Prior to Amtrak were there any heavy railroads, other than the Long Island Railroad, that were dependent primarily on passenger revenues as opposed to freight revenues to earn a return for their investors? I dont' consider Interurban operations as heavy rail, although some of them had the characteristics of heavy rail.
Did any of the major railroads earn a profit on their passenger operations? Some trains covered their costs and may have contributed something to net income, but my impression is that most of the railroads rarely if ever made any money on their total passenger operations.
You are asking a big question...and very open. At one time passenger trains did add to the bottom line for everyone if only because of US Mail contracts. There are so many books, histories of railroading,individual railroads, the passenger train, etc. and as many opinions as there are words. Start by defining where you consider the profit begins. Is it since the track is there, then the passenger train is gravey? Or the passenger train needs certain attentions that a freight track doesn't so the passenger train's cost is added. to running trains. Very open ended, Sam. Full of opinion and misunderstanding and lack of knowledge of how different railroads accounted for passenger trains on the books. Two trains could be identical in every way on two different railroads but the way they did the books could have different results on the bottom line.
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To cover its costs and add to the bottom line, a product line (passenger train) has to have revenues to cover its direct costs, indirect costs, and allocated overheads in deriving an operating profit. Revenues would have to be sufficient to cover all administrative costs (direct and allocated) to arrive at net income before depreciation, interest, and taxes. And they would have to be sufficient to cover these variables.
The railroads were amongst the first corporations to implement sophisticated accounting and finance systems in the U.S. I am reasonably sure that they had the ability to gather, process, and produce meaningful financial statements for each passenger train that they operated. I don't know how much of the information was made public, but they had it.
At one time, as I remember the argument, opponents of train-off petitions argued that passenger trains lost money according to ICC accounting rules, but did not lose money or not as much money as appeared to be the case under GAAP rules.
Right...and there were those running passenger trains in the 20's who knew they cost more than they brought in but kept running them on the freight's dime because they produced an advertising and promotional opportunity to those who bought the freight service from the railroad an it bought the politicians enroute. Loss of mail contracts removed the major income and often the major need of a passenger train; this became the reason (excuse?) after 1960's and zip codes. There are many serious, non rail fan oriented reading out there...start with Progressive Railroading archives and book reviews from them, Railway Age, Modern Railroads, and even Trains, too. There is no one answer as each railroad was different. The LIRR was indeed a passenger railroad and operated as such with some freight. It was also under the thumb of the PRR from the teens to 1950 when it was cut loose because of it being bankrupt so much. Freight traffic dwindled as the Moses highway system was built and more people began living on LI rather than working there. Today, it is a unique operation of commuter trains for it's entire length and breadth: just last week wrote its last train order while hauling commuters from Montauk and Greenport to the Big Apple every day, servants and sun seekers to the beaches and the Hamptons on summer weekends, and allowing a private enterprise use its tracks for what little freight traffic there is (it has to be a terminal or switching road by its physical nature!). But the LIRR/PRR picture is not typical of rail passenger services, either.
Sam1 ... The railroads were amongst the first corporations to implement sophisticated accounting and finance systems in the U.S. I am reasonably sure that they had the ability to gather, process, and produce meaningful financial statements for each passenger train that they operated. I don't know how much of the information was made public, but they had it. At one time, as I remember the argument, opponents of train-off petitions argued that passenger trains lost money according to ICC accounting rules, but did not lose money or not as much money as appeared to be the case under GAAP rules.
...
But, as you alluded to, much of that sophisticated accounting was structured towards the ICC and other regulatory requirements, which were quite different than the better known "generally-accepted accounting principles" ("GAAP"), and neither were necessarily intuitive or logical (in the common-sense sense).
Some 40 years ago, I had a conversation with a gentleman who worked in Southern Pacific's accounting department. He said that the ICC rules were most unfair to passenger traoins. For example, they required that, on lines which carried both passenger and freight trains, the RoW maintenance cost had to be split 50/50, Well, if there was 1 passenger train and 10 freights per day, the passenger was still charged with half of those costs -- and those costs would not have substantially been rediced if that 1 train were discontinued.
He also shared that, at the time SP was actively trying to eliminate passenger service, arguing how much it was costing to operate, some passenger trains were not losing money, and many of those that were, were actually losing much less than many freight trains.
But he also shared that this was not "public" information.
Sam,
I believe the answer to your original question is No. That is no large carrier, other than LI, got more than half of their gross from passengers.
I would qualify that by adding "after the Civil War". In the earliest days passengers were relatively more important until the railroads developed enough reach that freight transportation became more important than passengers.
