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STB Chairman Oberman throws cold water on further railroad mergers

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Posted by adkrr64 on Friday, June 4, 2021 1:40 PM

greyhounds
This was in addition to allowing an average person to have affordable light at night. 

Indeed. Consider the graph on this page: https://ourworldindata.org/light

 (Yes, the chart is in British Pounds, but you get the idea)

 

There is a description of the various technologies that allowed the cost of light to steadily drop as the industrial age progressed. Almost all of the innovations that allowed that price drop were due to new technologies created by individuals persuing profit in a free market economy. They made money and consumers paid less and less, to everyone's benefit.

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Posted by greyhounds on Friday, June 4, 2021 12:55 PM

Gramp
Yes, that's why he had such a hard time understanding the vitriol he encountered. 

Things J.D. Rockefeller did with his money:
 
1) He improved medical care.  Medicine and doctors were a joke.  You were a doctor if you called yourself one.  Medical school was maybe six months. The exception was Johns Hopkins.  Rockefeller would approach “Medical Schools” and offer money if they would adopt the Johns Hopkins standards.  It worked.
 
2) He supported education.  He was instrumental in the founding of the University of Chicago.  He also focused on educating black women.  Both done with his money.
 
3) He modernized and improved steel making in the US.  This was necessary for our economic growth.  He kind of just fell into this by accident.
 
The known iron ore deposits in Minnesota were controlled by a family that was in well over its head.  The ore was being shipped to the steel mills in small sailing vessels.  Despite controlling the ore deposits the family business floundered.  They kept needing to borrow money and pledged their ownership shares as collateral.  Rockefeller loaned them the money they needed.
 
After another default Rockefeller wound up owning the Iron Range as it was then known to exist.   He realized the operation could use a lot of improvement.
 
A major needed improvement was to replace the sails with steam powered lake freighters.  The calculation was that 12 freighters were needed.  Twelve new ships would challenge the ship building capacity on the lakes and drive up the price.  So, Rockefeller let it be known that they wanted one, or maybe two, such vessels.  The ship builders sharpened their pencils and submitted some lower offers.  Each ship builder wound up with an order for one or two ships.
 
The transportation was modernized at the lowest possible cost.  And we got more efficient steel production. 
 
Of course, the ship builders were upset.  But Rockefeller didn’t waste a dime.  And he did great good with the money he earned.  This was in addition to allowing an average person to have affordable light at night. 
 
 Read Chernow's biography.
 
"By many measures, the U.S. freight rail system is the safest, most efficient and cost effective in the world." - Federal Railroad Administration, October, 2009. I'm just your average, everyday, uncivilized howling "anti-government" critic of mass government expenditures for "High Speed Rail" in the US. And I'm gosh darn proud of that.
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Posted by Gramp on Friday, June 4, 2021 4:32 AM

Yes, that's why he had such a hard time understanding the vitriol he encountered. 

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Posted by greyhounds on Friday, June 4, 2021 12:51 AM

CSSHEGEWISCH
Rockefeller's decisions were based on enriching himself, not some altruistic goal of making petroleum products affordable.  Consider rebates paid to his firm on freight rates paid by his firm and his competitors.

Oh, I’ll disagree again.  John D. Rockefeller did a whole lot of good.
He became rich doing so.  So what?   The beauty of capitalism is that it incentivizes people to serve the common good.   JDR sure did that.
 
Before he started producing affordable kerosene people had to use candlelight after the sun went down.  Have you ever tried to live by candlelight?  He enabled people to have and afford decent light after the sun went down.
 
Rockefeller played hard ball business.  And that’s good.  You don’t waste a dime.  He’d drive hard bargains.  And that’s also good.  Walmart does that today.  And that’s good for us.
 
You might want to read Ron Chernow’s biography of John D. Rockefeller before judgement:
 
 
That man did a whole lot of good for the American People, and the people of the world.
 
He drove hard bargains with the railroads due to his volume.  And that was good for us folks too.
"By many measures, the U.S. freight rail system is the safest, most efficient and cost effective in the world." - Federal Railroad Administration, October, 2009. I'm just your average, everyday, uncivilized howling "anti-government" critic of mass government expenditures for "High Speed Rail" in the US. And I'm gosh darn proud of that.
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Posted by jeffhergert on Thursday, June 3, 2021 9:06 PM

Electroliner 1935

As to regulating train length, what should be the limit. Taking the case to the extreme. Could railroads act like a conveyer belt inserting cars at one end of a train and taking them off at the other end thus blocking crossing for a day. When trains get to be three mile long strings and slow down to under 20 mph, they can tie up towns for in my view excessive amounts of time. There will be cases where first responders are delayed. When I was about three years old (1940), I lived in Glen Ellyn IL on the South side of the tracks (C&NW + CA&E) and a house burned down because there was only one fire dept and it was on the North side of the tracks. And a slow moving C&NW freight had the crossings blocked. A couple of years ago, a CN train on the former EJ&E had the Barrington area tied up and an ambulance had to take a long detour to get the patient to the hospital. Who will be the DECIDER on what is acceptable. 

