my web site at www.readingeastpenn.com for construction updates, DCC Info, and more.