What the split was depended greatly on the territory served. The Washington Branch of the B&O was predominately passenger for many years, while they were hauling flour from Elicott Mills, some 13 or 14 miles out on the Main Line as soon as they got there. Coal did not become important until they got to Cumberland in the late 1840's IIRC.
Mac McCulloch
Early in the last century the Federal Government required that before giving up passenger service the ICC must approve of that decision. Generally, the ICC withheld approval in most cases and required railroad companies to operate at a loss. At the same time the Federal Government built a system of free highways and the 1930's and a second system, the Interstate Highways, in the 50's and these free highway systems competed with the railroads. New York Central President Alfred Perlman argued free highways were a subsidy to automobile makers because highways were required for the increasing numbers of automobiles being sold.
Had the railroad companies been allowed to manage their own passenger business they might have devised a profitable system of passenger service. They were not allowed to do this.
At the same time railroads have a long history of acts that are not in the interests of the railroads themselves but served to make money for insiders. For example, when the Penn Central directors knew the company was headed for bankruptcy the information was withheld from the public while insiders sold their stocks for relatively hight prices.
Would the New Haven be a road where the level of passenger revenues approached that of freight revenues? Not much line haul.
New Haven had so many more lines than the Shore Line and Springfield line for freight that freight was king by a long shot...branches did have passenger service, but the Boston-NY services were frequent and reknown.
Sam1 Prior to Amtrak were there any heavy railroads, other than the Long Island Railroad, that were dependent primarily on passenger revenues as opposed to freight revenues to earn a return for their investors? I dont' consider Interurban operations as heavy rail, although some of them had the characteristics of heavy rail.
I suspect the New Haven came closest to the LIRR in depending on passenger revenues. I base that solely on my understanding of the NH's high ratio of passenger to freight traffic but admittedly don't have any supporting data. Absent any figures, I don't know whether or not their passenger revenues actually exceeded those from freight operations.
Sam1 Did any of the major railroads earn a profit on their passenger operations? Some trains covered their costs and may have contributed something to net income, but my impression is that most of the railroads rarely if ever made any money on their total passenger operations.
Prior to the Great Depression, I believe that most railroads passenger operations were profitable. Intuitively I believe there was another period of passenger profitability during and immediately following WW2. However by 1950 (possibly a year or two later) I think the black ink from passenger operations had largely turned to red on the books of most if not all railroads.
Mark
KCSfan Sam1 Prior to Amtrak were there any heavy railroads, other than the Long Island Railroad, that were dependent primarily on passenger revenues as opposed to freight revenues to earn a return for their investors? I dont' consider Interurban operations as heavy rail, although some of them had the characteristics of heavy rail. I suspect the New Haven came closest to the LIRR in depending on passenger revenues. I base that solely on my understanding of the NH's high ratio of passenger to freight traffic but admittedly don't have any supporting data. Absent any figures, I don't know whether or not their passenger revenues actually exceeded those from freight operations. Sam1 Did any of the major railroads earn a profit on their passenger operations? Some trains covered their costs and may have contributed something to net income, but my impression is that most of the railroads rarely if ever made any money on their total passenger operations. Prior to the Great Depression, I believe that most railroads passenger operations were profitable. Intuitively I believe there was another period of passenger profitability during and immediately following WW2. However by 1950 (possibly a year or two later) I think the black ink from passenger operations had largely turned to red on the books of most if not all railroads. Mark
Again, it is really difficult to say when and if passenger services ever made real profits depending on individual railroad philosophies and who's bookkeeping is accepted. I've seen many a statements that indicated freight made so much money it more than offset passenger costs both on the books and and in the minds of management. US Mail contracts kept passenger trains on the timetables rather than actual passenger tickets.
henry6 Again, it is really difficult to say when and if passenger services ever made real profits depending on individual railroad philosophies and who's bookkeeping is accepted. I've seen many a statements that indicated freight made so much money it more than offset passenger costs both on the books and and in the minds of management. US Mail contracts kept passenger trains on the timetables rather than actual passenger tickets.
Henry6; unfortunately it was the US mail that drove passengers away as timekeeping was killed by the hand handling of the mail. My father told me that one time in Bristol, Va he waited 1-1/2 hrs for all the mail to be handled. N&W _- SOU would actually schedule exra trains during the Christmas period to protect regular schedules. If containerized mail handling had been available then maybe trains would not have been delayed as much ?