 

Train blocks access to house fire near Valley (ketv.com)  The train was tied down because of a derailment in Illinois.  The crew thought they had cut the proper crossing.  One that they didn't cut had an occupied house that no one on the railroad knew was there.  

Jeff

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Posted by Gramp on Thursday, June 3, 2021 5:58 PM

Not altruism. Creating demand. The highest priority action in business. 

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Posted by CSSHEGEWISCH on Thursday, June 3, 2021 10:28 AM

Rockefeller's decisions were based on enriching himself, not some altruistic goal of making petroleum products affordable.  Consider rebates paid to his firm on freight rates paid by his firm and his competitors.

The daily commute is part of everyday life but I get two rides a day out of it. Paul
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Posted by Gramp on Tuesday, June 1, 2021 11:42 PM

Greyhounds, I agree with your assessment of the impact of the ICC. I think its creation was made possible because of ruinous price cutting by eastern railroads and monopolistic actions by western railroads though. I think of all of these actions as abuse of power by those who had decision-making power In the era in question. 
I see these actions as different from say John Rockefeller and Standard Oil. His decisions were based in making oil products affordable to all. 

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Posted by greyhounds on Tuesday, June 1, 2021 1:10 PM

 

daveklepper
The ICC was a reaction to abuse of power. 

I strongly disagree with that.

The creation of the ICC in 1887 was an attempt to stabilize railroad freight charges.  These charges began to fall rapidly in 1867 and continued to fall.  As the rail network was built out there was more competition.  Both route and market competition.  The added competition drove prices down. This troubled the railroad people and the financial people.

As created, the ICC had almost no powers.  But the act did require that railroads have a written rate on file with the ICC before they could use the rate to move traffic.  This meant they couldn’t play “Let’s Make a Deal” as auto dealers do.  It created what I’ve seen called a “Sticky” or “Kinked” demand curve.  It held prices up.  It was predatory regulation designed to protect the producers (the railroads) against competition.  This, of course, was to the detriment of the American economy and the American people.

If you want a clear, salient example of the “Sticky” or “Kinked” demand curve in operation today, look at a corner with three gas stations all displaying their prices.  The prices will be the same or nearly the same.  Why?

Well, each station operator knows that if he/she lowers the price in an attempt to sell more volume the other station operators will also reduce their price.  No advantage will be gained.   Same thing with increasing the price.  If one station increases the price the customers will go over to the lower priced sellers.   So, the price sticks where it is.  Largely because each seller knows what the competition is charging.  (I realize gas prices do change.  The station operators don’t control the whole thing.)

A similar situation was created by the formation of the ICC.  By requiring any rate charged to be on file and public information the law made the rail charges “Sticky”.  Bad idea for the country and people.  Rail freight rates quit falling after the formation of the ICC.  Which was the whole idea.

Unfortunately, economic regulation is like cancer.  It grows and eventually kills.  While maximum rate controls were used to hurt the railroads before 1920, the eventual killer was the Transportation Act of 1920.  This law extended government rate control to minimum rates.  A railroad couldn’t reduce its rates without government approval. 

This minimum rate control was wrongly used to stop the development of intermodal, stop the development of unit trains, restrict the ability to compete with barges, etc., etc., etc.  The railroads couldn’t pass new efficiencies along in a competitive market.  And the government sure killed a whole bunch of railroads.  And the government harmed its economy and its people in doing so.

 

 
"By many measures, the U.S. freight rail system is the safest, most efficient and cost effective in the world." - Federal Railroad Administration, October, 2009. I'm just your average, everyday, uncivilized howling "anti-government" critic of mass government expenditures for "High Speed Rail" in the US. And I'm gosh darn proud of that.
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Posted by charlie hebdo on Tuesday, June 1, 2021 11:30 AM

diningcar

 

 
Juniata Man
ultiple states have had rules on their books governing how long crossings may be blocked. Unfortunately, Federal courts have struck down each of these as Class 1's have challenged them. Until the Federal government steps in, either Congress, FRA or STB and establishes a national blocked crossing rule, the railroads will continue to block grade crossings to their hearts content. CW

 

What has not been discussed is the origin of the crossings. The railroad was, in many-most cases there first and when the growing city wanted to cross with a street they made a contract/agreement with the RR.  The content of those agreements governs not only the maintainence of the crossing but other factors that may apply about occupancy. 

 

In some parts of the country,  rail lines were given incentives to locate their ROW through a given small,  growing town. You know a lot has changed with rail operations in the past 100-170 years (train length,  frequency,  etc.) on which agreements were based. So should crossing issues. 

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Posted by diningcar on Tuesday, June 1, 2021 10:52 AM

Juniata Man
ultiple states have had rules on their books governing how long crossings may be blocked. Unfortunately, Federal courts have struck down each of these as Class 1's have challenged them. Until the Federal government steps in, either Congress, FRA or STB and establishes a national blocked crossing rule, the railroads will continue to block grade crossings to their hearts content. CW

What has not been discussed is the origin of the crossings. The railroad was, in many-most cases there first and when the growing city wanted to cross with a street they made a contract/agreement with the RR.  The content of those agreements governs not only the maintainence of the crossing but other factors that may apply about occupancy. 

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Posted by Juniata Man on Tuesday, June 1, 2021 10:41 AM

Tree:

Multiple states have had rules on their books governing how long crossings may be blocked. Unfortunately, Federal courts have struck down each of these as Class 1's have challenged them.

Until the Federal government steps in, either Congress, FRA or STB and establishes a national blocked crossing rule, the railroads will continue to block grade crossings to their hearts content.

CW

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Posted by tree68 on Monday, May 31, 2021 6:51 PM

I would opine that length is only part of the problem, as already mentioned.  Case in point is good ol' Deshler.

Through trains on both the E-W line and the N-S line generally run through at around 35 MPH, barring other traffic.  Someone else can do the math to figure out how long a hypothetical 13,500 foot train would block crossings at speed.

On the other hand, trains using the transfers (wyes) are limited to 10 MPH, resulting in much longer crossing blockages, obviously.  And we won't talk about trains having to hold for other traffic, sometimes resulting in significantly longer blockages.  

I think most states already have laws on the books regarding blocking crossings.  In many cases, it's more a matter of enforcement.

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Posted by Overmod on Monday, May 31, 2021 2:08 PM

Electroliner 1935
As to regulating train length, what should be the limit.

Interesting example.  First you'd need a political 'groundswell' of sufficient influence to get specific restrictions made up and enacted -- take as a starting point the restrictions that a crossing can't be blocked by a standing train for longer than a specified interval before either moving or breaking the consist enough to let traffic pass.  I suspect this would not take the form of train length but rather of maximum crossing occupancy time ... and this might be fixed at some lesser time than the 15 minutes stopped, eliminating any loophole or malicious-compliance issue for slow but still moving consists or those that stop and start to 'reset the clock'.

I expect the argument to be made that running available traffic in 'longer' monstrains also implies fewer overall trains per day, hence fewer obstructions... this argument only holding much water if proper PSR "schedules" the trains away from peak traffic time.  The argument of course says less than nothing about fires or ambulance calls, which can't be predicted, let alone 'scheduled for in advance' -- but there are clear potential benefits in having fewer free crossing times per day, too.

As an incentive away from the present tendency to shove multiple blocks together and run them at cost-trimming slower speeds, time-restricting legislation might act as a good incentive... provided the penalties for non-compliance and the consistency of enforcement are kept 'meaningful' for the financiers whose pockets are involved.  I see an intermediate level of new hell for T&E crews who now have to juggle times on crossings as well as all the other conflicting stuff piled on them in addition to running trains safely, and I'd have to worry about discipline resulting 'automatically' from a citation being filed.

The more important part of this I'd like to see is better prediction when the crossing will be blocked, and for how long; some of the best-practices methods for ancipative crossing protection will already make this more practical.  I've noted in the past that navigation systems can benefit dramatically when realtime train information can be incorporated into 'traffic' accommodation... the catch being that many ways to capture the information can be used to reveal 'proprietary competitive information' about operations.

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Posted by Electroliner 1935 on Monday, May 31, 2021 1:32 PM

As to regulating train length, what should be the limit. Taking the case to the extreme. Could railroads act like a conveyer belt inserting cars at one end of a train and taking them off at the other end thus blocking crossing for a day. When trains get to be three mile long strings and slow down to under 20 mph, they can tie up towns for in my view excessive amounts of time. There will be cases where first responders are delayed. When I was about three years old (1940), I lived in Glen Ellyn IL on the South side of the tracks (C&NW + CA&E) and a house burned down because there was only one fire dept and it was on the North side of the tracks. And a slow moving C&NW freight had the crossings blocked. A couple of years ago, a CN train on the former EJ&E had the Barrington area tied up and an ambulance had to take a long detour to get the patient to the hospital. Who will be the DECIDER on what is acceptable. 