Sure! The interurbns were primarily passenger carriers with some freight, and all three Chicago interurbans were classified as railroads under the ICC and interchanged freight with the frieght railroads even though primiarly passenger carriers. So too the New York Westchester and Boston. The Salt Lake and Garfield, which remains as a freight carrier. I am certain others can think of lots more.
blue streak 1 henry6 Again, it is really difficult to say when and if passenger services ever made real profits depending on individual railroad philosophies and who's bookkeeping is accepted. I've seen many a statements that indicated freight made so much money it more than offset passenger costs both on the books and and in the minds of management. US Mail contracts kept passenger trains on the timetables rather than actual passenger tickets. Henry6; unfortunately it was the US mail that drove passengers away as timekeeping was killed by the hand handling of the mail. My father told me that one time in Bristol, Va he waited 1-1/2 hrs for all the mail to be handled. N&W _- SOU would actually schedule exra trains during the Christmas period to protect regular schedules. If containerized mail handling had been available then maybe trains would not have been delayed as much ?
The US mail did not drive passengers away from the train, passengers drove themselves away in their new cars on their new superhighways. If a train was held 1 and a half hours for mail, it was a mail train not a passenger train or there weren't enough passengers to pay for the train but the mail did. Extra holiday schedules were not due to mail but to larger volume of passengers. There were all mail trains for both bulk and first class (RPO' s for sorting enroute) and even extra mail trains during the Christmas season too. But planes, private auto on new highways took the passengers off the trains and US Mail moving to zip code and trucks taking the mail off the trains is what did the passenger train off. And the demise of the passenger train did not start after 1960 nor 1950 for that matter but was begun in the late 20's through the 30's. WWII slowed down the passenger train demise, but Post War America saw more cars, more highways, jet instead of prop planes, and the public adopting the new modes rather than hang on to the passenger train. It was not a quick quit, but a process of new technologies causing a new culture and changes over several decades. There is no one pinpoint where you can say the passenger train died (in fact it didn't, but had to morph, a process which it is still traveling), but you can pinpoint the beginning of the turning points: the automobile, the plane, the jet plane, the four lane highways, the loss of RPO mail service. The results are in and changing daily.
Henry; Actually it was Tr #42 the Pelican. He was probably in the Bristol -- NYP pullman which was one of 5 sleeper cars on the train. Was so late that he did not have to stay a hotel in NY for his business. I mis spoke but the lousy timekeeping certainly did not attract passengers . We do note that AMTRAK dropped the mail for many reason one being the timekeeping.
Personally had several AMTRAK delays for mail. One delay was on the Cal Z westbound at Helper that had a dual loco failure ( 3 total ) that could not have UP push us up the hill because of roadrailers on rear. Had to wait for helpers to finally join us and pull us up the hill. ( 4 hr delay ). Ended up having crews go on law wast of Salt Lake for further delay until UP crew arrived.
at our area the extras were for only mail
Again my age shows. Amtrak is not passenger railroading before it was created. It was a whole different world of people and operations.
Sam1 Prior to Amtrak were there any heavy railroads, other than the Long Island Railroad, that were dependent primarily on passenger revenues as opposed to freight revenues to earn a return for their investors? I dont' consider Interurban operations as heavy rail, although some of them had the characteristics of heavy rail. Did any of the major railroads earn a profit on their passenger operations? Some trains covered their costs and may have contributed something to net income, but my impression is that most of the railroads rarely if ever made any money on their total passenger operations.
If thats the case then your also alleging they submitted fradulent Annual Stockholder reports to the public and if that happened my question would be........where was the SEC enforcement over decades and decades when this happened?
Good questions...and fleeting answers. Business and politics done with the wink of an eye.
That must have been just before Christmas; I was never at the station at that time. I will say that the times that I rode #17 to Chattanooga, it was seldom on time.
Johnny
This sparks a memory for me. I recall a news article written shortly after the advent of Amtrak commenting that station-stop dwell times were greatly reduced when Amtrak took over.
Actually my farther's trip was not at Christmas. One Christmas mail rush SOU and N&W initiated a second # 41 at WASH ended up arriving NOL some 30 Hrs later than original train did. Don't know if train # desigination was changed several times? Probably arrived NOL as next day's 2nd 41
CMStPnP Sam1 Prior to Amtrak were there any heavy railroads, other than the Long Island Railroad, that were dependent primarily on passenger revenues as opposed to freight revenues to earn a return for their investors? I dont' consider Interurban operations as heavy rail, although some of them had the characteristics of heavy rail. Did any of the major railroads earn a profit on their passenger operations? Some trains covered their costs and may have contributed something to net income, but my impression is that most of the railroads rarely if ever made any money on their total passenger operations. If thats the case then your also alleging they submitted fraudulent Annual Stockholder reports to the public and if that happened my question would be........where was the SEC enforcement over decades and decades when this happened?