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Posted by Overmod on Monday, May 31, 2021 12:10 PM

JPS1
 
daveklepper
 The ICC was a reaction to abuse of power.  
It was!  But as is the case with much of government regulation, the regulators became an entity unto themselves.

I wrote about this in my college thesis on the first generation of automatic train control, as a peripheral but important effect.  I think greyhounds has done much more extensive research into some areas.
 
As has been mentioned, there was a considerable amount of government involvement and 'meddling' right from the earliest days of railroad construction (e.g. when competition with state canal projects was involved, or charter issues were a perceived opportunity) but the primary drivers for the kind of government "interference" Gallamore disparages came comparatively late, and it would pay to write a discriminating analysis of the actions and reactions over time (comparable to the thesis discussion of Federal control in the WWI years... an extraordinary inspiration to thesis writers anywhere!)
 
The original ICC came out of populist and 'grange' agitation in the mid-1880s, much of which was either perceived or actual 'gouging' and rate manipulation by railroad management to 'charge what the traffic would bear' without regard to those originating agricultural traffic.  It remained, I think, largely as Hilton depicted it through the advent of Federal control (the excuse for which was other reasons from normal Government regulation) with the major Federal meddling (application of the antitrust provisions, and notably the Hepburn Act of 1906).  What I found interesting was that in many cases the Government 'reaction' lagged what was actually happening in the world of railroad development and finance, and often over-penalized perceived action based on assumptions that no longer applied; the world of 1894 was tremendously different from that of early 1892, just as that of 1907-8 was radically changed from that when the Hepburn Act was debated and passed.
 
The big change came with the vast enlargement of the scope and authority of the ICC in progressivism, with the prewar mandating of valuation being a precursor.  This really started with changes in 1921, not incidentally associated with release from Federal control instead of either full or partial (as in contemporary Canada) nationalization.  With the vastly greater power came vastly greater opportunity for government officials to meddle in areas of political interest, or to conduct what they perceived as fair control over bullying monopoly power.  Of course, once established, the ICC became like any other bureaucracy -- self-sustaining, self-aggrandizing, solicitous of micro-regulation regardless of cost.  
 
Note the fun involved in conflating 'safety' with rate control and common-carrier obligations.  It is one thing to impose power-brake or boiler laws; quite another to take up issues like maximum permissible train lengths, or to become proactive in union-sponsored causes... or to become a self-appointed guardian of 'fairness' as with the Big John and similar cases, or the intentional enforcement of separation of OTR trucking from railroad ownership, or (I strongly think) disallowing railroad ownership or promotion of airline ownership (see the New Haven's history).
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Posted by JPS1 on Monday, May 31, 2021 11:01 AM

daveklepper
 The ICC was a reaction to abuse of power.  

It was!  But as is the case with much of government regulation, the regulators became an entity unto themselves.  They failed to recognize until it was nearly too late the changes in the transportation industry. 
 
I dealt with government regulators for most of my career.  I never ceased to be amazed how little they understood about our business – banking and electric utilities. 
 
In many instances, the career regulators had a vested interest in the status quo.  Protecting their jobs seemed to be their primary concern. 
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Posted by SD60MAC9500 on Monday, May 31, 2021 10:24 AM
 

daveklepper

Regarding the quotation and government regulation:

Suppose there were no government regulations whatsoever. Then one very wealthy individual or group could end up owning all railroads and perhaps turcking comopanies and petrolium suuppliers and be able to charge whatever they wish to maximize profits without real social responsibility.

The ICC was a reaction to abuse of power.  It was fair as long as railroads had the clear technilogical advantage ovrer other forms of freight transportation.  The fairness ended when the ICC and USA Government policies deliberaterly favored trucking at ar-freight at the expense of railroads.

 

I don't think it's the problem of gov't regulation. The problem stems from the ICC overstepping it's boundaries by creating unrealistic rates, caps, and restrictions for the railroads..

 
Rahhhhhhhhh!!!!
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Posted by daveklepper on Monday, May 31, 2021 6:44 AM

Regarding the quotation and government regulation:

Suppose there were no government regulations whatsoever. Then one very wealthy individual or group could end up owning all railroads and perhaps turcking comopanies and petrolium suuppliers and be able to charge whatever they wish to maximize profits without real social responsibility.

The ICC was a reaction to abuse of power.  It was fair as long as railroads had the clear technilogical advantage ovrer other forms of freight transportation.  The fairness ended when the ICC and USA Government policies deliberaterly favored trucking at ar-freight at the expense of railroads.

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Posted by tree68 on Sunday, May 30, 2021 3:00 PM

SD60MAC9500
Mr. Tree as much as I would love to take credit for that quote. That's from Mr. Gallamore's book American Railroads that Greyhounds quoted. A book I have on my reading list along with DeBoer's book on Intermodal.

Agreed - I should have made that clearer.

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Posted by SD60MAC9500 on Sunday, May 30, 2021 11:02 AM
 

tree68

 

 
SD60MAC9500
"A central theme of this book is that railroads, throughout their history, were so important to the US economy that politicians could not leave them alone, and when governments did intervene in transportation markets, they usually made a mess of things.

 

Interesting - never thought of it that way, but it does follow.

 

Mr. Tree as much as I would love to take credit for that quote. That's from Mr. Gallamore's book American Railroads that Greyhounds quoted. A book I have on my reading list along with DeBoer's book on Intermodal.

 
 
Rahhhhhhhhh!!!!
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Posted by diningcar on Saturday, May 29, 2021 5:17 PM

tree68

 In my career I was responsible for several detailed and elaborate reports to the Interstate Commerce Commission. I became suspecious that they were not using the reports, on forms perscribded by the ICC. After a meeting in Washington I stayed over the weekend and made an appointment to look at the latest three years filings. I was sent to a warehouse in Suitland, MD where I found all of them stored without having been examined. 

Things like this and much more presipitated the dismantling of the ICC. 

 
SD60MAC9500
"A central theme of this book is that railroads, throughout their history, were so important to the US economy that politicians could not leave them alone, and when governments did intervene in transportation markets, they usually made a mess of things.

 

Interesting - never thought of it that way, but it does follow.

 

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Posted by tree68 on Saturday, May 29, 2021 2:32 PM

SD60MAC9500
"A central theme of this book is that railroads, throughout their history, were so important to the US economy that politicians could not leave them alone, and when governments did intervene in transportation markets, they usually made a mess of things.

Interesting - never thought of it that way, but it does follow.

LarryWhistling
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Posted by SD60MAC9500 on Saturday, May 29, 2021 1:43 PM
 

greyhounds

 

 
Lithonia Operator
The STB sure seems like a very powerful entity. I had thought that that kind of regulatory power vanished along with the ICC.

 

"A central theme of this book is that railroads, throughout their history, were so important to the US economy that politicians could not leave them alone, and when governments did intervene in transportation markets, they usually made a mess of things. Government regulation distorted consumer choices, found awkward and costly ways of subsidizing competing modes of transportation, taxed or regulated away profits needed for reinvestment and capacity expansion, and—while generally contributing to greater safety—typically fell far short of stimulating optimal safety performance for all transport modes."

 

Gallamore, Robert E.. American Railroads . Harvard University Press. Kindle Edition. 

Let the CN buy the KCS!

 

 

+1

 
Rahhhhhhhhh!!!!
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Posted by greyhounds on Friday, May 28, 2021 11:48 PM

Lithonia Operator
The STB sure seems like a very powerful entity. I had thought that that kind of regulatory power vanished along with the ICC.

"A central theme of this book is that railroads, throughout their history, were so important to the US economy that politicians could not leave them alone, and when governments did intervene in transportation markets, they usually made a mess of things. Government regulation distorted consumer choices, found awkward and costly ways of subsidizing competing modes of transportation, taxed or regulated away profits needed for reinvestment and capacity expansion, and—while generally contributing to greater safety—typically fell far short of stimulating optimal safety performance for all transport modes."

 

Gallamore, Robert E.. American Railroads . Harvard University Press. Kindle Edition. 

Let the CN buy the KCS!

"By many measures, the U.S. freight rail system is the safest, most efficient and cost effective in the world." - Federal Railroad Administration, October, 2009. I'm just your average, everyday, uncivilized howling "anti-government" critic of mass government expenditures for "High Speed Rail" in the US. And I'm gosh darn proud of that.
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Posted by Lithonia Operator on Friday, May 28, 2021 11:15 PM

The STB sure seems like a very powerful entity. I had thought that that kind of regulatory power vanished along with the ICC.

Still in training.


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Posted by Gramp on Friday, May 28, 2021 10:22 PM

Down the Rock Island line she's a mighty fine road. 

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Posted by MidlandMike on Friday, May 28, 2021 9:22 PM

Lithonia Operator

What the hell is a voting trust?

 

My understanding is that it is a legal construct that puts KCS in amber while the regulators decide the merger.

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Posted by Lithonia Operator on Friday, May 28, 2021 9:17 PM

What the hell is a voting trust?

Still in training.


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