If thats the case then your also alleging they submitted fraudulent Annual Stockholder reports to the public and if that happened my question would be........where was the SEC enforcement over decades and decades when this happened?
How you drew the conclusion that I was alleging fraudulent stockholder reports is a mystery. Under the then existing SEC requirements, public companies were not required to report segment information. Many of them did not have the ability to do so. The customary reporting standards for public reporting when the railroads ran passenger trains was different from today's reporting requirements.
Segment reporting is governed by ASC 280. A quick scan of the SEC reporting requirements suggests that ASC 280 did not come into play until 1997. Moreover, whether segment reporting is required depends on a revenue, income, and asset test. Whether any railroad's passenger operations prior to May 1971 would have crossed the test threshold is unknown, although I suppose if one had a lot of time, he or she could research it.
henry6the Boston-NY services were frequent and reknown.
Boston to New York was reknown even before the New York New Haven and Hartford, Henry:
"Without a jar, or roll, or antic,
Without a stop to Willimantic,
The New England Limited takes its way
At three o'clock each day,
Maids and Matrons, daintily dimited,
Ride everyday on the New England Limited;
Rain nor snow ne'er stops its flight,
It makes New York at nine each night,
One half the glories have not been told
Of that wonderful train of white and gold
Which leaves each day for New York at three
Over the N.Y. & N.E." [New York and New England]
--Rudyard Kipling
Sam1 How you drew the conclusion that I was alleging fraudulent stockholder reports is a mystery. Under the then existing SEC requirements, public companies were not required to report segment information. Many of them did not have the ability to do so. The customary reporting standards for public reporting when the railroads ran passenger trains was different from today's reporting requirements. Segment reporting is governed by ASC 280. A quick scan of the SEC reporting requirements suggests that ASC 280 did not come into play until 1997. Moreover, whether segment reporting is required depends on a revenue, income, and asset test. Whether any railroad's passenger operations prior to May 1971 would have crossed the test threshold is unknown, although I suppose if one had a lot of time, he or she could research it.
It's very simple, many railroads did report a profit on Passenger Train operations in their Annual Reports despite your trying to confuse the issue with Accounting rule differences between then and now. Really are we going to apply 1990 era Accounting standards to Railroad Operations in the 1960's and 1950's and even before and say that is a rational or logical argument?. It's not rational to do that, IMO.
Had this argument before with another person. Using the Accounting standards at the time railroads reported a profit on their passenger train operations, some of them well into the 1960's. You can review their annual reports online many of them are on the Internet.
If your disputing the profits never happened because they did not apply 1990's era Accounting standards back then........thats an irrational argument at best. Passenger Trains under private operation are quite different then Passenger Trains today. One difference is they were used in the days of private control to move railroad crews, mail, LCL express freight, etc. Good luck applying 1990 rules to that amalgamation. It can't be done.
Did the Pennsylvania-Reading Seashore Lines come close to being more of a passenger vs freight RR?
Henry got it right when he said: "The U.S. mail did not drive passengers away from the train, passengers drove themselves away in their new cars on their new superhighways."
In the old days, most passengers were very aware of the difference between the fast passenger trains and the mail plugs. Fifty years ago, worried that I didn't, a ticket agent in Chicago's Union Station warned me that the 'Q's No. 7 was "not a Zephyr." I knew that; it was only that the mail train got me into Burlington, Ia., when I needed to be there.
It's true that, in the waning days, many 'name' and formerly fast trains found themselves hauling more mail, the legacy of other trains that had been discontinued. This mail helped the formerly fast trains pay for their keep and preserve at least a remnant of passenger service, even as it slowed the schedules end-to-end.
An example is the Rock Island's old westbound Chicago-Des Moines "Des Moines Rocket" in the early 1960s. As far as the Quad Cities, No. 5 was still well-patronized by the business crowd that gave it the nickname, "Businessman's Special." And it did get over the road. West of the Quads, only a few local passengers; business people going as far as Des Moines had switched to air.
Accordingly, west of the Quads, the Rocket had become a postman, with only a couple of station hands in Iowa City, for instance, to off-load a ton of mail, an operation that could take half an hour -- unthinkable only a few years before.
Amtrak's venture into mail was altogether different, all palletized, with no manual, piece-by-piece handling. The delays (other than mechanical) were to cut whole mail cars in or out of the consist enroute.
I still think the otherwise estimable Mr. Gunn made a mistake getting Amtrak out of the mail business. After Amtrak had got the kinks worked out, it could have helped the bottom line everybody talks about on here, even as it had formerly done for the private roads.
CMStPnP Sam1 How you drew the conclusion that I was alleging fraudulent stockholder reports is a mystery. Under the then existing SEC requirements, public companies were not required to report segment information. Many of them did not have the ability to do so. The customary reporting standards for public reporting when the railroads ran passenger trains was different from today's reporting requirements. Segment reporting is governed by ASC 280. A quick scan of the SEC reporting requirements suggests that ASC 280 did not come into play until 1997. Moreover, whether segment reporting is required depends on a revenue, income, and asset test. Whether any railroad's passenger operations prior to May 1971 would have crossed the test threshold is unknown, although I suppose if one had a lot of time, he or she could research it. It's very simple, many railroads did report a profit on Passenger Train operations in their Annual Reports despite your trying to confuse the issue with Accounting rule differences between then and now. Really are we going to apply 1990 era Accounting standards to Railroad Operations in the 1960's and 1950's and even before and say that is a rational or logical argument?. It's not rational to do that, IMO. Had this argument before with another person. Using the Accounting standards at the time railroads reported a profit on their passenger train operations, some of them well into the 1960's. You can review their annual reports online many of them are on the Internet. If your disputing the profits never happened because they did not apply 1990's era Accounting standards back then........thats an irrational argument at best. Passenger Trains under private operation are quite different then Passenger Trains today. One difference is they were used in the days of private control to move railroad crews, mail, LCL express freight, etc. Good luck applying 1990 rules to that amalgamation. It can't be done.
This is what I said: "The railroads were amongst the first corporations to implement sophisticated accounting and finance systems in the U.S. I am reasonably sure that they had the ability to gather, process, and produce meaningful financial statements for each passenger train that they operated. I don't know how much of the information was made public, but they had it." Note that I did not say that they did not make the information public. I said that I did not know!
I did not say that they did not make money on passenger trains. I said that I did not know. Moreover, I did not say or imply that they should have used 1990s accounting and SEC reporting standards. That would be absurd. How could they? They were out of the passenger business long before the 1990s. What I did say or meant to say is that the standards then were not as rigorous then as now.
You should take the time to read my posts more carefully before make assertions that have no foundation. Also, why don't you show us a sample of the railroads that made money on their overall passenger train operations with some supporting data that can be verified. One or two roads with revenues, net operating profit, net income before taxes, plus any extraordinary items and discontinued operations for the passenger department would work quite nicely.
In 1924 LIRR had 10.2 million dollars freight revenue, 22.1 million passenger. Others:
NH not including CNE 63.7 - 49.7
WJ&S 4.4 - 7.7
Atlantic City RR 1.5 - 3.0
NJ&NY 0.3 - 1.2
SIRT 1.1 - 1.3
RF&P 5.7 - 4.1
NH "Passenger service train revenue" was 57.6 million-- guess that includes mail-express or something; RF&P was 5.4.
MidlandMike Did the Pennsylvania-Reading Seashore Lines come close to being more of a passenger vs freight RR?
No...but good thought...P-RSL did not have a major freight operation..lots of terminal and switching across all of South Jersey not served by the single long arm of the CNJ.
I see a note about the Staten Island Rapid Transit. Another good though. I don't believe it was ever anything more than a rapid transit system on the south shore but did have passenger service on the north shore where the B&O also had freight operations...I don't think the St. George to Tottenville ever had freight....at least not in my experiences dating back to the 40's.
In response to Sam1's note, the kind of "costing" the ICC would use in a "train off" case would differ from the kind of "costing" a railroad would use to determine relative profitability or unprofitability of the service (I've commented before that the answer to questions about "profitiability" or "unprofitability" of particular railroad sevice oftenends to a large extent on why you are asking the question).
In a "train off" case, the financial question is whether the railroad as a whole is financially better off or worse off without the service. That requires that the agency to determine what revenues the railroad would lose from the train off (generally all of the revenues produced from the train itself, plus the revenues that the train's passengers, mail (etc) are producing on the railroad's other trains), then comparing those lost revenues to the costs the railroad would actually save by eliminating the train. This exercise, since it focusses only on avoidable revenues and costs, will tend to make the train's financials look better than more traditional measures of profitability, which take into account return on investment, depreciation charges and recovery of an allocated portion of overhead costs.
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